BIOSOURCE INTERNATIONAL INC, S-3/A, 2000-04-13

BIOSOURCE INTERNATIONAL INC
S-3/A, 2000-04-13
IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES

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As filed with the Securities and Exchange Commission on April 13, 2000
Registration No. 333-32622

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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BIOSOURCE INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S> <C> <C>
Delaware 2835 77-0340829
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>

820 Flynn Road
Camarillo, California 93012
(805) 383-5200
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)

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James H. Chamberlain
Chief Executive Officer & President
BioSource International, Inc.
820 Flynn Road
Camarillo, California 93012
(805) 383-5200
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Agent for Service)

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Copies to:
<TABLE>
<S> <C>
Scott W. Alderton, Esq. Daniel Clivner, Esq.
Linda Giunta Michaelson, Esq. Michael Nooney, Esq.
Troop Steuber Pasich Reddick & Tobey, LLP Simpson Thacher & Bartlett
2029 Century Park East 3373 Hillview Avenue, Suite 250
Los Angeles, California 90067 Palo Alto, California 94304
(310) 728-3000 (650) 251-5000
</TABLE>
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.

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If the securities being registered to this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]
If any of the securities being registered in this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]

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CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Title of Each Class of
Securities to be Proposed Maximum Aggregate
Registered Offering Price(1) Amount of Registration Fee
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<S> <C> <C>
Common Stock, $0.001 par
value (including the
Preferred Stock
Purchase Rights
attached thereto)(2) $96,312,500 $25,427
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee,
pursuant to Rule 457(c) under the Securities Act of 1933, and based on the
average of the high and low prices on the Nasdaq National Market on March
15, 2000.

(2) The Preferred Stock Purchase Rights are attached to and trade with the
shares of BioSource common stock.

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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED APRIL 13, 2000

PROSPECTUS

4,000,000 Shares

[LOGO OF BIOSOURCE INTERNATIONAL]

Common Stock

Of the 4,000,000 shares offered in this prospectus, BioSource International,
Inc. is offering 3,350,000 shares and the selling stockholders of BioSource are
offering 650,000 shares. BioSource will not receive any proceeds from the sale
of shares by the selling stockholders.

BioSource's common stock is quoted on the Nasdaq National Market under the
symbol "BIOI". On April 11, 2000, the last reported sale price for our common
stock on the Nasdaq National Market was $14.31 per share.

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<TABLE>
<CAPTION>
Per
Share Total
----- -----
<S> <C> <C>
Public offering price........................................... $ $
Underwriting discounts and commissions.......................... $ $
Proceeds to BioSource, before expenses.......................... $ $
Proceeds to selling stockholders, before expenses............... $ $
</TABLE>

BioSource and selling stockholders have granted the underwriters the right to
purchase up to an additional 600,000 shares to cover over-allotments.

-----------

Investing in our common stock involves a high degree of risk.
See "Risk Factors" beginning on page 7.

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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined
whether this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.

CHASE H&Q
DAIN RAUSCHER WESSELS

THOMAS WEISEL PARTNERS LLC

, 2000
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TABLE OF CONTENTS

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Page
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<S> <C>
Prospectus Summary....................................................... 3

Risk Factors............................................................. 7

Caution Regarding Reliance on Forward-Looking Statements................. 16

Use of Proceeds.......................................................... 17

Price Range of Common Stock.............................................. 17

Capitalization........................................................... 18

Selected Consolidated Financial Data..................................... 19

Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 20

Business................................................................. 26

Management............................................................... 36

Relationships and Related Transactions................................... 39

Principal and Selling Stockholders....................................... 40

Description of Capital Stock............................................. 43

Underwriting............................................................. 45

Legal Matters............................................................ 47

Experts.................................................................. 47

Where You Can Find More Information...................................... 47

Index to Consolidated Financial Statements and Financial Statement
Schedule................................................................ F-1
</TABLE>
<PAGE>

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus.
This summary may not contain all of the information you should consider before
investing in our common stock. You should read the entire prospectus carefully,
including "Risk Factors" and the financial statements and the related notes,
before making an investment decision. Except as otherwise noted, all
information in this prospectus assumes the underwriters' over-allotment option
will not be exercised, and each reference to a share of common stock includes
preferred share purchase rights issued under our rights agreement.

BioSource International

We develop, manufacture, market and distribute products used worldwide in
biomedical research that are instrumental in the development of new drug
therapies and medical diagnostic methods. Our products enable scientists and
biomedical researchers to better understand biochemistry, immunology and cell
biology of the human body, as well as disease processes. Through acquisitions
and internal growth, we believe we have grown to include a unique combination
of technological, production, and research and development skills resulting in
a full spectrum of products and services for the worldwide pharmaceutical and
biotechnology industries.

The biomedical research industry has seen significant advances in the
understanding of physiological processes at the cellular and molecular level.
In particular, the biotechnology industry has seen a substantial amount of
growth over the last year as efforts to sequence the human genetic structure,
or genome, have accelerated. Researchers have identified thousands of
previously unknown genes that potentially play key roles in physiological
systems in the human body. These genes are of significant interest to the
pharmaceutical industry, since they can be used as the basis of new therapeutic
discovery and development. The increase in biomedical research resulting from
the sequencing of the human genome has resulted in the need for methods and
products to accelerate and assist this research. The core competencies we have
developed in molecular and cellular biology, immunology and custom services
address this need.

We offer over 3,200 products that we group into the following product lines:
Assays; Antibodies; Bioactive Proteins and Peptides; Oligonucleotides; and
Serum, Buffers and Media. Our assays are primarily Enzyme-Linked ImmunoSorbent
Assay test kits and Radioimmuno Assays, and are used to measure substances,
mostly proteins, in biological samples. We produce both monoclonal and
polyclonal antibodies that are used to detect and quantitate antigens, and
separate and identify various types of cells. Our bioactive proteins and
peptides are used in basic research, drug discovery, enzymology, high
throughput screening, in vivo studies, x-ray crystallography and as antigens
for antibody production. Our oligonucleotides are synthetically-produced short
segments of DNA used for polymerase chain reaction, or PCR, initiation, gene
location and sequencing. We also sell serum, buffers and media for use as a
synthetic environment for cellular growth.

We have over 3,000 customers worldwide, including the customers of our
distributors. Our customers include:

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<CAPTION>
Pharmaceutical Biotechnology Universities Government
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American Home Products Amgen Brigham and Women's Hospital Centers for Disease Control
Aventis Pharmaceuticals Berlex Laboratories Georgetown University Food and Drug Administration
Baxter Biogen Johns Hopkins University National Cancer Institute
Boehringer Ingelheim Chiron UCLA National Institutes of Health
Glaxo Wellcome Human Genome Sciences UC San Francisco Veterans Administration Medical Centers
Johnson & Johnson Hyseq University of Michigan U.S. Army Research
Merck & Company Icos University of Pennsylvania
Pfizer IDEC Pharmaceuticals University of Texas MD Anderson
Pharmacia & Upjohn Rigel Pharmaceuticals Cancer Research Center
Schering-Plough
</TABLE>

3
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Our strategy is to capitalize on the growth of the biotechnology industry by
creating research tools and test kits that are not subject to the volatility
inherent in developing pharmaceuticals and includes the following components:

. We focus on the strategic direction of biomedical research with a strong
commitment to use innovative technologies and research techniques.

. We are committed to product development and believe by offering a broad
range of products we more fully address the needs of researchers.

. We believe we create superior value for, and offer greater affordability
and convenience to, our customers.

. We continuously evaluate potential acquisition candidates for
complementary products, businesses and technologies and have successfully
completed five acquisitions in the last seven years.

. We seek to create a team spirit among all of our employees that we
believe creates loyalty and pride, and translates into greater product
quality and enhanced customer service.

Corporate Information

Our principal executive offices are located at 820 Flynn Road, Camarillo,
California 93012, and our telephone number is (805) 383-5200. We maintain a
website at www.biosource.com. Information contained on our website does not
constitute part of this prospectus.

4
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The Offering

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<S> <C>
Shares offered by BioSource..................... 3,350,000 shares
Shares offered by the selling stockholders...... 650,000 shares
Total shares outstanding after the offering..... 13,155,552 shares
Use of proceeds................................. For strategic acquisitions of
businesses, products, services and
technologies; research and development;
working capital; and other general
corporate purposes.
Nasdaq National Market Symbol................... BIOI
</TABLE>

The number of shares of common stock outstanding after the offering is based
upon the number of shares outstanding as of March 20, 2000, assumes the
conversion of all outstanding shares of Series B Preferred Stock, which we
issued on February 15, 2000, into 1,485,200 shares of common stock and excludes
the following:

. 1,658,150 shares issuable upon the exercise of outstanding options to
acquire common stock as of March 20, 2000; and

. 1,357,860 shares issuable upon the exercise of outstanding warrants to
acquire common stock as of March 20, 2000.

Out of the total of 650,000 shares being offered by the selling
stockholders, 510,000 shares will be offered as a result of the prior
conversion of 127,500 shares of Series B Preferred Stock by the holders of the
Series B Preferred Stock. In the event that none of the remaining shares of the
Series B Preferred Stock are converted into shares of common stock in
connection with the consummation of this offering, the total number of shares
of common stock outstanding after the offering will be 12,040,352. For
information regarding the circumstances under which the Series B Preferred
Stock may be required to convert into common stock, you should read the section
of this prospectus titled "Description of Capital Stock--Series B Preferred
Stock."

5
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Summary Consolidated Financial Data

The following summary consolidated financial data for the years ended
December 31, 1995, 1996, 1997, 1998 and 1999, and as of December 31, 1999, is
derived from our audited consolidated financial statements. You should read
this summary consolidated financial data in conjunction with the sections of
the prospectus titled "Selected Consolidated Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations," as
well as the consolidated financial statements and related notes included in
this prospectus.

<TABLE>
<CAPTION>
Years Ended December 31,
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1995 1996 1997 1998 1999
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(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Consolidated Statement of Operations
Data:
Net sales............................ $8,608 $15,913 $20,572 $21,859 $29,257
Cost of sales...................... 2,996 5,568 6,930 13,189 11,071
------ ------- ------- ------- -------
Gross profit......................... 5,612 10,345 13,642 8,670 18,186
Operating expenses:
Research and development........... 1,074 1,421 2,078 2,648 3,315
Sales and marketing................ 1,290 2,762 4,043 4,338 4,737
General and administrative......... 1,633 2,703 3,552 4,469 4,460
Purchased in-process technology.... -- -- -- 4,222 --
Amortization of intangibles........ -- -- 31 95 1,061
------ ------- ------- ------- -------
Operating income (loss).............. 1,615 3,460 3,938 (7,102) 4,613
Interest and other income
(expense), net.................... (4) 3 708 432 (1,016)
------ ------- ------- ------- -------
Income (loss) before income taxes.... 1,611 3,463 4,646 (6,670) 3,597
Income tax expense (benefit)....... 451 696 1,460 (1,535) 20
------ ------- ------- ------- -------
Net income (loss).................... $1,160 $ 2,767 $ 3,186 $(5,136) $ 3,577
====== ======= ======= ======= =======
Net income (loss) per share:
Basic.............................. $ 0.20 $ 0.38 $ 0.38 $ (0.68) $ 0.49
Diluted............................ $ 0.20 $ 0.35 $ 0.36 $ (0.68) $ 0.46
Weighted average shares outstanding:
Basic.............................. 5,827 7,282 8,318 7,509 7,235
Diluted............................ 5,946 8,009 8,965 7,509 7,833
</TABLE>

<TABLE>
<CAPTION>
As of
December 31, 1999
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Actual As Adjusted
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(in thousands)
<S> <C> <C>
Consolidated Balance Sheet Data:
Current assets.............................................. $18,325 $60,716
Intangible assets, net of accumulated amortization.......... 13,816 13,816
Total assets................................................ 40,222 82,613
Current liabilities......................................... 7,340 4,586
Long-term debt, less current portion........................ 11,459 --
Total stockholders' equity.................................. 21,422 78,027
</TABLE>

The As Adjusted Consolidated Balance Sheet Data as of December 31, 1999 has
been adjusted to give effect to the following:

. the proceeds from the issuance of 371,300 shares of Series B Preferred
Stock on February 15, 2000; and

. our receipt of approximately $48,219,500 in net proceeds from this
offering of 3,350,000 shares of common stock pursuant to this prospectus,
at an assumed public offering price of $15.50 per share, after deducting
underwriting discounts and our estimated offering expenses.

6
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RISK FACTORS

You should carefully consider the following risk factors and all other
information contained in this prospectus before purchasing shares of our common
stock. Investing in our common stock involves a high degree of risk. If any of
the following events or outcomes actually occur, our business, operating
results and financial condition would likely suffer. As a result, the trading
price of our common stock could decline, and you may lose all or part of the
money you paid to purchase our common stock.

Risks Related to Our Business

Failure to manage our growth and expansion could impair our business.

We historically have sought, and will continue to seek, to increase our
sales and profitability primarily through the acquisition or internal
development of new product lines, additional customers and new businesses. Our
historical revenue growth is primarily attributable to our acquisitions and new
product development and, to a lesser extent, to increased revenues from our
existing products. We expect that future acquisitions, if successfully
consummated, will create increased working capital requirements, which will
likely precede by several months any material contribution of an acquisition to
our net income. Our ability to achieve our expansion objectives and to manage
our growth effectively and profitably depends upon a variety of factors,
including:

. our ability to internally develop new products;

. our ability to make profitable acquisitions;

. integration of new facilities into existing operations;

. hiring, training and retention of qualified personnel;

. establishment of new relationships or expansion of existing relationships
with customers and suppliers; and

. availability of capital.

In addition, the implementation of our growth strategy will place
significant strain on our administrative, operational and financial resources
and increased demands on our financial systems and controls. Our ability to
manage our growth successfully will require us to continue to improve and
expand these resources, systems and controls. If our management is unable to
manage growth effectively, our operating results could be adversely affected.
Moreover, there can be no assurance that our historic rate of growth will
continue, that we will continue to successfully expand or that growth or
expansion will result in profitability.

We cannot guarantee that our future acquisitions will be successful.

We expect to use the net proceeds from this offering to acquire
complementary businesses, products, services and technologies; for research and
development; working capital and other general corporate purposes. From time to
time, we evaluate potential acquisitions of complementary businesses, products
or technologies and expect that we may likely undertake one or more
acquisitions during 2000. As of the date of this prospectus, we have no
understandings, commitments or agreements with respect to any acquisition.

We compete for acquisition and expansion opportunities with companies which
have significantly greater financial and management resources than us. There
can be no assurance that suitable acquisition or investment opportunities will
be identified, that any of these transactions can be consummated, or that, if
acquired, these new businesses can be integrated successfully and profitably
into our operations. These acquisitions and investments may also require a
significant allocation of resources, which will reduce our ability to focus on
the other portions of our business, including many of the factors listed in the
prior risk factor.

7
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Reduction or delays in research and development budgets and in government
funding may negatively impact our sales.

Our customers include researchers at pharmaceutical and biotechnology
companies, academic institutions and government and private laboratories.
Fluctuations in the research and development budgets of these researchers and
their organizations could have a significant effect on the demand for our
products. Research and development budgets fluctuate due to numerous factors
that are outside our control and are difficult to predict, including changes in
available resources, spending priorities and institutional budgetary policies.
Our business could be seriously damaged by any significant decrease in life
sciences research and development expenditures by pharmaceutical and
biotechnology companies, academic institutions or government and private
laboratories.

A significant portion of our sales has been to researchers, universities,
government laboratories and private foundations whose funding is dependent upon
grants from government agencies such as the U.S. National Institutes of Health
and similar domestic and international agencies. Although the level of research
funding has increased during the past several years, we cannot assure you that
this trend will continue. Government funding of research and development is
subject to the political process, which is inherently fluid and unpredictable.
Our revenues may be adversely affected if our customers delay purchases as a
result of uncertainties surrounding the approval of government budget
proposals. Also, government proposals to reduce or eliminate budgetary deficits
have sometimes included reduced allocations to the NIH and other government
agencies that fund research and development activities. A reduction in
government funding for the NIH or other government research agencies could
seriously damage our business.

Many of our customers receive funds from approved grants at particular times
of the year, as determined by the federal government. Grants have, in the past,
been frozen for extended periods or have otherwise become unavailable to
various institutions without advance notice. The timing of the receipt of grant
funds affects the timing of purchase decisions by our customers and, as a
result, can cause fluctuations in our sales and operating results.

We rely on raw materials for our manufacturing, which we may not always be able
to obtain on favorable terms.

Our manufacturing process relies on the continued availability of high-
quality raw materials. It is possible that a change in vendors, or in the
quality of the raw materials supplied to us, could have an adverse impact on
our manufacturing process and, ultimately, on the sale of our finished
products. We have from time to time experienced a disruption in the quality or
availability of key raw materials, which has created minor delays in our
ability to fill orders for specific test kits. This could occur again in the
future, resulting in significant delays, and could have a detrimental impact on
the sale of our products and our results of operations.

Our ability to raise the capital necessary to expand our business is uncertain.

In the future, in order to expand our business through internal development
or acquisitions, we may need to raise substantial additional funds through
equity or debt financings, research and development financings or collaborative
relationships. However, this additional funding may not be available or, if
available, it may not be available on economically reasonable terms. In
addition, any additional funding may result in significant dilution to existing
stockholders. If adequate funds are not available, we may be required to
curtail our operations or obtain funds through collaborative partners that may
require us to release material rights to our products.

Our research and development efforts for new products may be unsuccessful.

We incur significant research and development expenses to develop new
products and technologies. There can be no assurance that any of these products
or technologies will be successfully developed or that

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if developed, will be commercially successful. In the event that we are unable
to develop commercialized products from our research and development efforts or
we are unable or unwilling to allocate amounts beyond our currently anticipated
research and development investment, we could lose our entire investment in
these new products and technologies.

Failure to license new technologies could impair our new product development.

Our business model of providing products to researchers working on a variety
of genetic projects requires us to develop a wide spectrum of products. To
generate broad product lines it is advantageous to sometimes license
technologies from others rather than depending exclusively on our own
employees. As a result, we believe our ability to license new technologies from
third parties is and will continue to be important to our ability to offer new
products.

In addition, from time to time we are notified or become aware of patents
held by third parties that are related to technologies we are selling or may
sell in the future. After a review of these patents, we may decide to obtain a
license for these technologies from these third parties. We are currently in
the process of negotiating several of these licenses and expect that we will
also negotiate these types of licenses in the future. There can be no
assurances that we will be able to negotiate these licenses on favorable terms,
or at all.

Our ability to gain access to technologies needed for new products and
services also depends in part on our ability to convince licensors that we can
successfully commercialize their inventions. We cannot assure you that we will
be able to continue to identify new technologies developed by others. Even if
we are able to identify new technologies of interest, we may not be able to
negotiate a license on favorable terms, or at all.

If we fail to introduce new products, or our new products are not accepted by
potential customers, we may lose market share.

Rapid technological change and frequent new product introductions are
typical for our market. Our future success will depend in part on continuous,
timely development and introduction of new products that address evolving
market requirements. We believe successful new product introductions provide a
significant competitive advantage because customers make an investment of time
in selecting and learning to use a new product, and then are reluctant to
switch. To the extent we fail to introduce new and innovative products, we may
lose market share to our competitors, which will be difficult or impossible to
regain. An inability, for technological or other reasons, to successfully
develop and introduce new products could reduce our growth rate or damage our
business.

In the past we have experienced, and are likely to experience in the future,
delays in the development and introduction of products. We cannot assure you
that we will keep pace with the rapid rate of change in life sciences research,
or that our new products will adequately meet the requirements of the
marketplace or achieve market acceptance. Some of the factors affecting market
acceptance of new products include:

. availability, quality and price relative to competitive products;

. the timing of introduction of the product relative to competitive
products;

. scientists' opinion of the product's usefulness;

. citation of the product in published research; and

. general trends in life sciences research.

The expenses or losses associated with unsuccessful product development
activities or lack of market acceptance of our new products could materially
adversely affect our business, operating results and financial condition.

Failure to attract and retain qualified scientific or production personnel or
loss of key management or key personnel could hurt our business.

Recruiting and retaining qualified scientific and production personnel to
perform research and development work and product manufacturing is critical to
our success. Because the industry in which we

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compete is very competitive, we face significant challenges attracting and
retaining this qualified personnel base. Although we believe we have been and
will be able to attract and retain these personnel, there can be no assurance
that we will be able to continue to successfully attract qualified personnel.
In addition, our anticipated growth and expansion into areas and activities
requiring additional expertise, such as clinical testing, government approvals,
production and marketing, will require the addition of new management personnel
and the development of additional expertise by existing management personnel.
The failure to attract and retain these personnel or, alternatively, to develop
this expertise internally would adversely affect our business.

Our success also will continue to depend to a significant extent on the
members of our management team and, in particular, on our Chief Executive
Officer and President, James H. Chamberlain. Except for an employment agreement
with Mr. Chamberlain, which has a term expiring on December 31, 2000, and an
employment agreement with Jordan Fishman, Ph.D., our Vice President, Cellular
Biology, which has a term expiring on November 30, 2001, we do not have
employment agreements with any of our executive officers or key employees or
maintain any "key man" insurance policies regarding any of these individuals.
We may not be able to retain the services of our executive officers and key
personnel or attract additional qualified members to management in the future.
The loss of services of Mr. Chamberlain, Dr. Fishman or of any of our other key
management or employees, could have a material adverse effect upon our
business.

Many of our customers are obtaining our products through new distribution
channels and methods that may adversely impact our results of operations and
financial condition.

Many of our customers have developed purchasing initiatives to reduce the
number of vendors they purchase from in order to lower their supply costs.
These activities force us to supply the large distributors with our products at
a discount to reach those customers. For similar reasons, many larger
customers, including the federal government, have special pricing arrangements,
including blanket purchase agreements. These agreements may limit our pricing
flexibility with respect to our products, which could adversely impact our
business, financial condition and results of operations. In addition, although
we accept and process some orders through our Internet website, we also
implement sales through third-party Internet vendors. Internet sales through
third parties will negatively impact our gross margins because we pay
commission on these Internet sales.

We rely on international sales, which are subject to additional risks.

International sales accounted for approximately 47.0% of our revenues in
1999 and 59.5% of our revenues in 1998. International sales can be subject to
many inherent risks that are difficult or impossible for us to predict or
control, including:

. unexpected changes in regulatory requirements and tariffs;

. difficulties in staffing and managing foreign operations, including
foreign distributor relationships;

. longer payment cycles;

. adverse economic or political changes;

. potential trade restrictions, exchange controls and import and export
licensing requirements;

. problems in collecting accounts receivable; and

. potentially adverse tax consequences.

We intend to continue to generate revenues from sales outside the United
States in the future. Future distribution of our products outside the United
States also may be subject to greater governmental regulation. These
regulations, which include requirements for approvals or clearance to market,
additional time required for regulatory review and sanctions imposed for
violations, as well as the other risks indicated

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in the bullets listed above, vary by country. We may not be able to obtain
regulatory approvals in the countries in which we currently sell our products
or in countries where we may sell our products in the future. In addition, we
may be required to incur significant costs in obtaining necessary regulatory
approvals. Failure to obtain necessary regulatory approvals or any other
failure to comply with regulatory requirements could result in a material
reduction in our revenues and earnings.

We also depend on third-party distributors for a material portion of our
international sales. If we lose or suffer any significant reduction in sales to
any material distributor, our business could be materially adversely affected.

In addition, approximately 22% of our sales are made in foreign currencies,
primarily Belgian francs, British pounds, and German marks. Although a
significant portion of the foreign currencies in which we conduct our business
is currently, or is anticipated in the future to be, denominated in Euros as a
result of the European Monetary Union, we are not certain about the effect of
the Euro on our business, financial condition or results of operations. In the
past, gains and losses on the conversion of our accounts receivable arising
from international operations have contributed to negative fluctuations in our
results of operations. In general, increases in the exchange rate of the United
States dollar to foreign currencies cause our products to become relatively
more expensive to customers in those countries, leading to a reduction in sales
or profitability in some cases. We historically have not, and currently are
not, using hedging transactions or other means to reduce our exposure to
fluctuations in the value of the United States dollar as compared to the
foreign currencies in which many of our sales are made.

We may be unable to protect our trademarks, trade secrets and other
intellectual property rights that are important to our business.

We regard our trademarks, trade secrets and other intellectual property as a
component of our success. We rely on trademark law and trade secret protection
and confidentiality and/or license agreements with employees, customers,
partners and others to protect our intellectual property. Effective trademark
and trade secret protection may not be available in every country in which our
products are available. We cannot be certain that we have taken adequate steps
to protect our intellectual property, especially in countries where the laws
may not protect our rights as fully as in the United States. In addition, our
third-party confidentiality agreements can be breached and, if they are, there
may not be an adequate remedy available to us. If our trade secrets become
known, we may lose our competitive position.

Intellectual property or other litigation could harm our business.

Litigation regarding patents and other intellectual property rights is
extensive in the biotechnology industry. We are aware that patents have been
applied for, and in some cases issued to others, claiming technologies that are
closely related to ours. As a result, and in part due to the ambiguities and
evolving nature of intellectual property law, we periodically receive notices
of potential infringement of patents held by others. Although to date we have
successfully resolved these types of claims, we may not be able to do so in the
future.

In the event of an intellectual property dispute, we may be forced to
litigate. This litigation could involve proceedings declared by the U.S. Patent
and Trademark Office or the International Trade Commission, as well as
proceedings brought directly by affected third parties. Intellectual property
litigation can be extremely expensive, and these expenses, as well as the
consequences should we not prevail, could seriously harm our business.

If a third party claimed an intellectual property right to technology we
use, we might need to discontinue an important product or product line, alter
our products and processes, pay license fees or cease our affected business
activities. Although we might under these circumstances attempt to obtain a
license to this intellectual property, we may not be able to do so on favorable
terms, or at all.

11
<PAGE>

In addition to intellectual property litigation, other substantial, complex
or extended litigation could result in large expenditures by us and distraction
of our management. For example, lawsuits by employees, stockholders,
collaborators or distributors could be very costly and substantially disrupt
our business. Disputes from time to time with companies or individuals are not
uncommon in our industry, and we cannot assure you that we will always be able
to resolve them out of court.

Accidents related to hazardous materials could adversely affect our business.

Portions of our operations require the controlled use of hazardous and
radioactive materials. Although we believe our safety procedures comply with
the standards prescribed by federal, state, local and foreign regulations, the
risk of accidental contamination of property or injury to individuals from
these materials cannot be completely eliminated. In the event of an accident,
we could be liable for any damages that result, which could seriously damage
our business and results of operations.

Our sales are subject to seasonality, which means that we have less revenue in
some months.

We experience a slowing of sales in Europe during the summer months and
worldwide during the Christmas holidays. Generally, our fourth quarter revenues
are significantly lower than our revenues in each of the first three quarters
of the year. We believe that period to period comparisons of our operating
results may not necessarily be reliable indicators of our future performance.
It is likely that in some future period our operating results will not meet
your expectations or those of public market analysts, which could result in
reductions in the market price of our common stock.

Potential product liability claims could affect our earnings and financial
condition.

We face a potential risk of liability claims based on our products and
services, and we have faced such claims in the past. We carry product liability
insurance coverage which is limited in scope and amount but which we believe to
be adequate. We cannot assure you, however, that we will be able to maintain
this insurance at reasonable cost and on reasonable terms. We also cannot
assure you that this insurance will be adequate to protect us against a product
liability claim, should one arise.

The labor laws applicable to our employees in Europe may restrict the
flexibility of our management.

As of February 29, 2000, 48 of our 207 employees worked for our BioSource
Europe subsidiary, which is located in Nivelles, Belgium. As a result of
Belgian labor laws, we are required to make specified severance payments in the
event we reduce the number of our employees working at this facility.
Accordingly, our management may be limited by the application of the Belgian
labor laws in the determination of staffing levels, and may have less
flexibility in making such determinations than our competitors whose employees
are not subject to similar labor laws.

Risks Associated With Our Industry

The biomedical research products industry is very competitive, and we may be
unable to continue to compete effectively in this industry in the future.

We are engaged in a segment of the biomedical research products industry
that is highly competitive. Many of our competitors, both in the United States
and elsewhere, are major pharmaceutical, chemical and biotechnology companies,
and many of them have substantially greater capital resources, marketing
experience, research and development staffs, and facilities than we do. Any of
these companies could succeed in developing products that are more effective
than the products that we have or may develop and may also be more successful
than us in producing and marketing their products. We expect this competition
to continue and intensify in the future.

12
<PAGE>

Our industry has also seen substantial consolidation in recent years, which
has led to the creation of competitors with greater financial and intellectual
property resources than us. In addition, we believe that the success that
others have had in our industry will attract new competitors. Some of our
current and future competitors also may cooperate to better compete against us.
We may not be able to compete effectively against these current or future
competitors. Increased competition could result in price reductions for our
products, reduced margins and loss of market share, any of which could
adversely impact our business, financial condition and results of operations.

As a result of consolidation in the pharmaceutical industry, we may lose
existing customers or have greater difficulty obtaining new customers.

In recent years, the United States pharmaceutical industry has undergone
substantial consolidation. As part of many business combinations, companies
frequently reduce the number of suppliers used and we may not be selected as a
supplier after any business combination. Further, mergers or corporate
consolidations in the pharmaceutical industry could cause us to lose existing
customers and potential future customers, which could have a material adverse
effect on our business, financial condition and results of operations.

We are currently subject to government regulation.

Our business is currently subject to regulation, supervision and licensing
by federal, state and local governmental authorities. Also, from time to time
we must expend resources to comply with newly adopted regulations, as well as
changes in existing regulations. If we fail to comply with these regulations,
we could be subject to disciplinary actions or administrative enforcement
actions. These actions could result in penalties, including fines.

Risks Associated With Our Offering

Our stock price has been volatile.

Our common stock is quoted on the Nasdaq National Market, and there has been
substantial volatility in the market price of our common stock. The trading
price of our common stock has been, and is likely to continue to be, subject to
significant fluctuations due to a variety of factors, including:

. variations in our quarterly operating results;

. the gain or loss of significant contracts;

. changes in management;

. announcements of technological innovations or new products by us or our
competitors;

. legislative or regulatory changes;

. general trends in the industry;

. recommendations by securities industry analysts;

. biological or medical discoveries;

. developments concerning intellectual property, including patents and
litigation matters;

. public concern as to the safety of new technologies;

. developments in our relationships with current or future customers and
suppliers; and

. general economic conditions, both in the United States and abroad.

As a result of these factors, and potentially others, the sales price of our
common stock has ranged from $2.41 to $32.00 per share from January 1, 1998
through April 11, 2000 and from $6.06 to $32.00 per share from January 1, 2000
through April 11, 2000. For additional information regarding the price range of
our common stock, see "Price Range of Common Stock."

13
<PAGE>

In addition, the stock market in general has experienced extreme price and
volume fluctuations that have affected the market price of our common stock, as
well as the stock of many biotechnology companies. Often, price fluctuations
are unrelated to operating performance of the specific companies whose stock is
affected.

In the past, following periods of volatility in the market price of a
company's stock, securities class action litigation has occurred against the
issuing company. If we were subject to this type of litigation in the future,
we could incur substantial costs and a diversion of our management's attention
and resources, each of which could have a material adverse effect on our
revenue and earnings. Any adverse determination in this type of litigation
could also subject us to significant liabilities.

Future sales of currently outstanding shares could adversely affect our stock
price.

The market price of our common stock could drop as a result of sales of a
large number of shares in the market after this offering or in response to the
perception that these sales could occur. Upon completion of this offering, we
may have outstanding up to 14,513,412 shares of common stock, which are based
upon shares outstanding as of March 20, 2000, the conversion of all of our
Series B Preferred Stock and the exercise of all then exercisable warrants. Of
these shares, most will be registered and freely tradable. In addition we have
filed registration statements on Form S-8 under the Securities Act that cover
1,181,137 shares of common stock pursuant to outstanding but unexercised vested
options to acquire our common stock. Furthermore, the beneficial owners of
2,262,220 shares have the right to request that we register those shares for
sale in the public market. Following this offering, approximately 3,450,010
shares will be subject to agreements, which subject to limited exceptions,
prevent the sale of these shares for 90 days following the consummation of this
offering. After expiration of this lock-up period, all of these shares will be
eligible for immediate sale, in some instances subject to the volume
limitations of Rule 144. In addition, the underwriters of this offering can
release shares from one or more of the lock-up agreements without our approval.

Our management may not use the proceeds from this offering effectively.

Our management will have broad discretion over the use of a significant
portion of the proceeds of this offering for the foreseeable future.
Accordingly, our management may allocate the proceeds differently than
investors in this offering would have preferred, or we may fail to maximize our
returns on the proceeds of this offering.

Anti-takeover provisions in our governing documents and under applicable law
could impair the ability of a third party to take over our company.

We are subject to various legal and contractual provisions that may impede a
change in our control, including the following:

. our adoption of a stockholders' rights plan, which could result in the
significant dilution of the proportionate ownership of any person that
engages in an unsolicited attempt to take over our company; and

. the ability of our board of directors to issue additional shares of our
preferred stock, which shares may be given superior voting, liquidation,
distribution and other rights as compared to our common stock.

These provisions, as well as other provisions in our certificate of
incorporation and bylaws and under the Delaware General Corporations Law, may
make it more difficult for a third party to acquire our company, even if the
acquisition attempt was at a premium over the market value of our common stock
at that time.

14
<PAGE>

Our principal stockholders and management own a significant percentage of our
capital stock and will be able to exercise significant influence over our
affairs.

After the completion of this offering, our executive officers, directors and
principal stockholders will continue to beneficially own 22.3% of our
outstanding common stock, based upon the beneficial ownership of our common
stock as of March 1, 2000. In addition, these same persons also hold options to
acquire additional shares of our common stock, which may increase their
percentage ownership of the common stock further in the future. Accordingly,
these stockholders:

. will be able to significantly influence the composition of our board of
directors;

. will significantly influence all matters requiring stockholder approval,
including change of control transactions; and

. will continue to have significant influence over our affairs.

This concentration of ownership of our common stock could have the effect of
delaying or preventing a change of control of us or otherwise discouraging a
potential acquirer from attempting to obtain control of us. This in turn could
have a negative effect on the market price of our common stock. It could also
prevent our stockholders from realizing a premium over the market prices for
their shares of common stock.

Absence of dividends could reduce our attractiveness to you.

Some investors favor companies that pay dividends, particularly in general
downturns in the stock market. We have never declared or paid any cash
dividends on our common stock. We currently intend to retain any future
earnings for funding growth and we do not currently anticipate paying cash
dividends on our common stock in the foreseeable future. Because we may not pay
dividends, your return on this investment likely depends on your selling our
stock at a profit.

15
<PAGE>

CAUTION REGARDING RELIANCE ON FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and
uncertainties that include, but are not limited to, the following:

. failure to manage growth and expansion;

. the unsuccessfulness or regulation by the government of our research and
development;

. inability to obtain licenses for new products or technologies;

. our financial condition and results of operations;

. international sales;

. new product introduction and success; and

. volatility of our stock price.

You can identify forward-looking statements generally by the use of forward-
looking terminology such as "believes," "may," "will," "plans," "estimates,"
"continues," "intends," "expects," "should," "could," "seeks," "pro forma,"
"anticipates," or other variations, including their use in the negative, or by
discussions of strategies, opportunities, plans or intentions. You may find
these forward-looking statements under the captions "Prospectus Summary," "Risk
Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial
Condition and Result of Operations," and "Business," as well as other captions
elsewhere in this prospectus. A number of factors could cause results to differ
materially from those anticipated by these forward-looking statements,
including those discussed under "Risk Factors" and "Business."

These forward-looking statements necessarily depend on assumptions and
estimates that may prove to be incorrect. Although we believe that the
assumptions and estimates reflected in the forward-looking statements are
reasonable, we cannot guarantee that we will achieve our plans, intentions, or
expectations. The forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results to differ in
significant ways from any future results expressed or implied by the forward-
looking statements.

The cautionary statements made in this prospectus are intended to apply to
all related forward-looking statements wherever they appear in this prospectus.
We assume no obligation to update these forward-looking statements or to update
the reasons why actual results could differ materially from those anticipated
in these forward-looking statements.

16
<PAGE>

USE OF PROCEEDS

BioSource will receive an estimated $48.2 million in net proceeds from the
sale of 3,350,000 shares of common stock offered by us pursuant to this
prospectus, or $49.7 million if the underwriters' over-allotment option is
exercised in full, at an assumed public offering price of $15.50 per share,
after deducting the underwriting discounts and commissions and estimated
offering expenses. We will not receive any proceeds from the sale of common
stock by the selling stockholders.

We intend to use the net proceeds from this offering to acquire
complementary businesses, products, services and technologies; for research and
development; working capital; and other general corporate purposes. From time
to time, we evaluate potential acquisitions of complementary businesses,
products or technologies and expect that we may likely undertake one or more
such acquisitions during 2000. As of the date of this prospectus, we have no
understandings, commitments or agreements with respect to any acquisition.
Accordingly, our management will retain broad discretion as to the allocation
of the net proceeds of this offering.

Pending the uses discussed above, we intend to invest the net proceeds of
this offering in United States government short-term, interest-bearing
securities or other guaranteed obligations of the United States government.

PRICE RANGE OF COMMON STOCK

Our common stock is traded on the Nasdaq National Market under the symbol
"BIOI." The following table sets forth, for the periods indicated, the high and
low sales price per share of our common stock as reported on the Nasdaq
National Market.

<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
1998 Fiscal Year
First Quarter............................................... $ 7.00 $ 5.44
Second Quarter.............................................. 7.00 5.50
Third Quarter............................................... 6.25 3.06
Fourth Quarter.............................................. 3.88 2.41

1999 Fiscal Year
First Quarter............................................... $ 4.75 $ 2.50
Second Quarter.............................................. 5.38 3.63
Third Quarter............................................... 6.13 3.75
Fourth Quarter.............................................. 9.69 3.25

2000 Fiscal Year
First Quarter............................................... $32.00 $ 6.06
Second Quarter, through April 11, 2000...................... $17.00 $11.75
</TABLE>

On April 11, 2000, the last reported sale price of our common stock on the
Nasdaq National Market was $14.31. As of March 20, 2000, there were 8,180,352
shares of our common stock outstanding held by approximately 569 holders of
record.

17
<PAGE>

CAPITALIZATION

The following table sets forth our capitalization as of December 31, 1999 on
an actual basis and "as adjusted with full conversion" to give effect to the
following:

. the issuance of 371,300 shares of Series B Preferred Stock on February
15, 2000 and the conversion of all of those shares of Series B Preferred
Stock into 1,485,200 shares of common stock; and

. our receipt of approximately $48,219,500 in net proceeds from our
offering pursuant to this prospectus of 3,350,000 shares of common stock
at an assumed public offering price of $15.50 per share, after deducting
underwriting discounts and our estimated offering expenses.

The following table also sets forth our capitalization as of December 31,
1999 "as adjusted without full conversion," which gives effect to the same
items to which "as adjusted with full conversion" gives effect, except that
adjustment is made for the conversion of only 127,500 of the shares of Series B
Preferred Stock into 510,000 shares of common stock, with the remaining 243,800
shares of Series B Preferred Stock remaining unconverted.

We will not receive any proceeds from the sale of common stock in this
offering by the selling stockholders. The capitalization information set forth
in the table below should be read in conjunction with the more detailed
Consolidated Financial Statements of BioSource and the related notes included
in this prospectus.

<TABLE>
<CAPTION>
At December 31, 1999
-------------------------------
As
Adjusted
As Adjusted Without
With Full Full
Actual Conversion Conversion
------- ----------- ----------
(in thousands)
<S> <C> <C> <C>
Long-term liabilities, less current portion.... $11,459 $ -- $ --
------- ------- -------
Stockholders' equity:
Preferred Stock, $0.001 par value; 1,000,000
shares authorized; no shares issued or
outstanding, actual; 371,300 shares as
adjusted with full conversion; and 127,500
shares, as adjusted without full
conversion.................................. -- -- 4,318
Common Stock, $0.001 par value; 20,000,000
shares authorized; 7,711,716 shares issued
and 7,425,716 shares outstanding, actual;
12,546,916 shares issued and 12,260,916
shares outstanding, as adjusted with full
conversion; and 11,571,716, shares issued
and 11,285,716 shares outstanding, as
adjusted without full conversion............ 7 12 11
Additional paid-in capital................... 22,026 79,574 75,257
Retained earnings............................ 948 -- --
Accumulated other comprehensive loss......... (1,559) (1,559) (1,559)
------- ------- -------
Total stockholders' equity..................... 21,422 78,027 78,027
------- ------- -------
Total capitalization........................... $32,881 $78,027 $78,027
======= ======= =======
</TABLE>

The number of outstanding shares as of December 31, 1999 excludes:

. 1,993,925 shares of common stock issuable upon exercise of outstanding
stock options with weighted average exercise prices ranging from
approximately $3.24 to $3.48 per share; and

. warrants to purchase 218,100 shares of common stock, exercisable at
prices ranging from $7.50 to $11.10 per share.

In addition, on February 15, 2000, we issued warrants to purchase a total of
1,287,000 shares of our common stock, exercisable at $7.77 per share.

18
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected data presented below under the captions "Consolidated Statement
of Operations Data" and "Consolidated Balance Sheet Data" for, and as of the
end of, each of the years in the five-year period ended December 31, 1999, are
derived from our consolidated financial statements that have been audited by
KPMG LLP, independent certified public accountants. The consolidated financial
statements as of December 31, 1999 and 1998, and for each of the years in the
three-year period ended December 31, 1999, and the report on these statements,
are included in this prospectus. The consolidated financial statements as of
December 31, 1995, 1996 and 1997, and for each of the years in the two-year
period ended December 31, 1996 are not included in this prospectus. You should
read the selected consolidated financial data together with our historical
financial statements and related notes to our audited reports, as well as the
section included in this prospectus entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
Years ended December 31,
----------------------------------------
1995 1996 1997 1998 1999
------ ------- ------- ------- -------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Consolidated Statement of Operations
Data:
Net sales............................ $8,608 $15,913 $20,572 $21,859 $29,257
Cost of sales...................... 2,996 5,568 6,930 13,189 11,071
------ ------- ------- ------- -------
Gross profit......................... 5,612 10,345 13,642 8,670 18,186
Operating expenses:
Research and development........... 1,074 1,421 2,078 2,648 3,315
Sales and marketing................ 1,290 2,762 4,043 4,338 4,737
General and administrative......... 1,633 2,703 3,552 4,469 4,460
Purchased in-process technology.... -- -- -- 4,222 --
Amortization of intangibles........ -- -- 31 95 1,061
------ ------- ------- ------- -------
Operating income (loss).............. 1,615 3,460 3,938 (7,102) 4,613
Interest and other income
(expense), net.................... (4) 3 708 432 (1,016)
------ ------- ------- ------- -------
Income (loss) before income taxes.... 1,611 3,463 4,646 (6,670) 3,597
Income tax expense (benefit)....... 451 696 1,460 (1,535) 20
------ ------- ------- ------- -------
Net income (loss).................... $1,160 $ 2,767 $ 3,186 $(5,136) $ 3,577
====== ======= ======= ======= =======
Net income (loss) per share:
Basic.............................. $ 0.20 $ 0.38 $ 0.38 $ (0.68) $ 0.49
Diluted............................ $ 0.20 $ 0.35 $ 0.36 $ (0.68) $ 0.46
Weighted average shares outstanding:
Basic.............................. 5,827 7,272 8,318 7,509 7,235
Diluted............................ 5,946 8,009 8,965 7,509 7,833
<CAPTION>
As of December 31,
----------------------------------------
1995 1996 1997 1998 1999
------ ------- ------- ------- -------
(in thousands)
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet Data:
Current assets....................... $6,317 $22,407 $27,636 $18,278 $18,325
Total assets......................... 7,388 33,795 33,157 41,400 40,222
Current liabilities.................. 1,321 4,320 3,206 10,039 7,340
Long term debt, less current
portion............................. 64 1,314 1,292 13,666 11,459
Total stockholders' equity........... 5,897 28,161 28,658 17,696 21,422
</TABLE>

19
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements of BioSource and the related notes included
elsewhere in this prospectus. Our discussion contains forward-looking
statements based upon current expectations that involve risks and
uncertainties, such as our plans, objectives, expectations and intentions. Our
actual results and the timing of events could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including those set forth under "Risk Factors," "Business" and elsewhere in
this prospectus.

Overview

BioSource was originally incorporated as a California corporation in October
1989, and was reincorporated as a Delaware corporation in May 1993 in
connection with the acquisition of TAGO Immunologicals, Inc., a manufacturer of
immunological reagents derived from antibodies produced in goats and other
animals. In November 1995, we acquired Keystone Laboratories, Inc., a
manufacturer of oligonucleotides. In June 1996, we acquired assets and assumed
selected liabilities of Medgenix Diagnostics, S.A. located in Fleurus, Belgium.
The Medgenix assets consisted of diagnostic and research assay kits, and
included manufacturing and distribution facilities, research and development
laboratories, customer accounts and an existing employee base. In December
1998, BioSource acquired Quality Controlled BioChemicals, Inc., a manufacturer
of peptides and antibodies. In December 1998, we also acquired substantially
all the assets and selected liabilities of Biofluids, Inc., a manufacturer of
serum, buffers and media.

In 1998, we incurred a net loss of $5,135,800. The loss was primarily the
result of charges of approximately (1) $4,966,000 related to the establishment
of valuation reserves for our antibody inventories, and the reduction of our
inventory value for Enzyme-Linked ImmunoSorbent Assay, or ELISA, test kits and
products manufactured in Europe and (2) $4,222,000 related to purchased in-
process technology in connection with our acquisition of QCB in December 1998.
As a result of the 1998 net loss, we had net operating losses that benefited
our income tax provision in 1999. All of our net operating losses have been
recognized as of December 31, 1999.

We currently manufacture products for inventory and ship products shortly
after receipt of orders and anticipate that we will continue to do so in the
future. Accordingly, we have not developed a significant backlog of products
and do not anticipate we will develop a material backlog of products in the
future.

Consolidated Results of Operations

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

Net sales. Net sales were $29,257,000 in 1999 compared to $21,858,600 in
1998, an increase of $7,398,400 or 33.8%. $5,501,200 of the increase is
attributable to the revenues generated from the QCB and Biofluids acquisitions
in December 1998. The remaining increase is related to the increase in the
volume of sales of assay kits and oligonucleotides. Foreign sales represented
47.0% of total sales in 1999 and 59.5% of total sales in 1998. Net sales in the
United States were $15,518,000 in 1999 compared to $8,844,100 in 1998, an
increase of $6,673,900 or 75.5%. $5,501,200 of the increase is attributable to
the revenues generated

20
<PAGE>

from the QCB and Biofluids acquisitions in December 1998. The additional
increase was generated primarily from the increase in the sales of assay kits
and oligonucleotides. Net sales to Japan were $2,790,000 in 1999, an increase
of $155,300, or 5.9%, over the prior year. European sales were $10,139,400 in
1999, an increase of $447,000 or 4.6%. This increase was primarily due to an
increase in sales of assay kits.

Gross profit. Gross profit in 1999 was $18,186,500, or 62.2% of net sales,
compared to $8,670,000 or 39.7% of sales for 1998. The increased gross margin
is primarily the result of a 1998 charge of approximately $4,966,000 related to
(1) the establishment in 1998 of valuation reserves for antibody inventories
and (2) the reduction of inventory value for ELISA test kits and products
manufactured in Europe.

Research and development. Research and development expense in 1999 was
$3,315,400 and in 1998 was $2,648,300. Increased costs in domestic expenditures
of approximately $1,002,000 were due to the additional expenditures of our QCB
subsidiary acquired in December 1998. These costs were offset by a reduction of
$297,000 in our European expenses related to staff and other cost reductions in
Europe.

Purchased in-process technology. The purchased in-process technology charge
in 1998 of $4,222,000 relates to the portion of the QCB purchase price that was
allocated to products in development which had not yet reached technological
feasibility as of the acquisition date and did not have alternative future
uses. In accordance with applicable accounting rules, purchased in-process
technology is required to be expensed. You should read Note 2 of the Notes to
Consolidated Financial Statements for further discussion on this item.

Sales and marketing. Sales and marketing expense was $4,736,900 in 1999
compared to $4,337,500 in 1998. The increased sales and marketing expense of
$399,400, or 9.2%, is primarily due to additional costs associated with sales
and marketing activities of our QCB subsidiary and Biofluids division acquired
in December 1998 as well as overall increased advertising and other marketing
programs.

General and administrative. General and administrative expenses were
$4,460,300 in 1999 and $4,468,900 in 1998. General and administrative expenses
decreased as a result of a 1998 settlement of a legal claim by the former
landlord of our Belgium facility and costs associated with the transition and
relocation of our Belgium subsidiary, offset by an increase of additional costs
related to the acquisitions of QCB and Biofluids in December 1998.

Amortization of intangibles. Amortization of intangible assets was
$1,060,700 in 1999 and $95,100 in 1998. The increase was due to the full year
amortization of intangible assets acquired in connection with the acquisitions
of QCB and Biofluids in December 1998.

Interest income and expense. Interest expense of $1,367,300 in 1999 and
$215,900 in 1998 was related to the interest expense on the note used to
finance the acquisition of QCB and Biofluids in December 1998. Interest income
of $397,200 in 1999 and $513,400 in 1998 was derived from interest income on
invested cash.

Income tax expense (benefit). The income tax expense in 1999 was $19,600
while the income tax benefit in 1998 was $1,534,600. The effective income tax
rate of 0.5% for 1999 reflects the benefit of the utilization of all prior net
operating losses in our Belgium and other European subsidiaries. The effective
rate of 23.0% for 1998 reflects non-deductible foreign losses of approximately
$923,400.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

Net sales. Net sales were $21,858,600 in 1998, an increase of $1,286,800 or
6.3% over 1997. Net sales in the United States were $8,844,100 in 1998, an
increase of $1,392,000, or 18.7%, over 1997. The increase in sales was driven
by increases in sales of assays and oligonucleotides. Net sales to European
customers were $9,692,400 in 1998, a decrease of $292,200, or 2.9%, over 1997.
The decline in sales was driven primarily by reduced sales of radioimmuno assay
kits. These kits were facing strong competition from non-radioactive assays and
as a result we were realizing a decline in revenue and market share. Net sales
in Japan

21
<PAGE>

were $2,634,700 in 1998, an increase of $181,300, or 7.4%, over the prior year.
The increase in sales was driven primarily by increases in sales of our ELISA
kits to both new and existing Japanese customers. However, Japanese sales in
the December 1998 quarter were affected by the adverse economic climate in
Asia. A large portion of our sales are derived from foreign sales, representing
59.5% of our net sales in 1998 and 63.8% of our net sales in 1997. Although the
percentage of domestic sales to total net sales has remained relatively
constant, domestic sales volume has increased by 18.7% in 1998 and 9.7% in 1997
as compared to the prior year.

Gross profit. Gross profit was $8,670,000, or 39.7%, in 1998 and
$13,641,700, or 66.3%, in 1997. The decline in gross profit of $4,971,700, or
36.4%, in 1998 as compared to 1997 was primarily the result of charges of
approximately $4,966,000 related to (1) the establishment of a valuation
reserve for our antibody inventory and (2) the reduction of inventory value for
ELISA test kits and products manufactured in Europe. Our strategy is to
maintain a broad base of products available for sale to our customers. With
regard to the antibody product inventory, we offer over 1,000 antibodies for
sale and find it to be more cost efficient to produce large quantities of the
antibody product during each production run. However, this inventory turns
slowly. Attempts have been made to reduce the quantity of antibody inventory
maintained in stock in order to increase the inventory turnover. However, this
approach did not allow us to maintain proper strategic levels of inventory
necessary to service our customer needs. As a result, in order to properly
account for excess or slow moving inventory resulting from large production
runs, the appropriate financial management policy with regard to the antibody
inventory was determined to be one of expensing the cost of production as
incurred as a component of cost of sales. Also contributing to the reduced
gross profit is an increased percentage of sales of lower profit
oligonucleotides as compared to the prior year and costs relating to the sale
of custom antibodies, custom peptides, sera, buffers and media resulting from
our acquisitions of QCB and Biofluids in December 1998.

Research and development. Research and development expense was $2,648,300 in
1998 and $2,077,700 in 1997. The increased research and development expense of
$570,600 in 1998 as compared to 1997 is primarily due to increased staffing
costs, expenditures related to the development of new product lines and
additions to current product lines, a reduction in grant funds received in the
current fiscal year and research and development expenditures related to QCB
for the month of December 1998.

Purchased in-process technology. Purchased in-process technology was
$4,222,000 in 1998 as compared to zero in 1997. The purchased in-process
technology charge in 1998 relates to the portion of the QCB purchase price that
was allocated to products in development which had not yet reached
technological feasibility as of the acquisition date and did not have
alternative future uses. In accordance with applicable accounting rules,
purchased in-process technology is required to be expensed. You should read
Note 2 of the Notes to Consolidated Financial Statements for further discussion
on this item.

Sales and marketing. Sales and marketing expenses were $4,337,500 in 1998
and $4,043,000 in 1997. The increased sales and marketing expense of $294,500,
or 7.3%, in 1998 as compared to 1997 is primarily due to increased staffing
costs, costs related to the repatriation of a United States employee that had
been assigned to an overseas position and increased advertising and other
marketing programs.

General and administrative. General and administrative expenses were
$4,468,900 in 1998 and $3,552,000 in 1997. The increased general and
administrative expense of $916,900, or 25.8%, in 1998 as compared to 1997 is
primarily due to increased staffing costs, the settlement of a claim by our
former landlord of our Belgian facility, costs associated with the closure of
overseas offices, costs related to the repatriation of a United States employee
that had been assigned to an overseas position and costs related to operating
QCB and Biofluids for the period from the acquisition dates to December 31,
1998. The increased general and administrative expense of $849,500, or 31.4%,
in 1997 as compared to 1996 is primarily due to incremental costs associated
with the acquisition of BioSource Europe. Additionally, costs increased in the
United States predominantly due to increased staffing costs required to support
BioSource's domestic growth.

22
<PAGE>

Amortization of intangible assets. Amortization of intangible assets was
$95,100 in 1998 and $30,700 in 1997. The increase of $64,400 was due to the
amortization of intangible assets acquired in conjunction with the acquisitions
of QCB and Biofluids in December 1998.

Interest income and expense. Interest expense of $215,900 in 1998 was
related to the interest expense on the note used to finance the acquisition of
QCB and Biofluids. Interest expense of $133,000 in 1997 was related to interest
expense on the notes used to finance the purchase of our current facilities in
Camarillo, California. Interest income of $513,400 in 1998 and $760,400 in 1997
was derived from interest income on invested cash.

Income tax expense (benefit). Our income tax benefit for the year ended
December 31, 1998 was $1,534,600. Our income tax expense for the year ended
December 31, 1997 was $1,460,000. The income tax benefit recorded in 1998 is
primarily due to the inventory valuation reserves and purchased in-process
technology charges recorded in 1998.

Liquidity and Capital Resources

Cash and cash equivalents as of December 31, 1999 of $4,644,500 decreased by
$2,432,400, or 34%, from $7,076,900 at December 31, 1998. The decrease in cash
resulted primarily from the use of cash to reduce outstanding borrowings.
Working capital, which is the excess of current assets over current
liabilities, at December 31, 1999, was $10,984,900 as compared to $8,239,400 at
December 31, 1998 representing an increase of $2,745,500 or 33%. BioSource's
policy is to maintain liquidity in its investments to provide working capital
and have the ability to react to future potential long-term investment
opportunities in complementary businesses, products and technologies.

Capital expenditures of $1,077,000 for the year ended December 31, 1999 were
primarily for the purchases of laboratory, manufacturing and computer
equipment. The funding for these expenditures was obtained from our working
capital.

In April 1997, the Board of Directors authorized us to repurchase up to
200,000 shares of our outstanding common stock at market price. In December
1997, the Board of Directors authorized us to repurchase up to 1,000,000
additional shares of our outstanding common stock at market price and in August
1998 we were authorized to repurchase up to an additional 300,000 shares of our
outstanding common stock at market price. No shares were repurchased during the
year ended December 31, 1999 or for the period from January 1, 2000 through
March 15, 2000. As of December 31, 1999, we have repurchased a total of
1,279,500 shares of our common stock for $8,054,300, an average price of $6.29
per share, since the inception of the repurchase program in April 1997.

In December 1998, we executed a loan agreement with Union Bank of
California, N.A. and borrowed $14,000,000 which was used to finance the
acquisitions of the stock of QCB and all of the assets and selected liabilities
of Biofluids. As of December 31, 1999, the balance was $12,000,000. On February
16, 2000, we repaid $8,100,000 of our borrowings under the loan agreement with
the proceeds of our Series B Preferred Stock and warrants financing. On March
11, 2000, we amended this loan agreement to convert our balance of $3,400,000
to a line of credit and on March 13, 2000, we repaid $3,000,000 of the line of
credit. Our line of credit provides for borrowings of up to $3,400,000 and
expires on February 26, 2001. Interest on the line of credit is payable monthly
at LIBOR plus 2%. Covenants in the loan agreement require us to maintain a
minimum ratio of total liabilities to tangible net assets, achieve minimum net
profit levels, and comply with specified ratios of earnings before interest,
taxes, depreciation and amortization to debt service costs. We are also
required to comply with various non-financial covenants. As of the date of this
prospectus, we were in compliance with regard to these covenants.

QCB had six loans outstanding aggregating $1,394,700 with MetroWest Bank
which we assumed upon completion of the acquisition of QCB in December 1998.
These loans were refinanced with Union Bank of California, N.A in January 2000.
As of January 20, 2000, we had completely repaid each of these loans with the
proceeds received from the sale of warrants.

23
<PAGE>

On February 15, 2000, we issued 371,300 shares of our Series B Preferred
Stock with an initial aggregate liquidation value of $9,000,300. The Series B
Preferred Stock is initially convertible into 1,485,200 shares of our common
stock at an effective price of $6.06 per share of common stock. The Series B
Preferred Stock will be entitled to receive in-kind dividends at a rate of 8%
of the original issue price. Unless all dividends on the outstanding shares of
Series B Preferred Stock have been paid, no dividends or other distributions
shall be paid to common stockholders. The Series B Preferred Stock has a
liquidation preference to the common stock. This preferred stock also is
automatically convertible upon any of the following events: (1) a public
offering of common stock of not less than $15 per share, which results in
proceeds to us of at least $40,000,000 before commissions or discounts, (2) the
date we specify to the holders, if the last reported sale price of our stock is
above $20 per share for 20 consecutive trading days on the Nasdaq National
Market, or (3) the holders of greater than 50% of the shares of the Series B
inform us in writing of their desire to convert the shares. Holders of Series B
Preferred Stock have the right to require us to redeem the Series B Preferred
Stock at the original liquidation value plus accrued dividends after February
15, 2004, or as early as February 15, 2001, if various stock price thresholds
are not met.

In connection with the issuance of Series B Preferred Stock, the holders
received detachable stock purchase warrants. The warrants are exercisable for
1,287,000 shares of common stock at an exercise price of $7.77 per share. We
allocated the net proceeds of $8,385,000 based on the relative fair value of
the warrants and the Series B Preferred Stock. The book value of the Series B
Preferred Stock of $5,581,600 will accrete to its liquidation value immediately
by $995,100 related to the beneficial conversion feature, then through February
2004 or earlier upon accelerated conversion, under the interest method. This
accretion will not have an effect on net income, but will reduce the income
available to common stockholders used to calculate basic earnings per share.

On March 8, 2000, we entered into a lease for a new facility in Camarillo,
California. The lease will commence on May 1, 2000, and expires on June 30,
2005, with the option to continue the lease for two additional five-year terms.
Annual lease payments in the initial five-year period ended December 31, 2005,
range from $342,000 at inception to $411,000 at termination.

We currently estimate that we will use the net proceeds from this offering
to acquire complementary businesses, products, services and technologies; for
research and development; working capital; and other general corporate
purposes. From time to time, we evaluate potential acquisitions of
complementary businesses, products or technologies and expect that we may
likely undertake one or more such acquisitions during 2000. As of the date of
this prospectus, we have no understandings, commitments or agreements with
respect to any acquisition. Accordingly, our management will retain broad
discretion as to the allocation of the net proceeds of this offering. The
amount and timing of these expenditures will vary depending on a number of
factors, including the availability of potential acquisitions. We believe that
the net proceeds from this offering, together with our current cash, cash
equivalents and short-term investments will be sufficient to meet our
anticipated cash needs for working capital and capital expenditures for at
least the next twelve months.

Year 2000

The following statements constitute a "Year 2000 Readiness Disclosure" under
the Year 2000 Information and Readiness Disclosure Act.

Prior to the end of 1999, we completed our systems assessment and installed
a new version of our business system software that is purported to be Year 2000
compliant by the software vendor. We have implemented the software as well as
some other less significant software, and fully tested the software to ensure
Year 2000 compliance. Software for one piece of laboratory equipment was
determined to require an upgrade in order to be Year 2000 compliant which was
subsequently implemented.

To date, we have not experienced any material failures of any of our systems
related to the failure of Year 2000 compliance. In addition, to date, we have
not been made aware of any Year 2000 compliance failures involving our
customers and suppliers.

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<PAGE>

To date, we have spent an immaterial amount on the compliance program, and
we do not expect to incur any material additional amounts. The costs discussed
above do not include our internal costs, principally the payroll costs for
those persons working on the project, which costs we do not track.

Recently Issued Accounting Standards

SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
is effective for fiscal years beginning after June 15, 2000. SFAS No. 133
addresses the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and hedging activities. The
Statement standardizes the accounting for derivative instruments by requiring
that an entity recognize those items as assets or liabilities in the statement
of financial position and measure them at fair value. We are evaluating the
Statement's provisions to determine the effect on our financial statements. In
addition, the impact of SFAS No. 133 will depend on the terms of future
transactions.

Disclosure of Market Risk

We conduct business in various foreign currencies, including Belgian francs,
British pounds and German marks, and are therefore subject to the transaction
exposures that arise from foreign exchange rate movements between the dates
that foreign currency transactions are initiated and the dates that they are
converted. We are also subject to exchange rate exposures arising from the
translation and consolidation of the financial results of our foreign
subsidiaries. Although a significant portion of the foreign currencies in which
we conduct our business is currently, or is anticipated in the future to be,
denominated in Euros as a result of the European Monetary Union, we are not
certain about the effect of the Euro on our business, financial condition or
results of operations. There can be no assurance that actions taken to manage
our exchange rate exposures will continue to be successful or that future
changes in currency exchange rates will not have a material impact on our
future cash collections and operating results. We do not currently hedge either
our translation risk or our economic risk associated with the exchange of
foreign currencies into U.S. dollars.

Our exposure to market risks for changes in interest rates relates primarily
to outstanding commercial debt. Due to the recent paydown of our commercial
debt, we anticipate no material market risk exposure for changes in interest
rates. Accordingly, we have not included quantitative tabular disclosures.

25
<PAGE>

BUSINESS

Overview

We develop, manufacture, market and distribute products used worldwide in
biomedical research that are instrumental in the development of new drug
therapies and medical diagnostic methods. Our products enable scientists and
biomedical researchers to better understand biochemistry, immunology and cell
biology of the human body, as well as disease processes. We offer over 3,200
products that we group into the following product lines: Assays; Antibodies;
Bioactive Proteins and Peptides; Oligonucleotides; and Serum, Buffers and
Media. Through acquisitions and internal growth, we believe we have grown to
include a unique combination of technological, production, and research and
development skills resulting in a full spectrum of products and services for
the worldwide pharmaceutical and biotechnology industries.

We believe we have a strong scientific research staff, a broad product line
and an established trade name, giving us a strong presence in the biomedical
research market. We intend to continue our focus on new product development,
and to aggressively seek to acquire businesses, products and technologies
complementary to our current business.

Industry Overview

Biomedical researchers around the world are constantly in search of
specialty research products and services, which are necessary to conduct both
basic and clinical research. This research is conducted in settings that range
from university and medical school laboratories to pharmaceutical and
biotechnology research and development groups. The success of this type of
research depends upon the availability of high quality biological reagents and
custom services, including the types of assay kits, antibodies, biologically
active proteins, molecular probes and serums that we develop, manufacture and
sell.

Strategy

Our goal is to capitalize on the growth of the biotechnology industry by
creating research tools and test kits that are not subject to the volatility
inherent in developing pharmaceuticals. Our strategy includes the following
elements:

Focus on the Strategic Direction of Biomedical Research. Our continued
success depends, in part, on our strong commitment to use innovative
technologies and research techniques to service the growing research product
needs. Academic institutions, as well as pharmaceutical and biotechnology
companies, are increasingly relying on biomedical research companies such as
ours to provide innovative tools to further their basic research and screen
their drug candidates. We believe we are uniquely positioned to have a strong
impact on the research community with our enabling user-friendly technologies.

Commitment to Product Development. We offer over 3,200 products in five
major product lines. We believe our industry is diverse and fragmented, and by
offering a broad range of products we more fully address the needs of
researchers, thereby offering them the ability to look to us first to satisfy
many of their needs. We focus on the introduction of new products to meet the
needs of our customers and the rapid changes that are taking place in
biomedical research. For example, in 1999, we introduced over 250 new products
that targeted the growing cellular biology research area.

26
<PAGE>

Create Superior Value. We seek to create superior value for our customers.
For instance, our staff have written many application booklets that provide an
overview of the technology we provide in various areas, the types of
performance that can be expected using our products and troubleshooting
guidelines. Our communications with customers are highly technical, fostering
the understanding that our products are from scientists to scientists. We also
believe we offer greater affordability and convenience to our customers than do
our competitors.

Acquire Complementary Businesses, Products and Technologies. We continuously
evaluate potential acquisition candidates for complementary products and
businesses and have successfully completed five acquisitions in the last seven
years, which include: TAGOImmunologics, Medgenix, Keystone Laboratories,
Biofluids and QCB.

Provide Superior Customer Service. We seek to create a team spirit among all
of our employees, fostering awareness of our objectives and strategies at all
levels within our company. We believe this creates loyalty and pride, which
translates into greater product quality and enhanced customer service.

Products

We offer over 3,200 different products, which we group into the following
product lines:

. assays

. antibodies

. bioactive proteins and peptides

. oligonucleotides

. serum, buffers and media

Assays

Enzyme-Linked ImmunoSorbent Assay test kits. We have developed methodologies
for the measurement of cytokines and chemokines in blood or other biological
samples. ELISA test kits are a combination of cytokines, their antibodies and
other chemical reagents, and are used to measure the presence or quantity of a
particular bioactive protein in serum, plasma or other biological sample. The
quantitation of these cytokines and chemokines has been shown to be an
excellent way for scientists to determine the status of the immune system.
Since many of the current targets of pharmaceutical intervention are designed
to modulate the immune system, using these quantitation markers as a means for
gauging the effectiveness of treatment is becoming a key monitor.

In a typical ELISA test kit, an antibody is immobilized or "bound" on a
microtiter well of the kit's test plate. A sample containing the antigen that
is to be measured is added by the researcher and allowed to react with the
bound antibody. After the well is washed, a second antibody with a specific
enzymatic tag is added and allowed to react with the bound antigen. After
washing away any remaining free antibody, the researcher adds a substrate that
produces a colored reaction. The amount of color is proportional and thereby
indicates the amount of antigen present, which can be measured even in minute
concentrations, using common laboratory instruments. This method of
quantitation of these antigens has become an integral tool both in research and
diagnostic applications as it provides a relatively inexpensive, accurate and
rapid method for the evaluation of immune status.

Our ELISA tests produce results in a few hours, compared to days or even
weeks with bioassays. We offer kits for human, mouse, rat, monkey and swine
proteins. The diversity of species is important to allow investigators to
establish numerous measurements in pre-clinical animal model systems. We offer
over 70 types of ELISA kits and we believe we are the leader in sales of rat,
monkey and swine cytokine ELISA kits. Detection of fluctuations in cytokine
levels by ELISA tests, whether in an in vitro cell culture experiment of a new
drug or in a patient's serum, provide researchers and scientists with valuable
information in understanding disease progression, therapy and diagnosis.

27
<PAGE>

Of the more than 70 kits we offer, the following table illustrates a few of
the more common applications of our ELISA test kits:

<TABLE>
<CAPTION>
Test Kit Characteristics/Application
-------- ---------------------------
<C> <S>
MIP-4 This kit tests for the presence of human macrophage inflammatory
protein-4, a chemokine which is an important regulator of white
blood cell migration to areas of inflammation and has been
associated with human neurodegenerative diseases, such as
Alzheimer's Disease, autoimmune diseases and infections. MIP-4 was
discovered by a major pharmaceutical company in connection with
its human genome research. From this discovery, we were able to
develop antibodies and create a kit to measure the presence of
MIP-4.

Eotaxin This test kit measures the chemokine, Eotaxin, which is an
important molecule in the origin of allergic responses. We
developed this kit in response to the demand from researchers
studying the physiology of white blood cells. Our kits are used in
the process of drug development to determine the effect of the
target drug on white blood cell function.

Beta amyloid This test kit measures for beta amyloid, an important molecule in
the study of Alzheimer's Disease.
</TABLE>

Radioimmuno assays. We produce and market RIAs, which are used
internationally in clinical laboratories for the measurement of hormones and
proteins important in growth, reproductive and thyroid disease. These assays
utilize radioisotopically labeled molecules to compete with non-isotopically
labeled molecules for sites on known antibody concentrations. RIA is a mature
technology used primarily in European and other foreign countries and is not
widely used in the United States.

Other assays. We have combined our oligonucleotide and ELISA technologies to
develop a portfolio of other assay kits that measure the quantity of messenger
RNA, the type of RNA that serves as a template for protein synthesis, of
various cytokines in blood, cultured cells or tissues. Our molecular analysis
kit product line permits detection of the individual genes, and quantitates the
amount of the gene that encodes for a specific protein. We also have developed
kits that allow researchers to measure multiple genes at the same time from a
single sample.

Antibodies

Antibodies are used as detector systems in the research of normal and
abnormal proteins. Antibodies are proteins generated by immune cells in
response to foreign substances, which are called antigens. Antibodies have
specific amino acid sequences which cause them to interact only with the
antigen that induced their creation. Antibodies circulate in the blood and
assist the body's immune system by searching out and neutralizing or
eliminating antigens. Antibodies are used by researchers in a variety of
applications, including neutralization studies in bioassay systems, as capture
and detection molecules for protein quantitation and for cellular
differentiation. Antibodies used in research are generally produced by
injecting an antigen into animals, which cause the animals' immune system to
produce an antibody specific to that antigen.

Our TAGOImmunologics product line provides researchers and biotechnology
companies with a broad array of secondary antibodies. These products are used
in the development of analytical signals in various assays. In addition, other
companies use our TAGO products as a component of their test kits.

We also have developed a significant catalog of innovative tools which
enable customers to more readily understand the complex signals which control
cellular processes. Many of these tools are antibodies that recognize specific,
activated or inactivated forms of proteins containing one or more molecules of
phosphate

28
<PAGE>

at specific sites. Such an addition of phosphate molecules, which is referred
to as phosphorylation, or removal of phosphate molecules, which is referred to
as dephosphorylation, control most of the signaling within and between cells.
Diseases such as cancer, heart disease and Alzheimer's have been shown to be at
least in part due to the malfunctioning of key molecules within cells, in many
cases due to alterations in their activity through altered phosphorylation.

We offer over 2,000 antibody products. The following table illustrates some
of the uses for the antibodies we offer:

<TABLE>
<CAPTION>
Uses Description
---- -----------
<C> <S>
Flow Cytometry In order to identify specific cell types by the
nature of the antigens expressed on their surface,
antibodies are bound to cells and visualized by
labeling the antibody molecules with a fluorescent
dye or "fluorochrome." The result is examined with
an instrument known as a flow cytometer.

ELISA Test Kits Antibodies are used in our ELISA test kits to detect
and measure proteins in biological fluids. An
antibody coupled with an enzyme reacts with a
colorless substrate in the presence of a sample
containing the antigen of interest to generate a
colored reaction product. The color produced is
proportional to, and thereby indicates the amount
of, antigen present in the sample.

High Throughput Screening High throughput screening permits the researcher to
test thousands of drug candidates in a short period
of time for their effect on target molecules. In
order to be used in this manner, we conjugate our
antibodies to different dyes or enzymes.

Immunoblotting Immunoblotting uses antibodies to identify a
specific protein in a complex mixture. In this
process, a protein of interest is separated by
molecular weight using gel electrophoresis. A
specific antibody is then passed over the mixture,
and any protein that binds to the antibody is
visibly detected.
</TABLE>

The research conducted by our customers often requires that we manufacture
unique, specific peptides or antibodies for custom research projects.
Previously unidentified genes and proteins are being identified at a rapid
rate, which often precedes the introduction of catalog offerings by many months
to years. Through our QCB subsidiary we engage in the manufacture of these
custom peptides and antibodies thus allowing customers to perform timely
research on these new or proprietary targets. The capabilities to provide
custom peptides and antibodies as well as innovative catalog products further
strengthens our strategic relationships with our customers and has led to the
development of new catalog products and expanded sales opportunities.

Bioactive Proteins and Peptides

Proteins, which are chains of amino acids in particular sequences, and their
interactions are responsible for all of the biochemical and physical properties
of a cell, as well as variations among different types of cells. Proteins take
various forms, including enzymes, hormones, antibodies, receptors, cytokines
and chemokines. Proteins are ideal for use in basic research, drug discovery,
enzymology, high throughput screening, in vivo studies, x-ray crystallography
or as antigens for antibody production. Our primary protein products are
cytokines and chemokines, which are regulatory molecules that control growth
and differentiation of cells.

Cytokines. The development of an effective immune response involves complex
cell-to-cell communications, which are mediated by a group of small hormone-
like soluble secreted proteins collectively called cytokines. Cytokines, like
growth factors, interact with specialized target receptors on the surface of
the cells and stimulate a chain of secondary messengers leading to a biological
response. These responses

29
<PAGE>

result from changes in both the molecular capabilities and behaviors of cells.
For example, cytokines can activate cells to recognize and eliminate harmful
bacteria and viruses. They carry vital signals to the cell's genetic machinery
that can trigger it to grow or stop growing. Cytokines can also signal a cell
to differentiate, that is, to acquire the features necessary for it to take on
more specialized tasks. Specific cytokines play a key role in stimulating cells
surrounding a wound to grow and divide and also in attracting migratory cells
to the site. Some cytokines have a regulatory function, and other cytokines
exert direct effects of their own.

Cytokines are extracted from natural sources, such as human and animal
platelets, white blood cells and lymphatic cells, or are produced through
genetic engineering, also known as recombinant DNA technology. Cytokines
coordinate and orchestrate the proper functioning of the immune system. In
addition to producing the human cytokines, we also produce the equivalent
proteins from mice, rats, swine and monkeys. Many cytokines are being
investigated for their ability to activate or suppress host immunity. Cytokines
and other similar growth factors and adhesion molecules are instrumental in the
body's defense against cancer, AIDS and other life-threatening disorders.

Chemokines. Chemokines are specific proteins that regulate the recruitment
and activation of white blood cells and other sites of inflammation. Chemokines
function by binding to receptors on the surface of affected cells. Tremendous
interest in chemokines exists due to recent studies linking chemokines and
their receptors to the development of HIV.

Other Proteins. To date we have focused on cytokines, chemokines and growth
factors; however, with the progress of the human genome project, protein
discoveries will expand beyond these proteins. Signal transduction proteins, of
which it is hypothesized that only a fraction have been discovered, will be
important in high throughput screens of drug candidates since the irregular
functioning of these proteins is involved in substantially all diseases.
Additionally, researchers will want reagents to the nuclear proteins,
cytoskeletal proteins and others that will be discovered to study their role in
various diseases. Reagents to these markers can be created using our core
competencies.

We offer over 70 protein products. The following table shows examples of
different cytokines we produce and use:

<TABLE>
<CAPTION>
Cytokine Research Uses
-------- -------------
<C> <S>
IL-4 Interleukin 4 is a protein that has been observed to have direct
growth-suppressive activity on a variety of malignancies. IL-4 is
used in cancer research.

VEGF Vascular Endothelial Growth Factor regulates angiogenesis, the
process of new blood vessel growth. VEGF is used in drug development,
cancer research and as a growth factor for endothelial cells.

TNF Tumor Necrosis Factor is a protein that plays a vital role in the
regulation of the immune system. TNF is used to study immunological
processes, cancer, inflammation and septic shock.
</TABLE>

Peptides. Bioactive peptides are subsections of proteins or small proteins
that are synthetically created. These peptides represent the active or
inhibitory site of a particular protein, and are used to study the activity of
various proteins. Some bioactive peptides, such as beta amyloid peptides, have
been shown to play a major role in the development of Alzheimer's Disease. We
sell a significant amount of beta amyloid peptides as well as many other
bioactive peptides through our QCB subsidiary.

Oligonucleotides

The production of oligonucleotides is a custom service we provide for
researchers engaged in molecular biology. An oligonucleotide is a synthesized
polymer made up of the same building blocks that form DNA. Synthetic
oligonucleotides have been used in molecular biology for over twenty years,
essentially as

30
<PAGE>

templates for nucleic acid and protein synthesis, and more recently, as the
therapeutic agents for the inhibition of gene expression or as a diagnostic
agent to identify disease. DNA is used by almost every discipline in biomedical
research in both academic and commercial areas, including molecular biology and
cell biology departments of major universities and biomedical companies
developing gene therapy products. These researchers use synthetic
oligonucleotides to determine the exact sequence of a gene, or to perform
experiments leading to the potential development of pharmaceutical drugs. The
primary use of the oligonucleotides we develop and sell are for DNA sequencing
and polymerase chain reaction, or PCR, priming.

In DNA sequencing, we synthesize oligonucleotides pursuant to customer
specifications, which they use to initiate a process of sequencing a DNA
strand. DNA sequencing is used in a wide range of biomedical research
applications to identify the makeup of particular strands of DNA.

In PCR priming, our synthesized oligonucleotides are used by our customers
in combination with other reagents to amplify a specific genetic sequence
isolated from a cell sample. After PCR amplification, gel electrophoresis is
used to identify and even to quantitate a specific DNA or RNA sequence from
that sample. PCR is an extremely powerful tool in molecular biology research
because it can amplify genetic information from a single copy of DNA or RNA.
Using PCR technology, the presence of the genetic message used to code for the
production of protein can be identified, thereby offering numerous
possibilities in the detection of genetic disorders, monitoring disease
progression, and in understanding cellular functions.

Genomics research requires large quantities of oligonucleotides. DNA arrays
for expression profiling and single nucleotide polymorphism, or SNP, analysis
all require the use of synthetic DNA oligonucleotides. In addition, high
throughput screening techniques, used in drug discovery are incorporating the
use of fluorescent modified DNA oligonucleoticle probes to detect and quantify
target gene expression. We have developed technologies to rapidly produce and
manufacture large number of high quality DNA oligonucleotides for DNA array
construction and developed proprietary processes to produce fluorescent probes.

The following table illustrates some of the uses for the DNA oligonucleotide
services we offer:

<TABLE>
<CAPTION>
Uses Applications
---- ------------
<C> <S>
Primers Oligonucleotides are used in the initiation of the PCR process.

Probes DNA oligonucleotides are used in hybridization reactions to search and
detect specific genetic sequences. Our FRET, or Forster Resonance
Energy Transfer, probes are fluorescent probes used in real time PCR
quantitation and diagnostic molecular analysis.

Arrays Oligonucleotides are used on a solid matrix to profile gene expression
or single nucleotide polymorphisms, or SNPS.
</TABLE>

Serum, Buffers and Media

We manufacture over 140 varieties of serum, buffers and media. These
products are vital in growing specialized cell cultures. In most cases, cell
cultures are a primary testing method for the effectiveness of vaccines and
drugs for a variety of diseases.

31
<PAGE>

Customers

We have over 3,000 customers worldwide, including the customers of our
distributors. No single customer accounted for 10% or more of our total revenue
during any of the last three years. Our customers include:

<TABLE>
<CAPTION>
Pharmaceutical Biotechnology Universities Government
- ----------------------- --------------------- ------------------------------- ---------------------------------------
<S> <C> <C> <C>
American Home Products Amgen Brigham and Women's Hospital Centers for Disease Control
Aventis Pharmaceuticals Berlex Laboratories Georgetown University Food and Drug Administration
Baxter Biogen Johns Hopkins University National Cancer Institute
Boehringer Ingelheim Chiron UCLA National Institutes of Health
Glaxo Wellcome Human Genome Sciences UC San Francisco Veterans Administration Medical Centers
Johnson & Johnson Hyseq University of Michigan US Army Research
Merck & Company Icos University of Pennsylvania
Pfizer IDEC Pharmaceuticals University of Texas MD Anderson
Pharmacia & Upjohn Rigel Pharmaceuticals Cancer Research Center
Schering-Plough
</TABLE>

Research and Development

Traditionally we have focused our research and development in the area of
cytokine biology. Cytokines are soluble proteins that act as chemical
communicators between cells. As we have extended our product lines into
cellular communication, or signal transduction, the following three areas of
biomedical research have been impacted dramatically by recent trends and
technology: (1) apoptosis, which is related to programmed cell death, (2)
angiogenesis, which involves blood vessel growth factors important in wound
healing and tumor development, and (3) degenerative neurological diseases such
as Alzheimer's Disease. We have focused our research and development efforts
aggressively into the generation of products for these areas. Our sales people,
who have education and backgrounds in the biological sciences, discuss issues
and ideas with our customers, which serves as an additional source for
identifying, creating and developing some of our new products.

Our current research and development activities are focused in four major
areas:

. expansion of current and novel methodologies into the areas of
angiogenesis, cardiovascular, inflammation, neurology and tumor
development;

. selective addition of new cytokine, chemokine and growth factors to our
existing product offerings;

. development of ELISA kits for detection of site-specific phosphorylation
and site-specific cleavage of important signal pathways proteins; and

. maintenance of our position in the rat, swine and monkey ELISA test kit
markets.

Currently we employ 32 research scientists, ten of whom hold Ph.D.'s. Among
these professionals are experts in peptide chemistry, molecular biology,
immunology and signal transduction. In particular, their knowledge is
fundamental to the development of peptides, oligonucleotides, proteins,
antibodies and assay kits. Our research laboratories are located in Camarillo,
California; Hopkinton, Massachusetts; and Nivelles, Belgium. In the year ended
December 31, 1999, we introduced over 250 new products, of which approximately
95% were developed by our scientists. In addition, at February 29, 2000 we had
approximately 50 products under development. We spent approximately $2,648,300
in 1998, excluding $4,222,000 of purchased in-process technology, and
approximately $3,315,400 in 1999 on research and development.

Manufacturing

Our reagent products and ELISA test kits are currently manufactured at our
laboratories located in Camarillo, California. We manufacture oligonucleotides
at our laboratories located at the facilities of our Keystone subsidiary in
Foster City, California. Our custom antibodies are manufactured at the
laboratory

32
<PAGE>

facilities of our QCB subsidiary in Hopkinton, Massachusetts. Our serum,
buffers and media are manufactured at the facilities of our Biofluids division
in Rockville, Maryland. We also manufacture antibodies and assay kits at the
facilities of our European subsidiary in Nivelles, Belgium.

Labeling, packaging, and shipping are carried out independently at each
facility. We purchase our packaging components from outside suppliers who
follow our own custom packaging designs. We have an internal graphic arts
department located at our Camarillo, California facility that designs and
produces our packaging and marketing materials. We believe there are numerous
available suppliers for our packaging components.

We believe that we have adequate supplies of raw materials on hand to
continue to manufacture almost all of our products and meet customer demand,
and that those materials that we do not produce internally are readily
available from multiple sources.

Sales and Marketing

We have 17 sales representatives worldwide. The principal markets for our
products are in the United States, Japan and Western Europe. We have a direct
sales force strategically located in major metropolitan areas in the United
States. The use of a direct sales force provides us with an opportunity to
discuss directly with researchers and scientists new developments and trends in
the industry. We advertise in various scientific trade journals and distribute
our own product catalog to all current and selected potential customers. We
sell to our international markets directly through our European subsidiary, and
we use international distributors that specifically target selected foreign
medical markets.

Our sales people hold biological sciences undergraduate degrees and undergo
training in the nature and application of our products and proven selling
techniques. We believe that by investing in the scientific training of our
sales force, we are able to determine the needs of researchers and scientists
in the biomedical community. Our sales force is used not only as a traditional
marketing group, but also to provide valuable feedback for product development.
Each representative is responsible for the maintenance of existing accounts as
well as the generation of new business. Representatives are paid a base salary
and commissions. The commissions are based upon sales growth over previous
years' sales levels.

Besides the United States, we sell directly to Germany, Belgium, Holland and
the United Kingdom, and use a network of international distributors covering 41
other countries. We utilize a network of both exclusive and non-exclusive
international distributors, but we generally grant exclusive distribution
rights only where the distributor maintains direct field representatives
proportionate to the potential for sales of our products in a defined
geographical area. In order to serve as our exclusive distributor, the
distributor must generally meet acceptable annual sales goals. All of our
distributors are required to limit their primary sales focus to the biomedical
research market. We offer all of our distributors annual training to enhance
their knowledge of our products as well as their respective applications,
solicit requests for new products and ultimately to increase sales.

Competition

We are engaged in a segment of the health care products industry that is
highly competitive. Our primary competitors include biotechnology companies
such as Techne Corporation, Pharmingen, New England Biolabs, and Life
Technologies. Many of our competitors have been involved in the health care
industry significantly longer than us and benefit from greater name
recognition. In addition, many of our competitors have greater resources to
devote to research and development, sales and marketing and occasionally engage
in price cutting measures to achieve leadership in their field. However, we
believe that by offering a very broad and complete product line that enables
the end user to obtain many products

33
<PAGE>

from one source we gain a competitive advantage. In addition, competition in
our markets generally focuses on the following factors:

. quality;

. speed of delivery;

. application/customer support;

. breadth of product offerings; and

. price.

Patents and Trademarks

We do not own any patents and do not believe that patent protection is
available for any of our products or processes. We seek to protect our
interests by treating technologies and know-how as trade secrets and by
requiring all employees and contractors to execute invention and assignment
agreements with us, which include confidentiality provisions.

"TAGOImmunologicals," "Cytoscreen," "Primescreen," "ICScreen" and "Cytosets"
are unregistered product trademarks used for some of our products, but are only
of limited importance to our business. "Biofluids" is also a registered
trademark we acquired as part of our acquisition of Biofluids in December 1998.

Government and Environmental Regulation

Except as we indicate in the following paragraph, approval by the Food and
Drug Administration is not required for the sale of any of our products in the
United States because our products are marketed and sold for research use only.
Research products are not currently required to comply with the lengthy FDA
approval process associated with diagnostic or therapeutic products. In the
event we develop products directly for the diagnostic market in the United
States, we will be required to obtain FDA approval prior to selling them. This
approval, if required, could be time consuming and costly.

Some of our products, however, are used by our customers as raw materials or
intermediates in the production of diagnostic products. As such, we received
clearance by the State of California and the FDA to manufacture our
TAGOImmunologics product line as Analyte Specific Reagents. These reagents are
classified as Class I biologics that are manufactured in compliance with the
FDA's Quality System Regulation, also known as cGMP. This registration allows
us to market these products to clinical laboratories and manufacturers of in
vitro diagnostic products.

We believe that we are materially in compliance with the Occupational Safety
and Health Act, the Environmental Protection Act, the Toxic Substances Control
Act, and other similar laws of general application.

Our European subsidiary's clinical products are produced in facilities that
have achieved ISO 9001 certification, and are eligible to be used in Europe for
clinical diagnostics. In all of our markets in which we sell through
distributors, our distributors are responsible for compliance with the
applicable governmental regulations.

Except as we indicated above, we are not subject to direct governmental
regulation other than the laws and regulations generally applicable to
businesses in the jurisdictions in which we operate, including those governing
the handling and disposal of hazardous wastes and other environmental matters.
Our research and development activities involve the controlled use of small
amounts of hazardous materials, chemical and radioactive compounds. Although we
believe that our safety procedures for handling and disposing of such materials
comply with applicable regulations, the risk of accidental contamination or
injury from these materials cannot be completely eliminated. In the event of
such an accident, we could be held liable for resulting damages. This liability
could have a material adverse effect on us.

34
<PAGE>

Properties

Our principal executive offices are located in Camarillo, California,
approximately 50 miles northwest of Los Angeles, California, in our 29,000
square foot facility. We purchased this property on March 28, 1996 and own it
subject to a first trust deed mortgage that was made by the lender pursuant to
the Small Business Administration's Loan Guarantee Program, with an outstanding
principal balance of $688,000 as of December 31, 1999, due on April 1, 2016.
The property is subject to a second trust deed loan with the California
Statewide Development Corp. with an outstanding principal balance of $561,500
as of December 31, 1999, due approximately June 1, 2016. Our payments under
these mortgages are unconditionally guaranteed by James H. Chamberlain, our
Chief Executive Officer and President.

On March 8, 2000 we entered into a lease for a new facility in Camarillo,
California, and we intend to relocate our Camarillo offices and laboratories to
this new location on or about May 1, 2000. Our new building contains
approximately 51,821 square feet and is situated in an industrial park
approximately two blocks from our current facility. The lease will commence on
May 1, 2000 and run through June 30, 2005, with the option to continue the
lease for two additional five-year terms. The new facility has three laboratory
areas, including molecular biology facilities, a protein purification facility
and an assay development and manufacturing facility, as well as ELISA
development and manufacturing space and cold storage rooms sufficient to
accommodate our current and anticipated future needs.

Our Keystone subsidiary leases facilities in Foster City, California,
approximately 20 miles south of San Francisco, which consists of approximately
3,500 square feet, of which approximately 3,000 square feet is our
oligonucleotide laboratory, under a lease that expires in May 2003.

Our QCB subsidiary leases facilities in Hopkinton, Massachusetts,
approximately 25 miles west of Boston, which consist of approximately 11,500
square feet, of which approximately 7,000 square feet is laboratory space,
under a lease that expires in April 2001.

Our Biofluids division leases facilities in Rockville, Maryland, which
consist of approximately 11,500 square feet of warehouse, manufacturing, and
office space, under a lease that expires in May 2001.

Our European subsidiary leases facilities in Nivelles, Belgium, which
consist of approximately 30,000 square feet of manufacturing, laboratory and
office space, under a lease that expires in March 2007.

Additional small sales offices are leased in Germany, Holland and the United
Kingdom.

We believe that all of our facilities are in good condition, are adequately
covered by insurance and will be adequate for our occupancy needs for the
foreseeable future.

Employees

As of February 29, 2000, we employed 207 individuals, 200 of whom were full
time employees. Sixteen of our employees at that date had doctoral degrees.

None of our employees in the United States is represented by a labor union.
As of February 29, 2000, 48 of our 207 employees worked for our BioSource
Europe subsidiary, which is located in Nivelles, Belgium. As is customary under
Belgian labor law, employees of our Belgian subsidiary, BioSource Europe S.A.,
are represented by three national unions who represent employee interests to
the national chemistry industry employer organization. Pursuant to Belgian law,
we have been subject to heightened restrictions regarding severance obligations
applicable to companies with more than 50 employees. Because we now employ less
than 50 employees at our Belgian facility, union representation for works
councils and safety councils will terminate in April 2000 for this facility.
Accordingly although we remain subject to other severance obligations
applicable generally to companies in Belgium, the additional severance benefits
that currently apply to our Belgian facility will terminate in November 2000.
We believe we are in compliance with these Belgian legal restrictions. We
consider our current employee relations to be good.

Legal Proceedings

We are not a party, nor is any of our property subject, to any material
legal proceedings.

35
<PAGE>

MANAGEMENT

The following table sets forth information with respect to our directors,
executive officers and key employees as of March 1, 2000:

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
James H. Chamberlain.............. 52 Chairman of the Board, President and
Chief Executive Officer

Charles C. Best................... 40 Chief Financial Officer, Executive
Vice President, Finance

Gus E. Davis...................... 52 Chief Operating Officer, Executive
Vice President, Sales & Marketing

Richard O. Buford................. 52 Vice President, Human Resources,
Secretary

Cirilo D. Cabradilla, Jr., Ph.D... 52 Vice President, Molecular Biology

Jordan B. Fishman, Ph.D........... 42 Vice President, Cellular Biology

Kevin J. Reagan, Ph.D............. 48 Vice President, Immunology

Jozef Vangenechten, Ph.D. ........ 45 General Manager, BioSource Europe, S.A

Jean-Pierre L. Conte.............. 36 Director

Leonard M. Hendrickson*........... 52 Director

David J. Moffa, Ph.D.*............ 57 Director

John R. Overturf, Jr.**........... 39 Director

Robert D. Weist**................. 60 Director

Robert J. Weltman................. 34 Director
</TABLE>
- --------
* Member of the Compensation Committee.

** Member of the Audit Committee.

James H. Chamberlain has served as Director, President and Chief Executive
Officer of BioSource and its predecessor, BioSource Industries, Inc., since it
was founded in October 1989, and was elected as its Chairman of the Board in
November 1993. Previously, Mr. Chamberlain was Manager for Business Development
for Amgen Inc., where he started and managed the Amgen Biologicals Division.
Mr. Chamberlain also serves on the board of directors of Biopool International,
Inc. He received his Bachelor of Arts degree from West Virginia University and
studied biochemistry at the University of Pittsburgh.

Charles C. Best joined BioSource in December 1999 as Chief Financial
Officer. Prior to his employment at BioSource, Mr. Best served four and a half
years as Vice President and Chief Financial Officer of Cogent Light
Technologies, Inc., a company engaged in the manufacture of surgical lighting
instruments. From 1989 to 1995, Mr. Best worked in various positions including
Corporate Controller for 3D Systems, Inc., a company engaged in the manufacture
and sale of high tech rapid prototyping equipment. Mr. Best is a CPA and holds
a Bachelor of Science degree in Business Administration and Accounting from San
Diego State University.

Gus E. Davis became our Executive Vice President Sales and Marketing and
Chief Operating Officer in June 1995. From February 1994 to June 1995, Mr.
Davis served as Vice President of Sales and Marketing of the Company. Prior to
that time, since February 1993, Mr. Davis was employed as Vice President of
Sales and Marketing at Genosys Biotechnologies, a company engaged in the
manufacturing of oligonucleotides. Mr. Davis received his Bachelor of Science
and Masters degree in Biology and Chemistry from Sam Houston State University.

Richard O. Buford became Vice President of Human Resources of BioSource in
February 1993. From 1989 to 1992, Mr. Buford served as Vice President of
Operations for The Office Mart, a California regional commercial furniture and
office supply distributor. Mr. Buford received a Bachelor of Arts and a Masters
degree in English from the University of California at Santa Barbara.

36
<PAGE>

Cirilo D. Cabradilla, Jr., Ph.D. became President of our Keystone subsidiary
in November 1995. From 1991 to 1995, Dr. Cabradilla served as President of
Keystone Laboratories, Inc. From 1988 to 1991, Dr. Cabradilla was Vice
President, Product Development, of Vascor, a pharmaceutical company.
Dr. Cabradilla was an Assistant Professor of Viral Oncology from 1996-1997 at
the University of Pennsylvania, School of Veterinary Medicine. He did his
postdoctoral training at the National Cancer Institute from 1974-1977.
Dr. Cabradilla received a Bachelor of Science and a Ph.D. degree in
Biochemistry from the University of California at Davis.

Jordan Fishman, Ph.D. became President of the Quality Controlled
Biochemicals subsidiary in December 1998. From 1993 to 1998, Dr. Fishman served
as the Senior Vice-President and Chief Scientific Officer of Quality Controlled
Biochemicals, Inc. From 1988 until 1992, Dr. Fishman was an Assistant Professor
of Pharmacology at the University of Massachusetts Medical School. From 1985
until 1988, Dr. Fishman was an Assistant Professor of Biochemistry at Boston
University School of Medicine and a Research Neurochemist at the Edith Nourse
Rogers Memorial VA Hospital in Bedford, Massachusetts. Dr. Fishman received his
Ph.D. in Biochemistry and Toxicology/Carcinogenesis from the University of
Tennessee at Oak Ridge, and his Bachelor of Science from Washington University,
St. Louis, Missouri.

Kevin J. Reagan, Ph.D. became Vice President, Immunology in December 1996.
From 1991 to December 1996, Dr. Reagan served as the first Director of
Development Laboratories and then Vice President, Laboratory Operations at
Specialty Laboratories, Inc., a clinical reference lab. From 1990 to 1991, Dr.
Reagan was the Associate Director of AIDS/Hepatitis R&D at Ortho Diagnostics,
Inc., a Johnson & Johnson Company. Dr. Reagan received his Bachelor of Arts in
Biological Sciences from the University of Delaware. Dr. Reagan received both
his Masters and Ph.D. degrees in Microbiology and Immunology from Hahnemann
Medical College.

Jozef Vangenechten, Ph.D. became Managing Director of BioSource Europe, S.A.
in February 1998. From 1988 to February 1998, Dr. Vangenechten worked for
Societe Generale de Surveillance, n.v., an international provider of
environmental compliance services, most recently as Managing Director of SGS's
EcoCare Environmental Services division.

Jean-Pierre L. Conte has served as a director of BioSource since February
2000. Mr. Conte is a Managing Director of Genstar Capital LLC, which is the
sole general partner of Genstar Capital Partners II, L.P., a private equity
investment firm. Prior to joining Genstar in 1995, he was a principal for six
years at the NTC Group, Inc., a private equity investment firm. He is a
director of several private companies, including NEN Life Science Products,
Inc. Mr. Conte earned a Masters of Business Administration from Harvard
University Graduate School of Business and a Bachelor of Arts from Colgate
University. Mr. Conte has been appointed to the Board of Directors pursuant to
an investor rights agreement among Genstar, Stargen and us, which is described
under "Relationships and Related Transactions."

Leonard M. Hendrickson has been a director of BioSource since October 1993.
Mr. Hendrickson is the President of Isotope Products Laboratories, a position
he has held since February 1992. From February 1990 to January 1992, Mr.
Hendrickson served as the principal consultant for Microchemics, a marketing
and business development consulting firm that he founded. Mr. Hendrickson also
serves on the board of directors of Isotope Products Laboratories, a subsidiary
of Eckert & Ziegler AG. Mr. Hendrickson holds a Bachelor of Science degree from
the University of Pennsylvania and a Masters in Business Administration from
American University in Washington, D.C.

David J. Moffa, Ph.D. has been a director of BioSource since April 1995. Dr.
Moffa serves: as the Regional Director and as special projects director for Lab
Corporation of America, Inc. located in Fairmont, West Virginia, positions he
has held since 1982 and 1984, respectively; as Director of Medical Arts
Lab/RBL, a position he has held since 1985; and as Director of Lab Corporation
of America, Inc. located in Altoona, Pennsylvania, a position he has held since
1990. Dr. Moffa also serves as an advisor and consultant to various diagnostic,
scientific and health care facilities, and is an owner and developer of GM
Realty and Moffa

37
<PAGE>

Properties. Dr. Moffa also serves on a number of committees and boards of
directors of various privately held companies and governmental offices,
including One Valley Bank, Inc. Dr. Moffa has completed a post doctoral
fellowship in Clinical Biochemistry at the West Virginia University National
Institutes of Health, holds a Ph.D. in Medical Biochemistry from the West
Virginia School of Medicine, a Masters of Science degree in Biochemistry from
West Virginia University and a Bachelor of Arts degree in Pre-Medicine from
West Virginia University.

John R. Overturf, Jr. has been a director of BioSource since September 1993.
Mr. Overturf serves as the President of R.O.I., Inc., a private investment
company, a position he has held since July 1993. He also serves as President of
the Combined Penny Stock Fund, Inc., a closed-end stock market fund, a position
he has held since August 1996. From September 1993 until September 1996, Mr.
Overturf served as Vice President of the Rockies Fund, Inc., a closed-end stock
market fund. Mr. Overturf holds a Bachelor of Science degree in Finance from
the University of Northern Colorado.

Robert D. Weist has been a director of BioSource since April 1996. Mr. Weist
has been President of Weist Associates, a management consulting firm, since
April 1992. From January 1986 through April 1992, Mr. Weist was a consultant to
and Senior Vice President, Administration, General Counsel and Secretary of
Amgen, Inc., having served as Vice President, General Counsel and Secretary
from March 1982 through January 1986. Mr. Weist holds a Juris Doctor degree
from New York University and a Masters in Business Administration from the
University of Chicago.

Robert J. Weltman has served as a director of BioSource since February 2000.
He is currently a Vice President of Genstar Capital LLC, the sole general
partner of Genstar Capital Partners II, L.P., a private equity investment firm.
Mr. Weltman joined Genstar in August 1995. Prior to joining Genstar, from July
1993 to July 1995, Mr. Weltman was an Associate with Robertson, Stephens &
Company, an investment banking firm. In addition, Mr. Weltman is a director of
NEN Life Science Products, Inc. Mr. Weltman holds an AB degree in chemistry
from Princeton University. Mr. Weltman has been appointed to the Board of
Directors pursuant to an investor rights agreement among Genstar, Stargen and
us, which is described under "Relationships and Related Transactions."

38
<PAGE>

RELATIONSHIPS AND RELATED TRANSACTIONS

Our Chief Executive Officer and President, James H. Chamberlain, is indebted
to us in the aggregate principal amount of $350,000 as of March 1, 2000. The
loan is represented by a promissory note in the principal amount of $350,000,
bearing interest at 5.9% per year. The loan provides for interest only
payments, payable quarterly, with all principal due upon demand. We also made
loans in the amount of $15,000 and $84,000 to Mr. Chamberlain which were repaid
to BioSource in full in January and June 1998, respectively.

On January 10, 2000, we entered into a securities purchase agreement with
Genstar Capital Partners II, L.P. and Stargen II LLC. Pursuant to this
agreement, we sold Genstar and Stargen a total of 371,300 shares, including
364,244 to Genstar and 7,056 to Stargen, of our Series B Preferred Stock for
$9,000,312 in the aggregate. These shares are convertible into 1,485,200
shares, including 1,456,976 for Genstar and 28,244 to Stargen, of our common
stock. In addition, we issued Genstar and Stargen warrants to purchase a total
of 1,287,000 shares of common stock, including 1,262,542 to Genstar and
24,458 to Stargen, exercisable at $7.77 per share. Under the investor rights
agreement among Genstar, Stargen and us, executed in connection with the
securities purchase agreement, Genstar and Stargen also have the right to
appoint two out of our seven directors to our board of directors as long as
they beneficially own, in the aggregate, at least 750,000 shares of common
stock, or one director if they beneficially own at least 495,000 shares.
Pursuant to the investor rights agreement, we appointed Jean-Pierre L. Conte, a
Managing Director of Genstar Capital LLC, and Robert J. Weltman, a Vice
President of Genstar Capital LLC, to our board of directors. Genstar and
Stargen also have the right of first refusal to purchase additional shares and
the right to require us to register the shares of our common stock underlying
the preferred stock and the warrants. They have waived their right of first
refusal in connection with this offering and have exercised a portion of their
registration rights. The consummation of the securities purchase agreement,
including the issuance of the shares of Series B Preferred Stock and the
warrants, occurred on February 15, 2000. Pursuant to the securities purchase
agreement, we paid a $270,009 transaction fee to Genstar Capital LLC and
reimbursed all of the fees and expenses of approximately $195,426, incurred by
Genstar Capital Partners and its affiliates in connection with the securities
purchase agreement.

We purchased our principal executive offices located in Camarillo,
California, on March 28, 1996, and own it subject to a first trust deed
mortgage that was made by the lender pursuant to the Small Business
Administration's Loan Guarantee Program. The property is subject to a second
trust deed loan with the California Statewide Development Corp. Our payments
under these mortgages, which are described in greater detail in the "Business--
Properties" section of this prospectus, are unconditionally guaranteed by James
H. Chamberlain, our Chief Executive Officer and President.

39
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table presents information regarding the beneficial ownership
of our common stock as of March 1, 2000, and as adjusted to reflect our sale of
shares of our common stock and the selling stockholders sale of our common
stock offered by this prospectus, for:

. each person who is known to us to be the beneficial owner of more than 5%
of our outstanding common stock;

. each of our directors;

. each of our executive officers;

. all executive officers and directors as a group; and

. the selling stockholders.

Unless otherwise provided below such person's name, the address of each
person listed is in care of us, at 820 Flynn Road, Camarillo, California 93012,
and the address of Messrs. Conte, Weltman and Genstar Capital LLC and Stargen
LLC is 555 California Street, Suite 4850, San Francisco, California 94104.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission that deem shares to be beneficially owned by
any person who has or shares voting or investment power with respect to such
shares. Shares of common stock under warrants or options currently exercisable
or exercisable within 60 days of March 1, 2000 are deemed outstanding for
purposes of computing the percentage ownership of the person holding such
warrants or options but are not deemed outstanding for computing the percentage
ownership of any other person. Unless otherwise indicated, the persons named in
this table have sole voting and sole investment power with respect to all
shares shown as beneficially owned, subject to community property laws where
applicable.

<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior to Owned After the
Offering Offering
-------------------- --------------------
Number of Percent of
Number of Percent of Shares Number of Class(1)
Name of Beneficial Owner Shares Class(1) Offered Shares
- ------------------------ --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
James H. Chamberlain(2).... 824,156 9.6% 83,000 741,156 6.0%
Charles C. Best(3)......... 5,000 * -- 5,000 *
Gus E. Davis(4)............ 90,000 1.1 18,000 72,000 *
Jean-Pierre L. Conte(5).... 2,772,220 25.4 510,000 2,262,220 15.9
Leonard M. Hendrickson(6).. 79,400 * 8,000 71,400 *
David J. Moffa, Ph.D(7) ... 66,900 * 7,000 59,900 *
John R. Overturf, Jr(8).... 67,000 * 7,000 60,000 *
Robert D. Weist(9)......... 57,000 * 6,000 51,000 *
Robert J. Weltman(10)...... -- -- -- -- --
Genstar Capital LLC(5)..... 2,719,518 25.0 500,308 2,219,210 15.6
Stargen II LLC(5).......... 52,702 * 9,692 43,010 *
Richard O. Buford(11)...... 59,875 * 6,000 53,875 *
Valerie A. Bressler-
Hill(12).................. 22,775 * 2,000 20,775 *
Jordan B. Fishman,
Ph.D.(13)................. 33,334 * 3,000 30,334 *
Dimensional Fund Advisors,
Inc.(14).................. 571,200 7.0 -- 571,200 4.8
1299 Ocean Avenue, 11th
Floor
Santa Monica, CA 90401
All of the directors and
executive officers as a
group (nine persons)(15).. 3,961,676 33.9% 637,000 3,324,676 22.3%
</TABLE>
- --------
* less than one percent

(1) Percentage ownership prior to the offering is based on 8,137,233 shares of
common stock outstanding as of March 1, 2000. Percentage ownership after
the offering is based on 8,137,233 shares of common stock outstanding as
of March 1, 2000 plus (1) 510,000 shares of common stock issuable upon
conversion of the Series B Preferred Stock and (2) 3,350,000 shares of
common stock sold by us in this offering.

40
<PAGE>

(2) Includes (1) 437,500 shares of common stock reserved for issuance upon
exercise of stock options that are currently exercisable or are
exercisable within 60 days of March 1, 2000, 83,000 of which
Mr. Chamberlain expects to exercise in connection with this offering; (2)
383,156 shares of common stock held in the Chamberlain Family Trust for
which Mr. Chamberlain serves as trustee; (3) 3,400 shares of common stock
held in Mr. Chamberlain's IRA account; and (4) 100 shares held as
custodian for Mr. Chamberlain's granddaughter.

(3) Includes 5,000 shares of common stock reserved for issuance upon exercise
of stock options that are currently exercisable or are exercisable within
60 days of March 1, 2000.

(4) Includes 90,000 shares of common stock reserved for issuance upon exercise
of stock options that are currently exercisable or are exercisable within
60 days of March 1, 2000, 18,000 of which Mr. Davis expects to exercise in
connection with this offering.

(5) Genstar Capital Partners II, L.P. holds 1,456,976 shares of common stock
issuable upon conversion of Series B Preferred Stock and 1,262,542 shares
of common stock issuable upon exercise of warrants and Stargen LLC holds
28,244 shares of common stock issuable upon conversion of Series B
Preferred Stock and 24,458 shares of common stock issuable upon exercise
of warrants, all of which are currently convertible or exercisable.
Genstar Capital LLC is the general partner of Genstar Capital Partners II,
L.P. Mr. Conte, Richard F. Hoskins and Richard D. Paterson are the
managers and managing directors of Genstar Capital LLC and are members of
Stargen, and Mr. Paterson is the Administrative Member of Stargen. In such
capacities Messrs. Conte, Hoskins and Paterson may be deemed to
beneficially own shares of common stock beneficially held by Genstar
Capital Partners and Stargen, but disclaim such beneficial ownership,
except to the extent of their economic interest in these shares. Messrs.
Conte, Hoskins, Paterson, Genstar Capital LLC, Genstar Capital Partners
II, L.P. and Stargen LLC may be deemed to be acting as a group in relation
to their respective holdings in BioSource but do not affirm the existence
of any such group.

(6) Includes (1) 67,000 shares of common stock reserved for issuance upon
exercise of stock options that are currently exercisable or are
exercisable within 60 days of March 1, 2000, 8,000 of which
Mr. Hendrickson expects to exercise in connection with this offering; (2)
800 shares of common stock owned; (3) 4,000 shares held of record by two
of Mr. Hendrickson's minor children; and (4) 7,600 shares of common stock
held in Microchemics Simplified Employee Pension Plan.

(7) Includes (1) 59,500 shares of common stock reserved for issuance upon
exercise of stock options that are currently exercisable or are
exercisable within 60 days of March 1, 2000, 7,000 of which Dr. Moffa
expects to exercise in connection with this offering; (2) 550 shares of
common stock held solely by Dr. Moffa's spouse; (3) 4,000 shares of common
stock held jointly with Dr. Moffa's spouse; and (4) 2,850 shares of common
stock held directly.

(8) Includes (1) 65,000 shares of common stock reserved for issuance upon
exercise of stock options that are currently exercisable or are
exercisable within 60 days of March 1, 2000, 7,000 of which Mr. Overturf
expects to exercise in connection with this offering and (2) 2,000 shares
of common stock owned.

(9) Includes 57,000 shares of common stock reserved for issuance upon exercise
of stock options that are currently exercisable or are exercisable within
60 days of March 1, 2000, 6,000 of which Mr. Weist expects to exercise in
connection with this offering.

(10) Mr. Weltman is a Vice President and a member, but not a managing member,
of Genstar Capital LLC and a member, but not a managing member, of Stargen
LLC. Mr. Weltman does not have power to vote or dispose of, or to direct
the voting or disposition of, any securities beneficially owned by Genstar
Capital LLC or Stargen LLC. Mr. Weltman disclaims that he beneficially
owns any shares of common stock beneficially owned by Genstar Capital LLC
or Stargen LLC, except to the extent of his economic interest in shares
owned by Genstar Capital LLC and Stargen LLC.

41
<PAGE>

(11) Includes (1) 52,938 shares of common stock reserved for issuance upon
exercise of stock options that are currently exercisable or are
exercisable within 60 days of March 1, 2000 and (2) 6,937 shares of common
stock owned, 6,000 of which Mr. Buford expects to sell in connection with
this offering.

(12) Includes (1) 19,075 shares of common stock reserved for issuance upon
exercise of stock options that are currently exercisable or are
exercisable within 60 days of March 1, 2000, 2,000 of which Ms. Bressler-
Hill expects to exercise in connection with this offering and (2) 3,700
shares of common stock owned.

(13) Includes 33,334 shares of common stock reserved for issuance upon exercise
of stock options that are currently exercisable or are exercisable within
60 days of March 1, 2000, 3,000 of which Dr. Fishman expects to exercise
in connection with this offering.

(14) As disclosed on the Schedule 13G filed by Dimensional Fund Advisors Inc.
with the Commission on February 3, 2000.

(15) Includes (1) 653,000 shares of common stock reserved for issuance upon
exercise of stock options that are currently exercisable or are
exercisable within 60 days of March 1, 2000, 127,000 of which are expected
to be exercised in connection with this offering; (2) 975,220 shares of
common stock reserved for issuance upon the conversion of Series B
Preferred Stock; and (3) 1,287,000 shares of common stock reserved for
issuance upon the exercise of warrants.

42
<PAGE>

DESCRIPTION OF CAPITAL STOCK

We are authorized to issue 20,000,000 shares of our common stock, par value
$0.001 per share and 1,000,000 shares of preferred stock, par value $0.001 per
share. As of March 20, 2000, there were 8,180,352 shares of our common stock
outstanding, no shares of our Series A Preferred Stock outstanding, and 371,300
shares of our Series B Preferred Stock outstanding. The outstanding shares of
the Series B Preferred Stock may be converted to common stock prior to or upon
consummation of this offering under the circumstances indicated under the
heading "Series B Preferred Stock" below, which would result in the issuance of
1,485,200 additional shares of common stock. In connection with the offering,
the holders of the Series B Preferred Stock will be converting 127,500 shares
of the Series B Preferred Stock into 510,000 shares of common stock, which will
be sold in the offering. The following statements are brief summaries of our
capital stock.

Common Stock

The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. Subject to any
preferences granted to holders of our preferred stock, the holders of our
common stock are entitled to receive dividends, as well as any other
distributions to stockholders, in proportion to their ownership, as may be
declared by our board of directors out of legally available funds. In the event
of our liquidation, dissolution or winding up, the holders of common stock are
entitled, subject to the rights of holders of preferred stock issued by us, to
share proportionally in all assets remaining available for distribution to them
after payment of liabilities. The outstanding shares of our common stock are,
and the common stock issuable pursuant to this offering will be, when issued,
duly authorized, validly issued, fully paid and nonassessable.

Preferred Stock

Our board of directors has the authority to issue the authorized and
unissued preferred stock in one or more classes or series, and our board of
directors may determine the designations, rights and preferences of the
preferred stock. Accordingly, and without the need for stockholder approval,
our board of directors has the power to issue preferred stock with dividend,
liquidation, conversion, voting or other rights, which may adversely affect the
voting power or other rights of the holders of our common stock. In the event
of issuance, and under various circumstances such as the Series A Preferred
Stock discussed below, we could use our preferred stock as a way of
discouraging, delaying or preventing an acquisition or a change in our control.

Series A Preferred Stock

In February 1999, our board declared a dividend of one preferred share
purchase right for each share of common stock outstanding on March 2, 1999.
Each right entitles the registered holder to purchase from the us one one-
thousandth of a share of our Series A Preferred Stock, par value $.001 per
share, at a price of $24.50 per one one-thousandth of a preferred share,
subject to adjustment. The purchase rights are subject to the terms and
conditions of the rights agreement, dated February 25, 1999, filed with the SEC
on March 1, 1999, on Form 8-A. In connection with our issuance of Series B
Preferred Stock and warrants to Genstar and Stargen, we amended our rights
agreement as of January 10, 2000, to include Genstar and Stargen as "Exempt
Persons" under the rights agreement and to exclude from the definition of
"Distribution Date" (1) the date of the approval, execution or delivery of the
securities purchase agreement with Genstar and Stargen and (2) the consummation
of the transactions contemplated by the agreements.

Initially and until a distribution date occurs, the rights are attached to
all common shares and no separate rights certificates will be issued. During
this initial period,

. the rights are not exercisable;

. the rights are transferred with the common shares and are not
transferable separately from the common shares;

43
<PAGE>

. new common share certificates or book entry shares issued will contain a
notation incorporating the rights agreement by reference; and

. the transfer of any common shares will also constitute the transfer of
the rights associated with those common shares.

Series B Preferred Stock

On January 8, 2000, the Board of Directors approved the creation of a series
of 500,000 shares of Series B Preferred Stock, $0.001 par value per share.
These shares are convertible, and the holder is entitled to be credited with a
non-cash dividend of additional Series B shares on the first day of each year
at the dividend rate of 8% per year. Series B Preferred Stock also has a
liquidation preference of $6.06 per share. This preferred stock also is
automatically convertible upon any of the following events: (1) a public
offering of common stock of not less than $15 per share, which results in
proceeds to us of at least $40,000,000 before commissions or discounts, (2) the
date we specify to the holders, if the last reported sale price of our stock is
above $20 per share for 20 consecutive trading days on the Nasdaq National
Market, or (3) the holders of greater than 50% of the shares of the Series B
inform us in writing of their desire to convert the shares. Holders of Series B
Preferred Stock have the right to require us to redeem the Series B Preferred
Stock at the original liquidation value plus accrued dividends after February
15, 2004, or as early as February 15, 2001, if various stock price thresholds,
as defined, are not met. The certificate of designation of preferences, rights
and limitations of Series B Preferred Stock of BioSource International, Inc.
was filed with the Delaware Secretary of State on February 4, 2000.

Warrants

On February 15, 2000, we issued to Genstar Capital Partners II, LP and
Stargen II LLC warrants to purchase an aggregate of 1,287,000 shares of our
common stock at an exercise price equal to $7.77 per share. These warrants
fully vested on the date of the grant and terminate on February 15, 2005. These
warrants do not have any voting rights, dividend rights or preferences until
they are exercised and converted to common stock. The warrants are not
redeemable.

On June 5, 1996, in connection with a public offering of our common stock,
we issued to Cruttenden Roth Incorporated and Commonwealth Associates, the
representatives of the underwriters in that offering, a warrant to purchase up
to an aggregate of 118,100 shares at an exercise price of $11.10 per share.
Subsequent to issuance, the warrant was allocated as follows: (1) Cruttenden
received a warrant to acquire 59,050 shares; (2) Commonwealth received a
warrant to acquire 47,240 shares; and (3) an employee of Commonwealth received
a warrant to acquire 11,810 shares. On March 2, 2000, Commonwealth exercised
its warrant in full. The warrants are fully vested and terminate on May 29,
2001. These warrants do not have any voting rights, dividend rights or
preferences until they are exercised and converted to common stock. The
warrants are not redeemable.

Anti-Takeover Provisions

In addition to the rights agreement discussed above, our certificate of
incorporation and bylaws include some provisions which may have the effect of
discouraging persons from pursuing non-negotiated takeover attempts. These
provisions include the inability of stockholders to take action by written
consent without a meeting and the inability for the stockholders to remove
directors without cause.

Transfer Agent

Our transfer agent and registrar for our common stock is U.S. Stock Transfer
Corporation, 1745 Gardena Avenue, Glendale, CA 91204-2991.

44
<PAGE>

UNDERWRITING

Chase Securities Inc., Dain Rauscher Incorporated and Thomas Weisel Partners
LLC are the representatives of the underwriters. Subject to the terms and
conditions of the underwriting agreement, the underwriters named below, through
their representatives, have severally agreed to purchase from BioSource and the
selling stockholders the following respective number of shares of common stock:

<TABLE>
<CAPTION>
Number of
Underwriter Shares
----------- ---------
<S> <C>
Chase Securities Inc.............................................
Dain Rauscher Incorporated.......................................
Thomas Weisel Partners LLC.......................................
---------
Total............................................................ 4,000,000
=========
</TABLE>

The underwriting agreement provides that the obligations of the underwriters
are subject to various conditions precedent, including the absence of any
material adverse change in our business and the receipt of certificates,
opinions and letters from us, our counsel and the independent auditors. The
underwriters are committed to purchase all of the shares of common stock
offered by us if they purchase any shares.

The following table shows the per share and total underwriting discounts and
commissions we and the selling stockholders will pay to the underwriters. These
amounts are shown assuming both no exercise and full exercise of the
underwriters' over-allotment option to purchase additional shares.

<TABLE>
<CAPTION>
Total
-------------------------------------
Per Without Over- With Over-
Share allotment Exercise allotment Exercise
----- ------------------ ------------------
<S> <C> <C> <C>
Underwriting discounts and
commissions paid by us......
Underwriting discounts and
commissions paid by the
selling stockholders........
</TABLE>

We estimate that the total expenses of this offering, excluding underwriting
discounts and commissions, will be approximately $590,000.00.

The underwriters propose to offer the shares of common stock directly to the
public at the public offering price set forth on the cover page of this
prospectus and to various dealers at that price less a concession not in excess
of $ per share. The underwriters may allow and these dealers may reallow
a concession not in excess of $ per share to various other dealers. After
this offering of the shares, the offering price and other selling terms may be
changed by the underwriters.

We have granted to the underwriters an option, exercisable no later than
30 days after the date of this prospectus, to purchase up to 100,000 additional
shares of common stock at the public offering price, less the underwriting
discount set forth on the cover page of this prospectus. In addition, Genstar
and Stargen have granted to the underwriters an option, exercisable no later
than 30 days after the date of this prospectus, to purchase on a pro rata basis
up to 500,000 additional shares of common stock at the public offering price,
less the underwriting discount set forth on the cover page of this prospectus.
In the event that the underwriters exercise the option in full, the holders of
the Series B Preferred Stock will convert 125,000 shares of the Series B
Preferred Stock and sell the resulting 500,000 shares of common stock. To the
extent

45
<PAGE>

that the underwriters exercise this option, each of the underwriters will have
a firm commitment to purchase approximately the same percentage of these option
shares which the number of shares of common stock to be purchased by it shown
in the above table bears to the total number of shares of common stock offered
by this prospectus. BioSource, Genstar and Stargen will be obligated, pursuant
to the option, to sell shares to the underwriters to the extent the option is
exercised. The underwriters may exercise this option only to cover over-
allotments made in connection with the sale of shares of common stock in this
offering.

The offering of the shares is made for delivery when, as and if accepted by
the underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The underwriters reserve the right
to reject an order for the purchase of shares in whole or in part.

We, together with the selling stockholders, have agreed to indemnify the
underwriters against liabilities specified in the underwriting agreement,
including liabilities under the Securities Act, and to contribute to payments
the underwriters may be required to make in respect of these liabilities.

Prior to the closing of this offering, some of our securityholders,
including Genstar, Stargen and their affiliates, and our executive officers,
directors and key employees, agreed that they will not, without the prior
written consent of Chase Securities Inc., offer, sell or otherwise dispose of
any shares of capital stock, options or warrants to acquire shares of capital
stock or securities exchangeable for or convertible into shares of capital
stock owned by them for a period of 90 days following this public offering.
This period will terminate on , 2000. We also agreed that we
would not, without the prior written consent of Chase Securities Inc., offer,
sell or otherwise dispose of any shares of capital stock, options or warrants
to acquire shares of capital stock or securities exchangeable for or
convertible into shares of capital stock until , 2000, except
that we may issue shares upon the exercise of options granted prior to the date
of this prospectus, and may grant additional options under our stock option
plans. Without the prior written consent of Chase Securities Inc., any
additional options granted shall not be exercisable until , 2000.

Persons participating in this offering may over-allot or effect transactions
which stabilize, maintain or otherwise affect the market price of the common
stock at levels above those which might otherwise prevail in the open market,
including by entering stabilizing bids, effecting syndicate covering
transactions or imposing penalty bids. A stabilizing bid means the placing of
any bid or effecting of any purchase, for the purpose of pegging, fixing or
maintaining the price of the common stock. A syndicate covering transaction
means the placing of any bid on behalf of the underwriting syndicate or the
effecting of any purchase to reduce a short position created in connection with
the offering. A penalty bid means an arrangement that permits the underwriters
to reclaim a selling concession from a syndicate member in connection with the
offering when shares of common stock sold by the syndicate member are purchased
in syndicate covering transactions. These transactions may be effected on the
Nasdaq National Market, in the over-the-counter market, or otherwise. This
stabilizing, if commenced, may be discontinued at any time.

In connection with this offering, underwriters and selling group members, if
any, who are qualified market makers on the Nasdaq National Market may engage
in passive market making transactions in our common stock on the Nasdaq
National Market in accordance with Rule 103 of Regulation M under the
Securities Exchange Act of 1934. In general, a passive market maker must
display its bid at a price not in excess of the highest independent bid of such
security; if all independent bids are lowered below the passive market maker's
bid, however, such bid must then be lowered when certain purchase limits are
exceeded.

Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker-dealer in December 1998. Since
December 1998, Thomas Weisel Partners has been named as a lead or co-manager on
142 filed public offerings of equity securities, of which 104 have been
completed, and has acted as a syndicate member in an additional 76 public
offerings of equity securities. Thomas Weisel Partners does not have any
material relationship with us or any of our officers, directors or other
controlling persons, except with respect to its contractual relationship with
us pursuant to the underwriting agreement entered into in connection with this
offering.

46
<PAGE>

LEGAL MATTERS

Our counsel, Troop Steuber Pasich Reddick & Tobey, LLP, Los Angeles,
California, has rendered an opinion that the common stock offered by us, upon
its sale will be duly and validly issued, fully paid and non-assessable. Troop
Steuber Pasich Reddick & Tobey, LLP beneficially owns 45,000 shares of our
common stock. Certain legal matters in connection with the offering will be
passed upon for the underwriters by Simpson Thacher & Bartlett, Palo Alto,
California.

EXPERTS

The consolidated financial statements and schedule of BioSource
International, Inc. as of December 31, 1999 and 1998, and for each of the years
in the three-year period ended December 31, 1999, have been included in the
prospectus and elsewhere in the registration statement in reliance upon the
report of KPMG LLP, independent certified public accountants, appearing
elsewhere in the registration statement, and upon their authority as experts in
accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Commission a registration statement on Form S-3 under
the Securities Act with respect to the shares of common stock offered in this
prospectus. This prospectus does not contain all of the information set forth
in the registration statement and the related exhibits. Statements contained in
this prospectus as to the contents of any contract or any other document
referred to are not necessarily complete, and with respect to any contract or
other document filed as an exhibit to the registration statement, reference is
made to the exhibit for a more complete description of the matter involved, and
each such statement is qualified in its entirety by this reference.

For further information about us and our common stock, please review the
registration statement and the exhibits and schedules filed with it. In
addition to the registration statement, you may also learn more about us from
the reports, proxy statements and other information that we have filed with the
Commission under the Securities Exchange Act of 1934. Copies of the
registration statement, including the exhibits, as well as the other
information we have filed with the Commission, may be inspected without charge
at the Commission's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, copies of all or any part of these
documents may be obtained upon payment of prescribed rates, by writing the
Public Reference Section of the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at Seven World Trade Center, Suite 1300, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, Suit 1400, Chicago,
Illinois 60661. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference rooms. The registration statement and the
other information we have filed with the Commission are also available at the
offices of the National Association of Securities Dealers, Inc., Reports
Section, 1735 K Street, N.W., Washington, D.C. 20006. In addition, the
registration statement and the other information we have filed with the
Commission is available to the public from commercial document retrieval
services and at the web site maintained by the Commission at
http://www.sec.gov. You may also visit us at http://www.biosource.com.

The Commission allows us to "incorporate by reference" information into the
registration statement of which this prospectus forms a part, which means that
we can disclose important information to you by referring you to another
document filed separately with the Commission. The information incorporated by
reference is deemed to be part of the registration statement, except for any
information superceded by information in the registration statement and this
prospectus. This prospectus incorporates by reference the documents set forth
below that we have previously filed with the Commission. These documents
contain important information about us and our finances.

1) our annual report on Form 10-K for the fiscal year ended December 31,
1999; and

2) the description of our capital stock contained in our registration
statement on Form 8-B, filed with the Commission on June 14, 1993, pursuant
to Section 12 of the Securities Exchange Act of 1934.

47
<PAGE>

We are also incorporating by reference any additional documents that we file
with the Commission between the date of this prospectus and the termination of
the offering.

We will provide without charge to each person to whom this prospectus is
delivered, upon written or oral request, a copy of any and all of the documents
that have been incorporated in this prospectus, other than the exhibits to
these documents, unless the exhibits are specifically incorporated by
reference. You should direct your requests for documents to the following:

BioSource International, Inc.
820 Flynn Road, Suite A
Camarillo, California 93012
Attention: Investor Relations
Telephone Number: (805) 383-5200

48
<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE

<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report............................................. F-2

Consolidated Balance Sheets at December 31, 1998 and December 31, 1999... F-3

Consolidated Statements of Operations for years ended December 31, 1997,
1998 and 1999........................................................... F-4

Consolidated Statements of Stockholders' Equity for years ended December
31, 1997, 1998 and 1999................................................. F-5

Consolidated Statements of Cash Flows for years ended December 31, 1997,
1998 and 1999........................................................... F-6

Notes to Consolidated Financial Statements for December 31, 1997, 1998
and 1999................................................................ F-7

Financial Statement Schedule--Valuation and Qualifying Accounts.......... F-20
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
BioSource International, Inc.:

We have audited the consolidated financial statements of BioSource
International, Inc. and subsidiaries as listed in the accompanying index. In
connection with our audits of the consolidated financial statements, we also
have audited the financial statement schedule as listed in the accompanying
index. These consolidated financial statements and financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of BioSource
International, Inc. and subsidiaries as of December 31, 1998 and 1999 and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999 in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.

KPMG LLP

Los Angeles, California
March 10, 2000

F-2
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 1998 and 1999
(Amounts in thousands, except for share amounts)

<TABLE>
<CAPTION>
1998 1999
--------- ---------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents............................. $ 7,076.9 $ 4,644.5
Accounts receivable, less allowance for doubtful
accounts of $301.0 at December 31, 1998 and $328.1 at
December 31, 1999.................................... 4,381.0 5,088.9
Inventories, net (note 3)............................. 4,970.6 6,015.3
Prepaid expenses and other current assets............. 726.2 578.7
Deferred income taxes (note 9)........................ 1,123.4 1,997.8
--------- ---------
Total current assets................................. 18,278.1 18,325.2

Property and equipment, net (note 4).................... 5,513.6 5,392.6
Intangible assets net of $125.8 at December 31, 1998 and
$1,186.4 of accumulated amortization at December 31,
1999 (note 2).......................................... 14,451.2 13,816.3
Other assets............................................ 1,318.0 819.3
Deferred income taxes (note 9).......................... 1,839.2 1,868.4
--------- ---------
$41,400.1 $40,221.8
========= =========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Notes payable to banks, current portion (note 5)...... $ 3,012.5 $ 2,754.4
Accounts payable...................................... 1,643.0 2,067.6
Accrued expenses...................................... 4,155.6 1,923.8
Deferred income....................................... 625.9 369.0
Income taxes payable.................................. 601.7 225.5
--------- ---------
Total current liabilities............................ 10,038.7 7,340.3

Notes payable to banks, less current portion (note 5)... 13,665.6 11,459.3
--------- ---------
Total liabilities.................................... 23,704.3 18,799.6

Commitments and contingencies (notes 5 and 12)

Stockholders' equity:
Preferred stock, $.001 par value. Authorized 1,000,000
shares; none issued or outstanding................... -- --
Common stock, $.001 par value. Authorized 20,000,000
shares issued 7,469,925 shares and outstanding
7,178,925 shares at December 31, 1998, issued
7,711,716 shares and outstanding 7,425,716 shares at
December 31, 1999 ................................... 7.2 7.4
Additional paid-in capital............................ 21,186.8 22,025.9
Retained earnings (accumulated deficit)............... (2,629.3) 948.1
Accumulated other comprehensive loss.................. (868.9) (1,559.2)
--------- ---------
Total stockholders' equity........................... 17,695.8 21,422.2
--------- ---------
$41,400.1 $40,221.8
========= =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 1997, 1998 and 1999
(Amounts in thousands, except per share data)

<TABLE>
<CAPTION>
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Net sales...................................... $20,571.8 $21,858.6 $29,257.0
Cost of sales.................................. 6,930.1 13,188.6 11,070.5
--------- --------- ---------
Gross profit................................. 13,641.7 8,670.0 18,186.5
--------- --------- ---------
Operating expenses:
Research and development..................... 2,077.7 2,648.3 3,315.4
Sales and marketing.......................... 4,043.0 4,337.5 4,736.9
General and administrative................... 3,552.0 4,468.9 4,460.3
Purchased in-process technology.............. -- 4,222.0 --
Amortization of intangibles.................. 30.7 95.1 1,060.7
--------- --------- ---------
Total operating expenses................... 9,703.4 15,771.8 13,573.3
--------- --------- ---------
Operating income (loss)........................ 3,938.3 (7,101.8) 4,613.2
Interest income.............................. 760.4 513.4 397.2
Interest expense............................. (133.0) (215.9) (1,367.3)
Other income (expense), net.................. 80.6 133.9 (46.1)
--------- --------- ---------
Income (loss) before income taxes.............. 4,646.3 (6,670.4) 3,597.0
Income tax expense (benefit)................. 1,460.0 (1,534.6) 19.6
--------- --------- ---------
Net income (loss).......................... $ 3,186.3 $(5,135.8) $ 3,577.4
========= ========= =========
Net income (loss) per share:
Basic........................................ $ 0.38 $ (0.68) $ 0.49
========= ========= =========
Diluted...................................... $ 0.36 $ (0.68) $ 0.46
========= ========= =========
Weighted average shares outstanding:
Basic........................................ 8,318.0 7,508.8 7,234.7
========= ========= =========
Diluted...................................... 8,965.2 7,508.8 7,832.9
========= ========= =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Years ended December 31, 1997, 1998 and 1999
(Amounts in thousands)

<TABLE>
<CAPTION>
Common stock Retained
---------------- Additional earnings Accumulated Net
Number of paid-in (accumulated comprehensive stockholders' Comprehensive
shares Amount capital deficit) loss equity income (loss)
--------- ------ ---------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1996................... 8,319.0 $8.3 $28,837.1 $ (679.8) $ (5.0) $28,160.6
Exercise of stock
options................ 77.0 -- 147.2 -- -- 147.2
Exercise of warrants.... 35.0 -- 64.8 -- -- 64.8
Purchases of treasury
stock.................. (283.3) (0.2) (1,744.3) -- -- (1,744.5)
Net income.............. -- -- -- 3,186.3 -- 3,186.3 $ 3,186.3
Foreign currency
translation
adjustments............ -- -- -- -- (1,156.1) (1,156.1) (1,156.1)
------- ---- --------- --------- --------- --------- ---------
Total comprehensive
income................. $ 2,030.2
=========
Balance at December 31,
1997................... 8,147.7 8.1 27,304.8 2,506.5 (1,161.1) 28,658.3
Issuance of stock
options to non
employees.............. -- -- 110.4 -- -- 110.4
Exercise of stock
options................ 27.4 0.1 59.9 -- -- 60.0
Income tax benefit from
exercise of stock
options................ -- -- 20.5 -- -- 20.5
Purchases of treasury
stock.................. (996.2) (1.0) (6,308.8) -- -- (6,309.8)
Net loss................ -- -- -- (5,135.8) -- (5,135.8) $(5,135.8)
Foreign currency
translation
adjustments............ -- -- -- -- 292.2 292.2 292.2
------- ---- --------- --------- --------- --------- ---------
Total comprehensive
loss................... $(4,843.6)
=========
Balance at December 31,
1998................... 7,178.9 7.2 21,186.8 (2,629.3) (868.9) 17,695.8
Issuance of stock
options to non
employees.............. -- -- 13.5 -- -- 13.5
Exercise of stock
options................ 246.8 .2 609.0 -- -- 609.2
Income tax benefit from
exercise of stock
options................ -- -- 216.6 -- -- 216.6
Net income.............. -- -- -- 3,577.4 -- 3,577.4 $ 3,577.4
Foreign currency
translation
adjustments............ -- -- -- -- (690.3) (690.3) (690.3)
---------
Total comprehensive
income................. $ 2,887.1
------- ---- --------- --------- --------- --------- =========
Balance at December 31,
1999................... 7,425.7 $7.4 $22,025.9 $ 948.1 $(1,559.2) $21,422.2
======= ==== ========= ========= ========= =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 1997, 1998 and 1999
(Amounts in thousands)

<TABLE>
<CAPTION>
1997 1998 1999
---------- ---------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)......................... $ 3,186.3 $ (5,135.8) $ 3,577.4
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization............ 712.0 959.8 1,990.9
Net (gain) loss on sale of property and
equipment............................... (6.3) 31.5 --
Purchased in-process technology.......... -- 4,222.0 --
Non-cash stock compensation.............. -- 110.4 13.5
Non-cash write-down of inventory......... -- 4,966.0 --
Other.................................... (110.0) 28.0 --
Changes in assets and liabilities, net of
effects of acquisitions:
Accounts receivable...................... 413.0 (386.1) (1,175.2)
Inventories.............................. (1,177.3) (1,048.3) (1,356.5)
Prepaid expenses and other current
assets.................................. (549.7) 888.0 (90.6)
Deferred income taxes.................... (56.0) (2,491.6) (903.6)
Other assets............................. 142.5 (1,001.1) 314.2
Accounts payable......................... (318.9) (62.0) 327.8
Accrued expenses......................... (581.3) 2,592.3 (2,255.7)
Deferred income.......................... -- 3.9 (256.9)
Income taxes payable..................... 194.0 348.9 215.5
---------- ---------- ---------
Net cash provided by operating
activities............................ 1,848.3 4,025.9 400.8
---------- ---------- ---------
Cash flows from investing activities:
Purchase of property and equipment........ (659.0) (1,390.0) (1,077.0)
Purchase of Quality Controlled
Biochemicals............................. -- (15,193.9) --
Purchase of net assets from Biofluids..... -- (2,822.5) --
Proceeds from sale of property and
equipment................................ 21.4 3.1 25.6
Purchases of investments.................. (23,028.0) (7,614.8) --
Proceeds from sale of investments......... 29,387.9 12,583.5 --
---------- ---------- ---------
Net cash provided by (used in)
investing activities.................. 5,722.3 (14,434.6) (1,051.4)
---------- ---------- ---------
Cash flows from financing activities:
Proceeds from the exercise of options..... 147.2 60.0 609.2
Proceeds from the exercise of warrants.... 64.8 -- --
Borrowings from bank...................... -- 14,000.0 --
Repayments to bank........................ (28.5) (31.1) (2,466.6)
Payments on capital lease obligations..... (2.3) (3.0) (9.6)
Payments to acquire treasury stock........ (1,744.5) (6,309.8) --
---------- ---------- ---------
Net cash provided by (used in)
financing activities.................. (1,563.3) 7,716.1 (1,867.0)
---------- ---------- ---------
Net increase (decrease) in cash and
cash equivalents...................... 6,007.3 (2,692.6) (2,517.6)
Effect of exchange rates on cash and cash
equivalents................................ (136.7) 292.0 85.2
Cash and cash equivalents at beginning of
year....................................... 3,606.9 9,477.5 7,076.9
---------- ---------- ---------
Cash and cash equivalent at end of year..... $ 9,477.5 $ 7,076.9 $ 4,644.5
========== ========== =========
Supplemental disclosure of cash flow
information:
Cash paid during the year for:
Interest................................. $ 136.4 $ 117.2 $ 1,171.4
========== ========== =========
Income taxes............................. $ 1,477.7 $ 1,117.6 $ 286.2
========== ========== =========
</TABLE>

In 1999, additional paid-in capital increased by $216.6 in connection with
the tax benefit associated with the exercise of employee stock options.

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1997, 1998 and 1999

1. Summary of Significant Accounting Policies

Description of Business

We develop, manufacture, market and distribute products used worldwide in
disease related biomedical research and clinical diagnostics, principally in
the fields of immunology and molecular biology. Our products include ELISA
assay test kits, clinical diagnostic kits, bioactive proteins, antibodies,
bioactive peptides, oligonucleotides and related products. These products
enable scientists to better understand the biochemistry, immunology and cell
biology of the human body. Some examples would include certain diseases such as
cancer, aging, arthritis and other inflammatory diseases, AIDS and certain
other infectious diseases.

Principles of Consolidation

The consolidated financial statements include the accounts of BioSource
International, Inc. (Company) and its wholly owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated.

Cash and cash equivalents

Cash and cash equivalents include all cash balances and highly liquid
investments with original maturities of three months or less.

Financial Instruments

The carrying value of financial instruments such as cash and cash
equivalents, trade receivables, and payables approximates their fair value at
December 31, 1998 and 1999 due to the short-term nature of these instruments.
The carrying value of the long-term debt also approximates fair value as of
December 31, 1998 and 1999 based on the terms the Company could obtain for
similar debt instruments with similar maturity. However, due to interest rate
fluctuations, the recorded value of the Heller Financial mortgage is
approximately 2% higher than the fair value of similar currently available debt
instruments. Assuming interest rates remain constant at the current level, this
interest rate differential would cost BioSource approximately $114,000 in
additional interest over the remaining life of the loan. See Note 5 for further
description of this Note Payable.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market
(net realizable value) for raw materials and work in process and the average-
cost method for finished goods.

Depreciation and Amortization

Property and equipment are stated at cost. Depreciation and amortization of
property and equipment and goodwill is provided using the straight-line method
over the estimated useful lives of the related assets which generally range
from three to fifteen years. Real property is depreciated over thirty nine
years. Leasehold improvements are amortized using the straight-line method over
their estimated useful lives or the lease term, whichever is shorter.

Goodwill and other intangibles are amortized on the straight-line basis over
periods of 5 to 15 years. Accumulated amortization at December 31, 1998 and
1999 was $125,800 and $1,186,400, respectively.

F-7
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Advertising, Marketing and Promotion Costs

Advertising, marketing and promotion costs are expensed as incurred. These
expenses charged to operations for the years ended 1997, 1998 and 1999 were
$805,300, $1,004,700, and $1,212,600, respectively.

License Agreements

License agreements are recorded at cost and are amortized using the
straight-line method over the shorter of the estimated useful lives of the
license or the license term (generally five to ten years). These costs are
included with other assets in the accompanying consolidated balance sheets.
Accumulated amortization at December 31, 1998 and 1999 was approximately
$110,400 and $205,500.

Revenue Recognition

Sales and related cost of goods sold are recognized upon shipment of
products. Certain customers prepay for sera or media and buffer product and
request shipment of the product at future dates. The Company records deferred
revenue until such time as a product is shipped to our customer. Upon shipment,
the appropriate sale and cost of goods sold are recognized.

Research and Development Costs

Research and development costs are charged to expense as incurred. Such
costs amounted to $2,077,700, $2,648,300, and $3,315,400 in 1997, 1998 and
1999, respectively.

Income Taxes

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

Long-Lived Assets

It is our policy to account for long-lived assets, including intangibles, at
amortized cost. As part of an ongoing review of the valuation and amortization
of long-lived assets, management assesses the carrying value of such assets if
facts and circumstances suggest that it may be impaired. If this review
indicates that the long-lived assets will not be recoverable, as determined by
a non-discounted cash flow analysis over the remaining amortization period, the
carrying value of the Company's long-lived assets would be reduced to its
estimated fair market value based on discounted cash flows. As a result, we
have determined that our long-lived assets are not impaired as of December 31,
1998 and 1999.

Stock Compensation

We account for stock-based compensation under the provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123). Under the provisions of SFAS 123, the Company has
elected to continue to measure compensation cost under Accounting Practice
Board Opinion No. 25 and comply with the pro forma disclosure requirements.

F-8
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Comprehensive Income

We adopted SFAS No. 130, "Reporting Comprehensive Income" in 1998. SFAS No.
130 establishes standards to measure all changes in equity that result from
transactions and other economic events other than transactions with owners.
Comprehensive income is the total of net earnings and all other non-owner
changes in equity. Except for net earnings (loss) and foreign currency
translation adjustments, the Company does not have any transactions and other
economic events that qualify as comprehensive income as defined under SFAS No.
130.

Business Segment Reporting

We adopted SFAS No. 131, "Disclosures About Segments of an Enterprise and
Related Information," in 1998. SFAS No. 131 establishes new standards for
reporting information about business segments and related disclosures about
products and services, geographic areas and major customers, if applicable.
Management of the Company has determined its reportable segments are strategic
business units that offer both sales to external customers from geographic
company facilities and sales to external customers in certain geographic
regions. Significant reportable business segments are the United States and
European facilities, and sales to external customers are summarized as those
located in the United States, Europe, Japan and other. Information related to
these segments is summarized in Note 11.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. This affects the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Concentrations of Credit Risk

Financial instruments, which potentially subject us to concentrations of
credit risk, consist primarily of cash equivalents and trade accounts
receivable. The credit risk associated with trade accounts is mitigated by our
credit evaluation process; reasonably short collection terms and the
geographical dispersion of sales transactions mitigate credit risk.

Foreign Currency Translation

The assets and liabilities of BioSource's foreign subsidiary, whose
functional currency is Belgian francs, are translated at the rate of exchange
at the balance sheet date, and related revenues and expenses are translated at
the average exchange rate in effect during the period. Resulting translation
adjustments are recorded as a component of stockholders' equity. Gains and
losses from foreign currency transactions are included in net income. Foreign
currency transaction gains and losses were insignificant to the operating
results for each of the years in the three-year period ended December 31, 1999.

Other Assets

Included in other assets at December 31, 1998 and 1999 is a note receivable
from an officer of $350,000. The note bears interest at 5.9% and is due on
demand. Management does not expect to demand payment within the 12 months
subsequent to December 31, 1999.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current
year's presentation.

F-9
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

2. Business Combinations

On December 10, 1998, BioSource acquired Quality Controlled Biochemicals,
Inc. (QCB). QCB is a leading manufacturer of phosphopeptides, phosphorylation
state-specific antibodies, custom peptides and custom antibodies. The
transaction was accounted for as a purchase. The results of operations of QCB
are included in the accompanying consolidated financial statements from the
date of acquisition. The purchase price was $15,193,900, including related
acquisition costs. The purchase price exceeded the fair value of net assets
acquired by approximately $16,034,500 of which $4,222,000 was allocated to in-
process technology. The remaining $11,812,500, which is being amortized on a
straight-line basis, was allocated to identifiable intangible assets and
goodwill with useful lives ranging from 5 to 15 years and is summarized as
follows:

<TABLE>
<S> <C>
Developed technology............................................. $ 7,655.4
Core technology.................................................. 665.3
Assembled workforce.............................................. 408.1
Trade name....................................................... 257.0
Goodwill......................................................... 2,826.7
---------
$11,812.5
=========
</TABLE>

The purchased in-process technology charge in 1998 relates to the portion of
the QCB purchase price that was allocated to products in development which had
not yet reached technological feasibility as of the acquisition date and did
not have alternative future uses and in accordance with applicable accounting
rules, purchased in-process technology is required to be expensed.

At the date of acquisition QCB had approximately 100 unique phosphorylated
antibodies under development, with most of these antibodies in the final phase
of development. We estimate that on an overall basis these antibodies were
approximately 75% complete when acquired. The balance of the development work
was completed by the end of 1999.

On December 15, 1998, BioSource purchased certain assets and liabilities of
Biofluids, Inc. for $2,822,500 in cash, including related acquisition costs.
Biofluids is involved in the manufacture and sale of sera, media and buffers
utilized in biomedical research. The acquisition was accounted for as a
purchase. Accordingly, the assets and liabilities of the acquired business are
included in the consolidated balance sheet as of December 31, 1998. The results
of Biofluids operations from the date of the acquisition to December 31, 1998
were not significant. Intangible assets were acquired in the amount of
$2,348,700 and are being amortized over a 15-year period and included in
intangible assets in the consolidated balance sheet at December 31, 1998 and
1999.

The following summarized unaudited pro forma financial information assumes
the acquisition had occurred on January 1, 1998:

<TABLE>
<CAPTION>
1998
----------------------
(in thousands,
except per share data)
<S> <C>
PRO FORMA INFORMATION
Net sales........................................... $27,752.9
Net loss............................................ $(6,731.8)
Net loss per share.................................. $ (0.90)
</TABLE>

These amounts are based upon certain assumptions and estimates, and do not
reflect any benefit from economies, which might be achieved from combined
operations. The pro forma results do not necessarily represent results that
would have occurred if the acquisition had taken place on the basis assumed
above, nor are they indicative of the results of future combined operations.

F-10
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

3. Inventories

Inventories at December 31, 1998 and 1999 are summarized as follows (000's):

<TABLE>
<CAPTION>
1998 1999
--------- ---------
<S> <C> <C>
Raw materials........................................ $ 4,115.0 $ 4,060.0
Work in process...................................... 750.4 598.6
Finished goods....................................... 3,972.4 5,040.7
--------- ---------
Subtotal............................................. 8,837.8 9,699.3
Inventory reserve.................................... (3,867.2) (3,684.0)
--------- ---------
Net inventory........................................ $ 4,970.6 $ 6,015.3
========= =========
</TABLE>

4. Property and Equipment

Property and equipment at December 31, 1998 and 1999 are summarized as
follows (000's):

<TABLE>
<CAPTION>
1998 1999
--------- ---------
<S> <C> <C>
Land................................................. $ 360.0 $ 360.0
Building and improvements............................ 2,283.5 2,255.0
Machinery and equipment.............................. 3,749.1 4,157.4
Office furniture and equipment....................... 1,596.8 1,883.1
Leasehold improvements............................... 87.2 107.9
--------- ---------
8,076.6 8,763.4
Less accumulated depreciation and amortization....... (2,563.0) (3,370.8)
--------- ---------
$ 5,513.6 $ 5,392.6
========= =========
</TABLE>

5. Long Term Debt and Notes Payable to Banks

In December, 1998, BioSource executed a loan agreement with Union Bank of
California, N.A. and borrowed $14,000,000 which was used to finance the
acquisitions of Quality Controlled Biochemicals, Inc. and all of the assets and
selected liabilities of Biofluids, Inc. The principal amounts outstanding as of
December 31, 1998 and 1999 were $14,000,000 and $12,000,000, respectively.
Principal repayments are to be made at approximately $166,700 per month for the
seven-year term of the loan. Interest is provided at a rate which is 2% per
annum in excess of either the bank's adjusted treasury rate for a term selected
by BioSource or the bank's LIBOR rate for a term also selected by the Company.
The actual interest rate at December 31, 1999 was 8.12%. The loan matures on
December 5, 2005. The terms of this loan require the Company to maintain a
minimum cash balance of $3,500,000 as of December 31, 1999. Additionally,
BioSource must maintain a minimum ratio of total liabilities to tangible net
assets, achieve minimum net profit levels, and comply with specified ratios of
earnings before interest, taxes, depreciation and amortization to debt service
costs. We are also required to comply with certain non-financial covenants. At
December 31, 1999, BioSource was in compliance with these covenants.

In June 1996, BioSource secured financing from Heller Financial Corp. in
order to finance the purchase of BioSource's corporate headquarters. The loan
principal was $745,000 and is secured by a first trust deed on the property.
The loan bears interest at a rate of 9.4% and has a 20-year term. The
outstanding principal balances at December 31, 1998 and 1999 were $705,300 and
$688,000 respectively.

F-11
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

In June 1996, a loan was obtained from the Small Business Administration to
finance the purchase of the corporate headquarters building. The original loan
principal was $616,000 and is secured by a first trust deed on the property.
The loan bears interest at a rate of 7.6% and has a 20-year term. The
outstanding principal balances at December 31, 1998 and 1999 were $578,100 and
$561,500 respectively.

Payments to both Heller Financial Corp. and the Small Business
Administration are guaranteed by the chairman of the board of the Company.

Quality Controlled Biochemicals, Inc. had four loans outstanding aggregating
$964,100 at December 31, 1999 with MetroWest Bank which were assumed by
BioSource upon completion of the acquisition of QCB in December 1998.
Description of all loans outstanding at December 31, 1998 and 1999 follows
(000's):

<TABLE>
<CAPTION>
Amount Outstanding at
-------------------------
December 31, December 31,
Type of Loan Maturity Date Interest Rate 1998 1999
- ------------ ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Term Loan............ January 31, 2002 9.25% $ 123.3 $ 83.2
Term Loan............ April 17, 1999 8.75% 53.5 --
Term Loan............ April 17, 2003 9.50% 385.7 296.7
Term Loan............ August 22, 2000 9.75% 66.7 22.3
Line of Credit....... April 17, 1999 8.75% 203.5 --
Line of Credit....... December 31, 1999 9.25% 562.0 562.0
-------- --------
$1,394.7 $ 964.2
======== ========
</TABLE>

Under the terms of the MetroWest Bank loan agreement, BioSource must meet
certain financial covenants that include a minimum tangible net worth covenant,
debt to tangible net worth, current ratio covenant, and other non-financial
covenants. BioSource was in compliance with these covenants as of December 31,
1999.

Maturities of the notes payable outstanding as of December 31, 1999 are:

<TABLE>
<CAPTION>
Year ending December 31:
------------------------
<S> <C>
2000........................................................ $ 2,754,400
2001........................................................ 2,165,800
2002........................................................ 2,135,600
2003........................................................ 2,076,900
2004........................................................ 2,051,500
Thereafter.................................................. 3,029,500
-----------
$14,213,700
===========
</TABLE>

6. Common Stock and Treasury Stock

In 1997, the Board of Directors authorized us to repurchase up to 1,200,000
shares of our outstanding common stock at market price. In 1998 we were
authorized to extend the repurchase program up to 1,500,000 shares of the
Company's stock. During the years ended December 31, 1997 and 1998, we
repurchased 283,300 and 996,200 shares of the Company's common stock for
$1,744,500, and $6,309,800, an average price of $6.16, and $6.33, respectively.
As of December 31, 1999, we have repurchased a total of 1,279,500 shares of the
Company's common stock for $8,054,300, an average price of $6.29 per share
since the inception of the repurchase program in April 1997.

F-12
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

7. Stock Options, Purchase Plans and Warrants

The Company currently has one stock option plan in place--the 1993 Stock
Incentive Plan (the 1993 Plan)--and several stock option agreements with
certain officers in effect.

Under the 1993 Plan, stock options may be granted to full-time employees,
part-time employees, directors and consultants of the Company to purchase a
maximum of 2,000,000 shares of common stock. Options granted under the 1993
Plan are generally exercisable at the rate of 25% each year beginning one year
from the date of grant. The stock options generally expire ten years from the
date of grant.

In August 1998, the Board of Directors approved the repricing of options
granted under this plan to an exercise price of $4.625 per share for all
optionees except for Officers and Board of Directors. As part of the repricing,
395,500 shares were canceled and 355,950 new shares were granted at the new
exercise price.

The per share weighted average fair value of stock options granted during
1997, 1998 and 1999 was $5.27, $2.40 and $3.43, respectively, on the date of
grant using the Black-Scholes option-pricing model with the following weighted
average assumptions:

<TABLE>
<CAPTION>
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Expected dividend yield.................................. 0% 0% 0%
Risk-free interest rate.................................. 6.4% 4.75% 6.40%
Expected volatility...................................... 60% 60% 69%
Expected option life (years)............................. 9 8.8 7.1
</TABLE>

The Company applies APB Opinion No. 25 in accounting for its plan, and
accordingly, no compensation cost has been recognized for its stock options in
the consolidated financial statements. Had the Company determined compensation
cost based upon the fair value at the grant date for its stock options under
SFAS No. 123, the Company's net income (loss) would have changed to the pro
forma amounts indicated below:

<TABLE>
<CAPTION>
1997 1998 1999
-------- --------- --------
(in thousands,
except per share data)
<S> <C> <C> <C>
Net income (loss):
As reported................................ $3,186.3 $(5,135.8) $3,577.4
Pro forma.................................. $2,774.6 $(6,135.0) $2,194.5
======== ========= ========

Net income (loss) per share:
As reported
Basic.................................... $ 0.38 $ (0.68) $ 0.49
Diluted.................................. $ 0.36 $ (0.68) $ 0.46
Pro forma
Basic.................................... $ 0.38 $ (0.82) $ 0.30
Diluted.................................. $ 0.31 $ (0.82) $ 0.28
======== ========= ========
</TABLE>

Pro forma net income (loss) reflects compensation expense related to the
vested portion of options granted during the periods 1995 through 1999.

To the extent that BioSource derives a tax benefit from options exercised by
employees, such benefit is credited to additional paid-in capital. Tax benefits
recognized totaling $0, $20,500 and $216,600, were credited to additional paid-
in capital in fiscal 1997, 1998 and 1999, respectively.

F-13
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The following summarizes the stock option transactions under the 1993 Plan
during the periods presented:

<TABLE>
<CAPTION>
Weighted
average
Shares exercise price
--------- --------------
<S> <C> <C>
Options outstanding at December 31, 1996......... 998,406 $4.15
Options granted.................................. 192,000 7.21
Options exercised................................ (77,044) 1.98
Options canceled................................. (120,801) 6.88
--------- -----
Options outstanding at December 31, 1997......... 992,561 4.57
Options granted.................................. 1,256,950 3.78
Options exercised................................ (27,410) 2.19
Options canceled................................. (504,955) 7.05
--------- -----
Options outstanding at December 31, 1998......... 1,717,146 3.30
Options granted.................................. 291,000 4.56
Options exercised................................ (221,791) 2.58
Options canceled................................. (169,930) 4.69
--------- -----
Options outstanding at December 31, 1999......... 1,616,425 $3.48
========= =====
</TABLE>

At December 31, 1999, the range of exercise prices and weighted average
remaining contractual life of outstanding options was $1.28-$8.94 and 7.6
years, respectively.

At December 31, 1997, 1998 and 1999, the number of options exercisable was
592,435, 1,031,730, and 1,142,279, respectively, and the weighted average
exercise price of those options was $4.57, $3.30 and $3.47, respectively.

The Company has several stock option agreements with certain officers. The
outstanding agreements expire from May 2003 through December 2008.

The following summarizes transactions outside the option plan during the
periods presented:

<TABLE>
<CAPTION>
Weighted
average
Shares exercise price
------- --------------
<S> <C> <C>
Options outstanding at December 31, 1996........... 402,500 $3.13
Options granted.................................... -- --
Options exercised.................................. -- --
Options canceled................................... -- --
------- -----
Options outstanding at December 31, 1997........... 402,500 3.13
Options granted.................................... -- --
Options exercised.................................. -- --
Options canceled................................... -- --
------- -----
Options outstanding at December 31, 1998 402,500 3.13
Options granted.................................... -- --
Options exercised.................................. (25,000) 1.50
Options canceled................................... -- --
------- -----
Options outstanding at December 31, 1999 377,500 $3.24
======= =====
</TABLE>

At December 31, 1999, the range of exercise prices and weighted average
remaining contractual life of outstanding options under certain agreements was
$1.50-$6.44 and 5 years, respectively.

F-14
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

At December 31, 1997, 1998 and 1999, the number of options under certain
agreements exercisable was 330,884, 365,259 and 374,633, respectively, and the
weighted average exercise price of those options was $3.13, $3.13 and $3.22,
respectively.

Effective April 7, 1995, the Company adopted an Employee Stock Purchase Plan
to provide substantially all full-time employees, excluding officers, an
opportunity to purchase shares of its common stock through payroll deductions.
In addition, the Company provides a matching contribution equal to 50% of the
participant's contribution. All contributions are invested in the Company's
common stock, which is purchased on the open market at prevailing market
prices. Participants have a fully vested interest in the shares purchased with
payroll deductions and become fully vested in the shares purchased with Company
matching contributions after two years. The Company's matching expense for the
years ended December 31, 1997, 1998 and 1999 was approximately $10,000,
$14,000, and $17,700, respectively.

At December 31, 1999 the Company had outstanding warrants to purchase
218,100 shares of the Company's common stock originally issued in connection
with the second primary stock offering with exercise prices ranging from $7.50
to $11.10 per share and expiration dates between February 1, 2001 and May 29,
2001.

8. Stockholder Rights Plan

On February 16, 1999, we adopted a stockholders' rights plan to protect the
Company and its stockholders from unsolicited attempts or inequitable offers to
acquire our stock. The rights plan has no immediate dilutive effect and does
not diminish our ability to accept an offer to purchase the Company that is
approved by the board. The stockholder rights plan was implemented through a
dividend of one preferred share purchase right on each outstanding share of our
common stock outstanding on March 2, 1999. Each right will entitle stockholders
to buy one one-thousandth of a share of Series A preferred stock at an exercise
price of $24.50. The rights will become exercisable (with certain limited
exceptions provided in the rights agreement) following the 10th day after: (a)
a person or group announces acquisition of 15 percent or more of our common
stock, (b) a person or group announces commencement of a tender offer the
consummation of which would result in ownership by the person or group of 15
percent or more of our common stock, (c) the filing of a registration statement
for any such exchange offer under the Securities Act of 1933, or (d) our board
determining that a person is an "adverse person," as defined in the rights
plan. The buyer or any "adverse person" would not be entitled to exercise
rights under the rights plan. The effect of the rights plan is to discourage
acquisitions of more than 15 percent of our common stock without negotiations
with our board. We can redeem the rights for $.001 per right at certain times
as provided in the rights agreement. The rights expire on January 31, 2009.

9. Income Taxes

Income tax expense (benefit) is summarized as follows:

<TABLE>
<CAPTION>
1997 1998 1999
-------- --------- -------
<S> <C> <C> <C>
Current:
Federal.................................... $1,092.0 $ 802.6 $ 720.0
State and local............................ 172.0 155.0 203.2
Foreign.................................... 140.0 (0.6) --
-------- --------- -------
1,404.0 957.0 923.2
-------- --------- -------
Deferred:
Federal.................................... 61.0 (2,014.0) 76.0
State and local............................ (5.0) (477.6) (7.2)
Foreign.................................... -- -- (972.4)
-------- --------- -------
56.0 (2,491.6) (903.6)
-------- --------- -------
$1,460.0 $(1,534.6) $ 19.6
======== ========= =======
</TABLE>

F-15
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The primary components of temporary differences which give rise to deferred
taxes at December 31, 1998 and 1999 are:

<TABLE>
<CAPTION>
1998 1999
--------- --------
<S> <C> <C>
Deferred tax assets:
Accruals for salary and bonus....................... $ 21.6 $ 31.8
Reserves for inventory.............................. 1,084.4 1,033.4
Purchased in-process technology/goodwill............ 1,752.2 1,622.2
Net operating loss carryforwards.................... 1,477.6 1,209.5
Allowance for doubtful accounts..................... -- 38.3
--------- --------
Total deferred tax assets............................. 4,335.8 3,935.2
Less valuation allowance............................ (1,160.2) --
--------- --------
Deferred tax assets net of valuation allowance........ 3,175.6 3,935.2
--------- --------
Deferred tax liability
Depreciation........................................ 103.4 69.0
State taxes......................................... 109.6 --
--------- --------
Total deferred tax liability.......................... 213.0 69.0
--------- --------
Net deferred tax assets............................... $ 2,962.6 $3,866.2
========= ========
</TABLE>

Management has reviewed the recoverability of deferred income tax assets and
has determined that it is more likely than not that the deferred tax assets
will be fully realized through future taxable earnings. During 1999 the Company
completed an analysis of its net operating losses in Belgium and as a result
recognized a deferred tax asset of $1,160,200.

Actual income tax expense (benefit) differs from that obtained by applying
the Federal income tax rate of 34% to income (loss) before income taxes as
follows:

<TABLE>
<CAPTION>
1997 1998 1999
-------- --------- ---------
<S> <C> <C> <C>
Computed "expected" tax expense
(benefit)............................... $1,580.0 $(2,267.9) $ 1,223.0
Nondeductible items...................... 9.0 10.9 16.2
State taxes (net of Federal benefit)..... 110.0 (212.9) 138.9
Reduction of valuation allowance......... -- -- (1,160.2)
Tax credits.............................. (110.0) (66.0) (100.0)
Tax effect resulting from foreign sales
corporation activities.................. (63.0) (94.2) (75.6)
Prior year adjustment to provision....... -- 116.5 --
Effect of foreign operations............. -- 923.4 187.8
Other.................................... (65.0) 55.6 (210.5)
-------- --------- ---------
Total.................................. $1,460.0 $(1,534.6) $ 19.6
======== ========= =========
</TABLE>

As of December 31, 1999, the Company has a net operating loss (NOL)
carryforward of approximately $756,701 for Federal income tax purposes. The
Federal NOL has a carryover period of 15 years and is available to offset
future taxable income, if any, through 2005, subject to an annual statutory
limitation.

10. 401(k) Benefit Plan

The Company has a 401(k) profit sharing plan, which covers substantially all
domestic employees of the Company. Plan participants may make voluntary
contributions up to 20% of their earnings up to the statutory limitation. The
Company's contribution is $0.25 for each $1.00 contributed by employees up to
the first $2,000. Company contributions have no vesting period. The Company's
contribution was $38,300 in 1999. There were no Company contributions made in
1997 and 1998.

F-16
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

11. Business Segments

BioSource is engaged in a single industry, the licensing, development,
manufacture, marketing and distribution of immunological reagents, test kits
and oligonucleotides used in biomedical research and human diagnostics. The
Company's customers are not concentrated in any specific geographic region and
no single customer accounts for a significant amount of our sales.

Our accounting policies of the segments below are the same as those
described in the summary of significant accounting policies, except that we are
only able to track net sales for the geographic "Sales-to" segments. We
evaluate performance for the "Sales-from" segments on net revenues and profit
or loss from operations. The Company's reportable segments are strategic
business units that offer geographic product availability. They are managed
separately because each business requires different marketing and distribution
strategies. Business segment information is summarized as follows:

<TABLE>
<CAPTION>
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Sales-from Segments:
Net sales to external customers from:
United States:
Domestic................................... $ 7,452.1 $ 8,844.1 $15,518.0
Export..................................... 4,220.7 4,270.3 4,678.2
--------- --------- ---------
Total United States...................... 11,672.8 13,114.4 20,196.2
Europe....................................... 8,899.0 8,744.2 9,060.8
--------- --------- ---------
Consolidated............................. $20,571.8 $21,858.6 $29,257.0
========= ========= =========
Operating income (loss):
United States................................ $ 3,244.7 $(4,459.4) $ 2,710.6
Europe....................................... 693.6 (2,642.4) 1,902.6
--------- --------- ---------
Consolidated............................. $ 3,938.3 $(7,101.8) $ 4,613.2
========= ========= =========
Identifiable assets at end of year:
United States................................ $33,762.7 $32,184.3
Europe....................................... 7,637.4 7,804.6
--------- ---------
Consolidated............................. 41,400.1 $39,988.9
========= =========
Net interest expense (income):
United States................................ $ (575.0) $ (315.6) $ 815.7
Europe....................................... (52.4) 18.1 154.4
--------- --------- ---------
Consolidated............................. $ (627.4) $ (297.5) $ 970.1
========= ========= =========
Depreciation and amortization:
United States................................ $ 371.7 $ 502.3 $ 1,559.5
Europe....................................... 340.3 457.5 431.4
--------- --------- ---------
Consolidated............................. $ 712.0 $ 959.8 $ 1,990.9
========= ========= =========
Capital expenditures:
United States................................ $ 398.3 $ 608.2 $ 899.0
Europe....................................... 260.7 781.8 178.0
--------- --------- ---------
Consolidated............................. $ 659.0 $ 1,390.0 $ 1,077.0
========= ========= =========
</TABLE>

F-17
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

<TABLE>
<CAPTION>
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Sales-to Segments:
Net Sales to external customers:
United States.................................. $ 7,452.1 $ 8,844.1 $15,518.0
Europe......................................... 9,984.6 9,692.4 10,139.4
Japan.......................................... 2,453.4 2,634.7 2,790.0
Other.......................................... 681.7 687.4 809.6
--------- --------- ---------
Total........................................ $20,571.8 $21,858.6 $29,257.0
========= ========= =========
</TABLE>

12. Commitments and Contingencies

At December 31, 1999 the Company had leases for certain of its facilities
and equipment under various noncancelable operating leases expiring through
March 2007. Total rental expense was approximately $385,000, $453,400 and
$722,900 for the years ended December 31, 1997, 1998 and 1999, respectively.

On March 8, 2000 the Company entered into a lease for a new facility in
Camarillo, California. The lease will commence on May 1, 2000 and expires on
June 30, 2005, with the option to continue the lease for two additional five-
year terms. Annual lease payments in the initial five-year period ended
December 31, 2005 range from $342,000 at inception to $411,000 at termination.

At December 31, 1999, the future minimum payments under these leases,
including the lease executed on March 8, 2000, are as follows:

<TABLE>
<S> <C>
2000.............................................................. $ 878.7
2001.............................................................. 882.9
2002.............................................................. 757.4
2003.............................................................. 676.8
2004.............................................................. 615.7
Thereafter........................................................ 685.7
--------
$4,497.2
========
</TABLE>

13. Earnings Per Share

The Company presents basic and diluted earnings (loss) per share ("EPS").
Basic EPS includes no dilution and is computed by dividing net income (loss)
available to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted EPS reflects the potential dilution
from securities that could share in the earnings of the Company.

The reconciliation's of basic to diluted weighted average shares are as
follows:

<TABLE>
<CAPTION>
Year ended December 31,
----------------------------
1997 1998 1999
-------- --------- --------
<S> <C> <C> <C>
Net earnings (loss) used for basic and
diluted earnings (loss) per share......... $3,186.3 $(5,135.8) $3,577.4
======== ========= ========
Weighted average shares used in basic
computation............................... 8,318.0 7,508.8 7,234.7
Dilutive stock options and warrants........ 647.2 -- 598.2
-------- --------- --------
Weighted average shares used for diluted
computation............................... 8,965.2 7,508.8 7,832.9
======== ========= ========
</TABLE>

F-18
<PAGE>

BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Options to purchase 367,079, 292,936 and 404,849 shares of common stock at
prices ranging from $7.06 to $9.06, $5.25 to $8.94 and $4.13 to $8.94 were
outstanding during 1997, 1998 and 1999, respectively, but were not included in
the computation of diluted earnings (loss) per share because the options'
exercise price was greater than the average market price of the common shares.
Options to purchase 1,824,710 shares of common stock at a prices ranging from
of $1.28 to $4.63 per share were outstanding during 1998, but were not included
in the computation of diluted loss per share because the options were
antidilutive, as the Company incurred a net loss for the year

14. Subsequent events

On February 15, 2000, the Company issued 371,300 shares of $0.001 par value
Series B Preferred Stock with an initial aggregate liquidation value of
$9,000,300. The Series B Preferred Stock is initially convertible into
1,485,200 shares of the Company's Common Stock or at an effective price of
$6.06 per share of Common Stock. The Series B Preferred Stock shares will be
entitled to receive dividends at a rate of 8% of the original issue price.
Unless all dividends on the outstanding Series B Preferred Stock shares have
been paid, no dividends or other distributions shall be paid to Common Stock
shareholders. The Series B Preferred Stock shareholders have liquidation
preference to the Common Stock shareholders. This preferred stock also is
automatically convertible upon any of the following events: (1) a public
offering of common stock of not less than $15 per share, which results in
proceeds to us of at least $40,000,000 before commissions or discounts (2) the
date we specify to the holders, if the last reported sales price of our stock
is above $20 per share for 20 consecutive trading days on the Nasdaq National
Market, or (3) the holders of greater than 50% of the shares of the Series B
inform us in writing of their desire to convert the shares. Holders of Series B
Preferred Stock have the right to require the Company to redeem the Series B
Preferred Stock at the original liquidation value plus accrued dividends after
February 15, 2004, or as early as February 15, 2001, if various stock price
thresholds, as defined, are not met.

In connection with the issuance of Series B Preferred Stock the holders
received detachable stock purchase warrants. The warrants are exchangeable for
1,287,000 shares of Common Stock at an exercise price of $7.77 per share. The
Company allocated the net proceeds of $8,385,000 based on the relative fair
value of the warrants and the Series B Preferred Stock. The book value of the
Series B Preferred Stock of $5,581,600 will accrete to its liquidation value
immediately by $995,100 related to the beneficial conversion feature then
through February 2004 or earlier upon accelerated conversion, under the
interest method. Such accretion will not have an effect on net income, but will
reduce the income available to common shareholders used to calculate basic
earnings per share.

F-19
<PAGE>

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

Years Ended December 31, 1997, 1998 and 1999

<TABLE>
<CAPTION>
Balance at Provision Deductions Balance at
Beginning Charged Accounts End of
of Year to Income Written Off Year
---------- --------- ----------- ----------
(000's)
<S> <C> <C> <C> <C>
1997
Allowance for doubtful accounts.... $ 49.0 $ 154.0 $ -- $ 203.0
Inventory reserve.................. 65.5 309.2 -- 374.7

1998
Allowance for doubtful accounts.... $ 203.0 $ 178.3 $ 80.3 $ 301.0
Inventory reserve.................. 374.7 5,240.8 1,748.3 3,867.2

1999
Allowance for doubtful accounts.... $ 301.0 $ 86.5 $ 59.4 $ 328.1
Inventory reserve.................. 3,867.2 1,455.3 1,638.5 3,684.0
</TABLE>

F-20
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

4,000,000 Shares

[LOGO OF BIOSOURCE INTERNATIONAL]

Common Stock

----------------

PROSPECTUS

----------------

Chase H&Q

Dain Rauscher Wessels

Thomas Weisel Partners LLC

----------------

, 2000

----------------

You should rely only on information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. BioSource and the selling stockholders are
offering to sell, and seeking offers to buy, shares of common stock only in
jurisdictions where offers and sales are permitted. The information contained
in this prospectus is accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or of any sale of our
common stock.

We have not taken any action in any jurisdiction outside the United States
to permit a public offering of the common stock or possession and distribution
of this prospectus in that jurisdiction. Persons who come into possession of
this prospectus in jurisdictions outside the United States are required to
inform themselves about and to observe any restrictions as to this offering
and the distribution of this prospectus applicable to that jurisdiction.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.

The following table itemizes the expenses incurred by the Registrant in
connection with the issuance and distribution of the Securities being
registered, other than underwriting discounts. All the amounts shown are
estimates except the Securities and Exchange Commission registration fee and
the NASD filing fee.

<TABLE>
<S> <C>
Registration fee--Securities and Exchange Commission............ $ 25,427
NASD filing fee................................................. 10,132
Nasdaq National Market fee...................................... 17,500
Accounting fees and expenses.................................... 180,000
Legal fees and expenses (other than blue sky)................... 280,000
Blue sky fees and expenses, including legal fees................ 25,000
Printing; stock certificates.................................... 30,000
Transfer agent and registrar fees............................... 10,000
Miscellaneous................................................... 11,941
---------
Total........................................................... $ 590,000
=========
</TABLE>

Item 15. Indemnification of Directors and Officers.

Section 145 of the Delaware General Corporation Law provides in relevant
part that a corporation may indemnify any person who was or is a party to or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful.

In addition, Section 145 provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Delaware Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Delaware Court of Chancery or
such other court shall deem proper. Delaware law further provides that nothing
in the above-described provisions shall be deemed exclusive of any other rights
to indemnification or advancement of expenses to which any person may be
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise.

Article VIII of the Registrant's Certificate of Incorporation provides for
the indemnification of directors to the fullest extent permissible under
Delaware law.

II-1
<PAGE>

Article V of the Registrant's Bylaws provides for the indemnification of
officers, directors and third parties acting on behalf of the Registrant if
such person acted in good faith and in a manner reasonably believed to be in
and not opposed to the best interest of the Registrant, and, with respect to
any criminal action or proceeding, the indemnified party had no reason to
believe his or her conduct was unlawful.

The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to indemnification provided for
in the Registrant's Bylaws, and intends to enter into indemnification
agreements with any new directors and executive officers in the future.

In addition, the Registrant has purchased insurance pursuant to which its
directors and officers are insured against liability, which they may incur in
their capacity as such.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable.

Section 7 of the Underwriting Agreement filed as Exhibit 1.1 hereto sets
forth certain provisions with respect to the indemnification of certain
controlling persons, directors and officers against certain losses and
liabilities, including certain liabilities under the Securities Act.

Item 16. Exhibits.

<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
1.1 Form of Underwriting Agreement.
2.1 Asset Purchase Agreement dated April 30, 1996, by and among
Registrant, Nordion International, Inc. and Medgenix Diagnostics, S.A.
(1)
2.2 Stock Purchase Agreement dated as of December 9, 1998 by and among
BioSource International, Inc., Quality Controlled Biochemicals, Inc.,
the stockholders of Quality Controlled Biochemicals, Inc., and the
stockholders of Javelle Pharmaceuticals, Inc.(2)
2.3 Asset Purchase Agreement dated as of December 14, 1998 by and among
BioSource International, Inc., a Delaware Corporation, and Biofluids,
Inc., a Maryland Corporation and the Biofluids stockholder.(3)
4.1 Specimen Stock Certificate of Common Stock of Registrant.(4)
4.2 Certificate of Designation of Series A Preferred Stock.(5)
4.3 Certificate of Designation of Series B Preferred Stock.*
4.4 Rights Agreement, dated as of February 25, 1999, between the Company
and U.S. Stock Transfer and Trust Corporation, as Rights Agent.(5)
4.5 Form of Right Certificate.(5)
4.6 Summary of Share Purchase Rights.(5)
4.7 Form of Warrant Agreement.(6)
4.8 Investor Rights Agreement dated February 15, 2000 by and among
BioSource International, Inc. Genstar Capital Partners II, L.P. and
Stargen II LLC.*
4.9 Warrant to Purchase Common Stock of the Company issued to Genstar
Capital Partners II, LP. on February 15, 2000.*
4.10 Warrant to Purchase Common Stock of the Company issued to Stargen II
LLC on February 15, 2000.*
5.1 Opinion and Consent of Troop Steuber Pasich Reddick & Tobey, LLP.*
23.1 Consent of Troop Steuber Pasich Reddick & Tobey, LLP (included in its
opinion filed as Exhibit 5.1 hereto).*
23.2 Consent of KPMG LLP, independent public accountants.
24.1 Power of Attorney (included on signature page).*
27.1 Financial Data Schedule.*
</TABLE>
- --------
* Previously Filed

II-2
<PAGE>

(1) Incorporated by reference to the Company's Amendment No. 1 to Registration
Statement on Form SB-2 (SEC No. 333-3336) as filed with the SEC on May 14,
1996.

(2) Incorporated by reference to the Company's Current Report on Form 8-K/A
filed with the SEC on February 19, 1999.

(3) Incorporated by reference to the Company's Form 10-K for the year ended
December 31, 1998 filed with the SEC on April 15, 1999.

(4) Incorporated by reference to the Company's Registration Statement on Form
S-4 as filed with the SEC on October 22, 1992, as amended.

(5) Incorporated by reference to Form 8-A filed March 1, 1999.

(6) Incorporated by reference to the Company's Registration Statement on Form
SB-2 (SEC No. 333-3336) as filed with the SEC on April 10, 1996.

Item 17. Undertakings.

(a) The undersigned Registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by
the underwriter to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer of controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by a controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

(1) For the purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the Offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this Amendment No. 2 to Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California, on April 12, 2000.

BIOSOURCE INTERNATIONAL, INC.

By: /s/ James H. Chamberlain
___________________________________
James H. Chamberlain
Chairman of the Board
Chief Executive Officer and
President

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 2 to Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
/s/ James H. Chamberlain Chairman of the Board, Chief April 12, 2000
____________________________________ Executive Officer and
James H. Chamberlain President

* Chief Financial Officer April 12, 2000
____________________________________
Charles C. Best

* Director April 12, 2000
____________________________________
Leonard M. Hendrickson

* Director April 12, 2000
____________________________________
David J. Moffa, Ph.D.

* Director April 12, 2000
____________________________________
John R. Overturf, Jr.

* Director April 12, 2000
____________________________________
Robert D. Weist
* Director April 12, 2000
____________________________________
Jean-Pierre L. Conte

* Director April 12, 2000
____________________________________
Robert J. Weltman

* Power of Attorney

By: /s/ James H. Chamberlain
-----------------------------
James H. Chamberlain
Attorney In Fact

</TABLE>

II-4

<PAGE>
EXHIBIT 1.1

BIOSOURCE INTERNATIONAL, INC.

4,000,000 Shares/1/

Common Stock

UNDERWRITING AGREEMENT

April __, 2000

CHASE SECURITIES INC.
DAIN RAUSCHER INCORPORATED
THOMAS WEISEL PARTNERS LLC, as representatives
of the several underwriters named in Schedule I hereto
c/o CHASE SECURITIES INC.
One Bush Street
San Francisco, CA 94104

Ladies and Gentlemen:

BioSource International, Inc., a Delaware corporation (herein called the
"Company"), proposes to issue and sell 3,350,000 shares of its authorized but
unissued Common Stock, $0.001 par value per share (herein called the "Common
Stock"), and the stockholders of the Company named in Schedule II hereto (such
stockholders named in Schedule II who are members of the management of the
Company herein collectively called the "Management Selling Securityholders," all
such other stockholders named in Schedule II herein collectively called the
"Other Selling Securityholders" and the Management Selling Securityholders and
the Other Selling Securityholders herein collectively called the "Selling
Securityholders") propose to sell an aggregate of 650,000 shares of Common Stock
of the Company (said 4,000,000 shares of Common Stock being herein called the
"Underwritten Stock"). The Company and the Other Selling Securityholders propose
to grant to the Underwriters (as hereinafter defined) an option to purchase on a
pro rata basis up to 100,000 additional shares of Common Stock from the Company
and up to 500,000 additional shares of Common Stock from the Other Selling
Securityholders (said 600,000 shares of Common Stock being herein called the
"Option Stock"

- -----------

/1/Plus an option to purchase from the Company up to 100,000 additional
shares and from the Other Selling Securityholders up to 500,000 additional
shares, each of which to cover over-allotments.

1
<PAGE>

and with the Underwritten Stock herein collectively called the "Stock"). The
Common Stock is more fully described in the Registration Statement and the
Prospectus hereinafter mentioned.

The Company and the Selling Securityholders severally hereby confirm the
agreements made with respect to the purchase of the Stock by the several
underwriters, for whom you are acting as representatives, named in Schedule I
hereto (herein collectively called the "Underwriters," which term shall also
include any underwriter purchasing Stock pursuant to Section 3(b) hereof). You
represent and warrant that you have been authorized by each of the other
Underwriters to enter into this Agreement on its behalf and to act for it in the
manner herein provided.

1. Registration Statement. The Company has filed with the Securities and
Exchange Commission (herein called the "Commission") a registration statement on
Form S-3 (No. 333-32622), including the related preliminary prospectus, for the
registration under the Securities Act of 1933, as amended (herein called the
"Securities Act") of the Stock. Copies of such registration statement and of
each amendment thereto, if any, including the related preliminary prospectus
(meeting the requirements of Rule 430A of the rules and regulations of the
Commission) heretofore filed by the Company with the Commission have been
delivered to you.

The term Registration Statement as used in this agreement shall mean such
registration statement, including all documents incorporated by reference
therein, all exhibits and financial statements, all information omitted
therefrom in reliance upon Rule 430A and contained in the Prospectus referred to
below, in the form in which it became effective, and any registration statement
filed pursuant to Rule 462(b) of the rules and regulations of the Commission
with respect to the Stock (herein called a "Rule 462(b) registration
statement"), and, in the event of any amendment thereto after the effective date
of such registration statement (herein called the "Effective Date"), shall also
mean (from and after the effectiveness of such amendment) such registration
statement as so amended (including any Rule 462(b) registration statement). The
term Prospectus as used in this Agreement shall mean the prospectus, including
the documents incorporated by reference therein, relating to the Stock first
filed with the Commission pursuant to Rule 424(b) and Rule 430A (or if no such
filing is required, as included in the Registration Statement) and, in the event
of any supplement or amendment to such prospectus after the Effective Date,
shall also mean (from and after the filing with the Commission of such
supplement or the effectiveness of such amendment) such prospectus as so
supplemented or amended. The term Preliminary Prospectus as used in this
Agreement shall mean each preliminary prospectus, including the documents
incorporated by reference therein, included in such registration statement prior
to the time it becomes effective.

The Registration Statement has been declared effective under the Securities
Act, and no post-effective amendment to the Registration Statement has been
filed as of the date of this Agreement. The Company has caused to be delivered
to you copies of each Preliminary Prospectus and has consented to the use of
such copies for the purposes permitted by the Securities Act.

2
<PAGE>

2. Representations and Warranties of the Company.

(a) The Company hereby represents and warrants as follows:

(i) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has full corporate
power and authority to own or lease its properties and conduct its business
as described in the Registration Statement and the Prospectus and as being
conducted, and is duly qualified as a foreign corporation and in good
standing in all jurisdictions in which the character of the property owned
or leased or the nature of the business transacted by it makes
qualification necessary, except where the failure to be so qualified would
not have a material adverse effect on the business, properties, condition
(financial or otherwise), results of operations or prospects of the Company
and its subsidiaries, taken as a whole (herein called a "Material Adverse
Effect"). The Company's only "significant subsidiary," within the meaning
of Rule 405 of the Securities Act, is BioSource Europe S.A. The Company has
provided to the Underwriters the current organizational documents for
itself and each of its subsidiaries prior to the date hereof, and none of
such documents have been amended or otherwise modified since the date of
receipt of such documents by the Underwriters.

(ii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not occurred any
Material Adverse Effect or any development involving a prospective Material
Adverse Effect whether or not occurring in the ordinary course of business,
and there has not been any material transaction entered into or any
material transaction that is probable of being entered into by the Company,
other than transactions in the ordinary course of business and changes and
transactions described in the Registration Statement and the Prospectus.
The Company has no material contingent obligations that are not disclosed
in the Prospectus or provided for in the Company's financial statements
that are included in the Registration Statement.

(iii) The Registration Statement, the Prospectus and each document
filed or to be filed pursuant to the Securities Exchange Act of 1934, as
amended (herein called the "Exchange Act"), and incorporated by reference
in the Registration Statement and the Prospectus comply, and on the Closing
Date (as hereinafter defined) and any Option Closing Dates (as such dates
are hereinafter defined), the Prospectus will comply, in all material
respects, with the provisions of the Securities Act and the Exchange Act,
as applicable, and the rules and regulations of the Commission thereunder;
on the Effective Date, the Registration Statement did not contain any
untrue statement of a material fact and did not omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading; and, on the Effective Date the
Prospectus did not and, on the Closing Date and any Option Closing Date,
will not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that none of the representations and warranties in this
subparagraph (iii) shall apply to statements in, or omissions from, the
Registration Statement or the Prospectus made in reliance upon and

3
<PAGE>

in conformity with information herein or otherwise furnished in writing to
the Company by or on behalf of the Underwriters for use in the Registration
Statement or the Prospectus.

(iv) The Commission has not issued an order preventing or suspending
the use of any Prospectus relating to the proposed offering of the Stock,
nor, to the best knowledge of the Company, instituted proceedings for that
purpose.

(v) The outstanding shares of capital stock of the Company and each
of its subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable; the Stock is duly and validly authorized, is
(or in the case of shares of the Stock to be sold by the Company, will be,
when issued and sold to the Underwriters as provided herein) duly and
validly issued, fully paid and non-assessable; and no preemptive, co-sale,
registration right, right of first refusal or other similar rights of
stockholders exist or have not been waived with respect to any of the Stock
or the issue and sale thereof. No further approval or authority of the
stockholders or the Board of Directors of the Company will be required for
the transfer and sale of the Stock to be sold by the Selling
Securityholders or the issuance and sale of the Stock as contemplated
herein. Except as disclosed in the Registration Statement and the
Prospectus (including the financial statements included therein or
incorporated therein by reference), (A) neither the filing of the
Registration Statement nor the offering or sale of the Stock as
contemplated by this Agreement gives rise to any rights relating to the
registration of any shares of capital stock of the Company or any of its
subsidiaries; (B) there are no contracts, agreements or understandings
between the Company or any of its subsidiaries and any person granting such
person the right to require the Company or any of its subsidiaries to file
a registration statement under the Securities Act with respect to any
securities of the Company or any of its subsidiaries owned or to be owned
by such person or to require the Company or any of its subsidiaries to
include such securities in the securities registered pursuant to any other
registration statement filed by the Company under the Securities Act; and
(C) there are no outstanding subscriptions, rights, warrants, options
(other than options to acquire Common Stock granted after March 20, 2000 to
employees of the Company in the ordinary course of business), calls,
convertible securities, commitments of sale or liens related to or
entitling any person to purchase or otherwise to acquire any shares of the
capital stock of, or other ownership interest in, the Company or any of its
subsidiaries.

(vi) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act. The Stock to be sold by the Selling Securityholders is listed
and duly admitted to trading on the Nasdaq National Market, and prior to
the Closing Date the Stock to be issued and sold by the Company will be
authorized for listing by the Nasdaq National Market upon official notice
of issuance.

(vii) The information set forth under the caption "Capitalization" in
the Prospectus is true and correct in all material respects. All of the
Stock conforms in all material respects to the description thereof set
forth under the caption "Description of Capital Stock" in the Registration
Statement and the Prospectus and the description of the

4
<PAGE>

Company's capital stock in the Registration Statement on Form 8-B filed on
June 14, 1993 (which description is incorporated by reference into the
Prospectus). The form of certificate for the Stock conforms to the legal
requirements of the State of Delaware and any applicable stock market rules
and regulations.

(viii) The financial statements of the Company, together with the
related notes and schedules set forth in or incorporated by reference into
the Registration Statement, present fairly, the financial position and the
results of operations and cash flows of the Company and its subsidiaries on
a consolidated basis at the indicated dates and for the indicated periods.
Such financial statements and related schedules have been prepared in
accordance with generally accepted principles of accounting, consistently
applied throughout the periods involved, and all adjustments necessary for
a fair presentation of results for such periods have been made. The summary
and selected financial data included in the Registration Statement present
fairly the information shown therein and such data has been compiled on a
basis consistent with the financial statements presented therein and the
books and records of the Company and its subsidiaries. No financial
statements, pro forma financial statements, schedules or other financial
data are required to be included in the Registration Statement other than
those which have been so included.

(ix) KPMG LLP, who have certified certain of the financial statements
filed with the Commission as part of or incorporated by reference in the
Registration Statement, are independent public accountants as required by
the Securities Act and the Rules and Regulations of the Commission
thereunder.

(x) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Company or any of its subsidiaries, threatened against the
Company, any of its subsidiaries or any of their respective directors,
officers or properties, before any court or administrative agency or
otherwise, which if determined adversely to the Company or such
subsidiaries could reasonably be expected to result in any Material Adverse
Effect or prevent the consummation of the transactions contemplated hereby;
and there are no agreements, contracts, leases or documents of the Company
or any of its subsidiaries of a character required to be described or
referred to in the Registration Statement or Prospectus or to be filed as
an exhibit to the Registration Statement by the Securities Act or the Rules
and Regulations which have not been accurately described in all material
respects or referred to in the Registration Statement or Prospectus or
filed as exhibits to the Registration Statement. The contracts so described
in the Registration Statement and Prospectus are in full force and effect
on the date hereof, and neither the Company nor any of its subsidiaries
nor, to the best of the knowledge of the Company and its subsidiaries, any
other party, is in breach of or default under any of such contracts where
such breach or default would have a Material Adverse Effect.

(xi) Each of the Company and its subsidiaries has good and marketable
title to all of the properties and assets as described in the Registration
Statement or as reflected in the financial statements filed with the
Commission as part of the Registration Statement, free and clear of any
lien, mortgage, pledge, charge or encumbrance of any

5
<PAGE>

kind except those reflected in such financial statements or as described in
the Registration Statement. All leases to which the Company or any of its
subsidiaries is a party are valid and binding obligations of the Company
and its subsidiaries, respectively, and no default by the Company or any of
its subsidiaries has occurred or is continuing thereunder which could
reasonably be expected to result in a Material Adverse Effect; and the
Company and its subsidiaries enjoy peaceful and undisturbed possession
under all such leases to which they are a party as lessee. Except as set
forth in the Registration Statement and Prospectus, the Company and its
subsidiaries own or lease all such properties as are necessary to their
operations as described in the Registration Statement and Prospectus.

(xii) Each of the Company and its subsidiaries has timely filed all
federal, state, local and foreign income tax returns which have been
required to be filed and have paid all taxes required by said returns and
all assessments received by them or any of them to the extent that such
taxes have become due and are not being contested in good faith except
where the failure to file such returns and pay such taxes would not have a
Material Adverse Effect. All tax liabilities (including those being
contested in good faith) for the periods covered by the financial
statements of the Company that are included in the Registration Statement
have been adequately accounted for or described in such financial
statements. The Company has made adequate charges, accruals and reserves in
the applicable financial statements included in the Prospectus in respect
of all federal, state and foreign income and franchise taxes for all
periods as to which the tax liability of the Company or any of its
consolidated subsidiaries has not been finally determined.

(xiii) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby, including, without
limitation, the corporate power and authority to issue, sell and deliver
the Stock as provided herein.

(xiv) This Agreement has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement of the Company,
enforceable in accordance with its terms except insofar as indemnification
and contribution provisions may be limited by applicable law or equitable
principles and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
affecting creditors' rights generally, by general equitable principles or
by considerations of public policy.

(xv) Neither the Company nor any of its subsidiaries is, nor with the
giving of notice or lapse of time or both will be, in violation of or in
default (A) under its respective certificate of incorporation or by-laws or
equivalent organizational documents or (B) under an agreement, lease,
contract, indenture or other instrument or obligation to which it is a
party or by which it, or any of its properties, is bound and which defaults
under this clause (B), individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. The execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not conflict with
or result in a breach of any of the terms or provisions of, or constitute a
default under any indenture, mortgage, deed of trust or other agreement

6
<PAGE>

or instrument to which the Company or any of its subsidiaries is a party,
or of the certificate of incorporation or equivalent organizational
documents of the Company or any of its subsidiaries or any law, order, rule
or regulation, injunction, judgment or decree applicable to the Company or
any of its subsidiaries of any court or of any regulatory body or
administrative agency or other governmental body having jurisdiction over
the Company or any of its subsidiaries.

(xvi) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the transactions
herein contemplated (except such additional steps as may be required by the
National Association of Securities Dealers, Inc. (herein called the "NASD")
or such additional steps as may be necessary to qualify the Stock for
public offering by the Underwriters under state securities or blue sky
laws) has been obtained or made and is in full force and effect.

(xvii) Each of the Company and its subsidiaries now holds and at the
Closing Date and any later date on which the Option Stock is purchased, as
the case may be, will hold, all licenses, consents, certificates, orders,
approvals and permits from all state, United States, foreign and other
governmental or regulatory authorities, including, but not limited to, the
U.S. Food and Drug Administration (herein called the "FDA") and any foreign
and state governmental or regulatory authorities performing functions
similar to those performed by the FDA, that are required for the conduct of
the business of the Company and its subsidiaries as such business is
currently conducted and as proposed to be conducted as described in the
Prospectus, all of which are valid and in full force and effect (and there
is no proceeding pending or, to the best knowledge of the Company or its
subsidiaries, threatened which may cause any such license, consent,
certificate, order, approval or permit to be withdrawn, canceled, suspended
or not renewed), except for such licenses, certificates approvals and
permits the failure of which to maintain or to keep valid and in full force
and effect would not have a Material Adverse Effect. Each of the Company
and its subsidiaries is in compliance in all material respects with all
applicable foreign, FDA, state and local rules, regulations, guidelines and
policies, including, without limitation, applicable foreign, FDA, state and
local rules, regulations and policies relating to good laboratory practice,
and good manufacturing practices. Neither the Company nor any of its
subsidiaries has violated, or received notice of an alleged violation of,
any foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants or relating to
discrimination in the hiring, promotion or pay of, or to the wages and
hours of, employees, except for such violations as in the aggregate would
not result in any Material Adverse Effect. To the best of the Company's and
each of its subsidiaries' knowledge, no labor disturbance by the employees
of the Company or any of its subsidiaries exists or is imminent, and
neither the Company nor any of its subsidiaries is aware of any existing or
imminent labor disturbance by the employees of any of its principal
suppliers, value added resellers, authorized dealers or distributors that
might be expected to result in a Material Adverse Effect. Except as
disclosed in the Registration Statement, no collective bargaining

7
<PAGE>

agreement exists with any of the Company's or its subsidiaries' employees
and, to the best of the Company's and each of its subsidiaries' knowledge,
no such agreement is imminent.

(xviii) The Company is in compliance in all material respects with all
currently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published
interpretations thereunder (herein called "ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company would have any liability; the
Company has not incurred and does not expect to incur liability under (i)
Title IV of ERISA with respect to termination of, or withdrawal from, any
"pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretation
thereunder (herein called the "Code"); and each "pension plan" for which
the Company would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, that would
cause the loss of such qualification.

(xix) Each of the Company and its subsidiaries is conducting its
business in compliance with all of the applicable laws, rules and
regulations of the jurisdictions in which it is conducting business,
including, but not limited to, (i) the laws, rules and regulations
administered or promulgated by the FDA or any foreign, state or local
governmental or regulatory authorities, performing functions similar to
those performed by the FDA body exercising comparable authority and (ii)
all laws, rules and regulations applicable to the import and export of the
Company's products, except where any such failure to be in compliance would
not have a Material Adverse Effect.

(xx) Except as indicated in the Registration Statement and the
Prospectus, the Company and its subsidiaries do not own any patents or
registered trademarks and have not applied for any patent or the
registration of any trademark. The Company and its subsidiaries own,
possess or have the right to use all patents, inventions, designs, trade
secrets, know-how, trademarks, service marks, trade names, copyrights,
domain names, technical data and other information (herein collectively
called "Intellectual Property") that are necessary to conduct its business
as described in the Registration Statement and the Prospectus. Neither the
Company nor any of its subsidiaries has received any notice of, and has no
knowledge of, any infringement of or conflict with any rights of the
Company or any of its subsidiaries by others with respect to any
Intellectual Property which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would have a Material Adverse
Effect. Neither the Company nor any of its subsidiaries has received any
notice of, and has no knowledge of, any infringement of or conflict with
any rights of others with respect to any Intellectual Property which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect. To the best of the
Company's and each of its subsidiaries' knowledge, none of the Intellectual
Property licensed to or by the Company or any of its subsidiaries is
unenforceable or invalid. Neither the Company nor any of its subsidiaries
is aware of the granting of any patent rights to third parties or the
filing of

8
<PAGE>

any patent applications by third parties or any other rights of third
parties to any Intellectual Property owned by the Company or any of its
subsidiaries which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect.

(xxi) Neither the Company nor any of its subsidiaries has taken,
directly or indirectly, any action designed to cause or result in, or which
has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock to
facilitate the sale or resale of the Stock.

(xxii) Each of the Company and its subsidiaries is not and, after
giving effect to the offering and sale of the Stock and the application of
the net proceeds thereof as described in the Prospectus, will not be an
"investment company" as such term is defined in the Investment Company Act
of 1940, as amended.

(xxiii) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (a) transactions are
executed in accordance with management's general or specific authorization;
(b) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (c) access to assets
is permitted only in accordance with management's general or specific
authorization; and (d) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.

(xxiv) Each of the Company and its subsidiaries carries, or is covered
by, insurance with insurers of nationally recognized reputability in such
amounts and covering such risks as it believes is customary for companies
engaged in similar industries, all of which insurance is in full force and
effect.

(xxv) The statements in the Prospectus under the heading
"Relationships and Related Transactions" set forth all existing agreements,
arrangements, understandings or transactions or currently proposed
agreements, arrangements, understandings or transactions between or among
the Company or any of its subsidiaries, on the one hand, and any officer,
director or stockholder of the Company or with any partner, affiliate or
associate of any of the foregoing persons or entities, on the other hand,
required to be set forth or described thereunder pursuant to the Securities
Act and the Rules and Regulations of the Commission thereunder.

(xxvi) There are no issues related to the preparedness of the Company
or any of its subsidiaries for the Year 2000 that (a) are of a character
required to be described or referred to in the Registration Statement or
Prospectus by the Securities Act or the Rules and Regulations of the
Commission thereunder which have not been accurately described in the
Registration Statement or Prospectus or (b) might reasonably be expected to
result in any Material Adverse Effect. Except as set forth in the
Registration Statement, all internal computer systems and all software
(including operating systems, programs,

9
<PAGE>

packages and utilities), firmware, hardware, networking components and
peripherals provided as part of the configuration (hereinafter "Constituent
Component") and all computer-related products and each Constituent
Component of those products of the Company and each of its subsidiaries (a)
have been reviewed to confirm that they store, process (including sorting
and performing mathematical operations, calculations and computations),
input and output data containing date and information correctly regardless
of whether the date contains dates and times before, on or after January 1,
2000, (b) have been designated to ensure date and time entry recognition,
calculations that accommodate same century and multi-century formulas and
date values, leap year recognition and calculations, and date data
interface values that reflect the century, (c) accurately manage and
manipulate data involving dates and times including single century formulas
and multi-century formulas, and will not cause an abnormal ending scenario
within the application or generate incorrect values or invalid results
involving such dates, (d) accurately process any date rollover and (e)
accept and respond to two-digit year date input in a manner that resolves
any ambiguities as to the century.

(xxvii) Neither the Company nor any of its subsidiaries has at any
time since its inception (a) made any unlawful contribution to any
candidate for foreign office, failed to disclose fully any contribution in
violation of applicable law, (b) violated the Foreign Corrupt Practices Act
of 1977, as amended, or (c) made any payment to any federal or state
governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by
the laws of the United States or any jurisdiction thereof.

(xxviii) Neither the Company nor any of its subsidiaries has
distributed or will distribute prior to the later of (a) the Closing Date
or the last Option Closing Date, as the case may be, and (b) completion of
the distribution of the Stock, any offering material in connection with the
offering and sale of the Stock other than any Preliminary Prospectuses, the
Prospectus, the Registration Statement and other materials, if any,
permitted by the Securities Act.

(xxix) Neither the Company nor any of its subsidiaries has incurred
any liability for any finder's fees or similar payments in connection with
the transactions contemplated hereby other than to the Underwriters.

(xxx) The statements (including the assumptions described therein)
included in the Prospectus are (i) within the coverage of Rule 175(b) under
the Securities Act to the extent such data constitute forward looking
statements as defined in Rule 175(c) and (ii) were made by the Company with
a reasonable basis and reflect the Company's good faith estimate of the
matters described therein.

Each certificate signed by any officer of the Company and delivered to the
Underwriters or counsel for the Underwriters pursuant to this Agreement shall be
deemed to be a representation and warranty by the Company to the Underwriters as
to the matters covered thereby. The Company acknowledges that each of the
Underwriters and, for purposes of the opinion to be delivered to the
Underwriters pursuant to Section 9(c) hereof, counsel to the

10
<PAGE>

Underwriters and counsel to the Company, will rely upon the accuracy and truth
of the foregoing representations and hereby consents to such reliance.

(b) Each of the Selling Securityholders hereby represents and warrants as
follows (provided that only the Other Selling Securityholders shall make any
representation and warranty with respect to clauses (iii) and (xi) below):

(i) Such Selling Securityholder has good and marketable title to all
the shares of Stock to be sold by such Selling Securityholder hereunder,
free and clear of all liens, encumbrances, equities, security interests and
claims whatsoever, with full right and authority to deliver the same
hereunder, subject to the rights of U.S. Stock Transfer Corporation, as
Custodian (herein called the "Custodian") and to the rights of the several
Underwriters, and upon the delivery of and payment for such shares of the
Stock hereunder, the several Underwriters will receive good and marketable
title thereto, free and clear of all liens, encumbrances, equities,
security interests and claims whatsoever.

(ii) In the case of each of the Management Selling Securityholders,
certificates in negotiable form for the shares of the Stock to be sold by
such Selling Securityholder have been placed in custody under a Custody
Agreement, dated as of April ___, 2000 (the "Custody Agreement"), between
such Selling Securityholder and the Custodian, for delivery under this
Agreement with the Custodian; such Selling Securityholder specifically
agrees that the shares of the Stock represented by the certificates so held
in custody for such Selling Securityholder are subject to the interests of
the several Underwriters and the Company, that the arrangements made by
such Selling Securityholder for such custody, including the Power of
Attorney to which such Custody Agreement is an exhibit, are to that extent
irrevocable, and that, except as set forth in the Custody Agreement, the
obligations of such Selling Securityholder shall not be terminated by any
act of such Selling Securityholder or by operation of law, whether by the
death or incapacity of such Selling Securityholder (or, in the case of a
Selling Securityholder that is not an individual, the dissolution or
liquidation of such Selling Securityholder) or the occurrence of any other
event; if any such death, incapacity, dissolution, liquidation or other
such event should occur before the delivery of such shares of the Stock
hereunder, certificates for such shares of the Stock shall be delivered by
the Custodian in accordance with the terms and conditions of this Agreement
as if such death, incapacity, dissolution, liquidation or other event had
not occurred, regardless of whether the Custodian shall have received
notice of such death, incapacity, dissolution, liquidation or other event.

(iii) Such Other Selling Securityholder has all requisite power and
authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby,
including, without limitation, the power and authority to sell and deliver
the Stock as provided herein.

(iv) This Agreement has been, in the case of each of the Other Selling
Securityholders, duly authorized, and in the case of each of the Selling
Securityholders, duly executed and delivered by or on behalf of such
Selling Securityholder, and is a valid

11
<PAGE>

and binding agreement of such Selling Securityholder, enforceable in
accordance with its terms except insofar as indemnification and
contribution provisions may be limited by applicable law or equitable
principles and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
affecting creditors' rights generally, by general equitable principles or
by considerations of public policy. In the case of each of the Management
Selling Securityholders, such Selling Securityholder has duly and
irrevocably executed and delivered a Power of Attorney (the "Power of
Attorney") appointing James Chamberlain and Charles Best, as attorneys-in-
fact, with full power of substitution, and with full authority to execute
and deliver this Agreement and the Custody Agreement between such Selling
Securityholder and the Custodian, and to take such other actions as may be
necessary or desirable to carry out the provisions hereof or thereof, in
each case on behalf of the Selling Securityholder.

(v) In the case of the Management Selling Securityholders, such
Selling Securityholder has reviewed the Registration Statement and
Prospectus and, although such Selling Securityholder has not independently
verified the accuracy or completeness of all the information contained
therein, nothing has come to the attention of such Selling Securityholder
that would lead such Selling Securityholder to believe that on the
Effective Date, the Registration Statement contained any untrue statement
of a material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Prospectus did not contain and,
on the Closing Date and any Option Closing Date, as the case may be, will
not contain any untrue statement of a material fact or did not omit or will
not omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

(vi) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery
by such Selling Securityholder of this Agreement and the consummation of
the transactions herein contemplated (except such additional steps as may
be required by the NASD or such additional steps as may be necessary to
qualify the Stock for public offering by the Underwriters under state
securities or blue sky laws) has been obtained or made and is in full force
and effect.

(vii) Such Selling Securityholder has not distributed and will not
distribute prior to the later of (a) the Closing Date or on an Option
Closing Date, as the case may be, and (b) completion of the distribution of
the Stock, any offering documents or related material in connection with
the offering and sale of the Stock other than any Preliminary Prospectuses,
the Prospectus, the Registration Statement and other materials, if any,
permitted by the Securities Act.

(viii) The information in the Prospectus under the caption "Principal
and Selling Stockholders" which specifically relates to such Selling
Securityholder and any written information furnished by or on behalf of
such Selling Securityholder that is set forth in the Registration Statement
and Prospectus does not, and will not on the Closing Date or

12
<PAGE>

on any Option Closing Date, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

(ix) Such Selling Securityholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Stock.

(x) Such Selling Securityholder does not have, or has waived prior to
the date hereof, any preemptive right, co-sale right or right of first
refusal or other similar right to purchase any of the shares that are to be
sold by the Company or any of the other Selling Securityholders to the
Underwriters pursuant to this Agreement. Except as disclosed in the
Registration Statement, such Selling Securityholder does not have, or has
waived prior to the date hereof, any registration right or similar right to
participate in the offering made by the Prospectus, other than such rights
of participation as have been satisfied by the participation of such
Selling Securityholder in the transactions to which this Agreement relates
in accordance with the terms of this Agreement.

(xi) In the case of the Other Selling Securityholders, the sale by
each such Other Selling Securityholder of the shares of Stock as
contemplated by this Agreement will not conflict with, or result in a
breach of, any agreement or instrument to which such Other Selling
Securityholder is a party or by which such Other Selling Securityholder is
bound or to which any of the property or assets of such Other Selling
Securityholder is subject.

Each certificate signed by the Custodian and delivered to the Underwriters
or counsel for the Underwriters pursuant to this Agreement shall be deemed to be
a representation and warranty by such Selling Securityholder to the Underwriters
as to the matters covered thereby. The Other Selling Securityholders acknowledge
that each of the Underwriters and, for purposes of the opinion to be delivered
to the Underwriters pursuant to Section 9(c) hereof, counsel to the
Underwriters, counsel to the Company and counsel to the Selling Securityholders
will rely upon the accuracy and truth of the foregoing representations and
hereby consents to such reliance.

3. Purchase of the Stock by the Underwriters.

(a) On the basis of the representations and warranties and subject to the
terms and conditions herein set forth, the Company agrees to issue and sell
3,350,000 shares of the Underwritten Stock to the several Underwriters, each
Selling Securityholder agrees to sell to the several Underwriters the number of
shares of the Underwritten Stock set forth in Schedule II opposite the name of
such Selling Securityholder, and each of the Underwriters agrees to purchase
from the Company and the Selling Securityholders the respective aggregate number
of shares of Underwritten Stock set forth opposite its name in Schedule I. The
price at which such shares of Underwritten Stock shall be sold by the Company
and the Selling Securityholders and purchased by the several Underwriters shall
be $___ per share. The obligation of each Underwriter to the Company and each of
the Selling Securityholders shall be to purchase from the Company and the
Selling Securityholders that number of shares of the Underwritten Stock which
represents the same proportion of the total number of shares of the Underwritten
Stock to be sold by each of the Company and the Selling Securityholders pursuant
to this Agreement as the number of shares of the Underwritten Stock set forth
opposite the name of such Underwriter in Schedule I hereto represents of the
total number of shares of the Underwritten Stock to be purchased by all
Underwriters pursuant to this Agreement, as adjusted by you in such manner as

13
<PAGE>

you deem advisable to avoid fractional shares. In making this Agreement, each
Underwriter is contracting severally and not jointly; except as provided in
paragraphs (b) and (c) of this Section 3, the agreement of each Underwriter is
to purchase only the respective number of shares of the Underwritten Stock
specified in Schedule I.

(b) If for any reason one or more of the Underwriters shall fail or refuse
(otherwise than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 8 or 9 hereof) to purchase and pay for
the number of shares of the Stock agreed to be purchased by such Underwriter or
Underwriters, the Company or the Selling Securityholders shall immediately give
notice thereof to you, and the non-defaulting Underwriters shall have the right
within 24 hours after the receipt by you of such notice to purchase, or procure
one or more other Underwriters to purchase, in such proportions as may be agreed
upon between you and such purchasing Underwriter or Underwriters and upon the
terms herein set forth, all or any part of the shares of the Stock which such
defaulting Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail so to make such arrangements with respect to all such shares
and portion, the number of shares of the Stock which each non-defaulting
Underwriter is otherwise obligated to purchase under this Agreement shall be
automatically increased on a pro rata basis to absorb the remaining shares and
portion which the defaulting Underwriter or Underwriters agreed to purchase;
provided, however, that the non-defaulting Underwriters shall not be obligated
to purchase the shares and portion which the defaulting Underwriter or
Underwriters agreed to purchase if the aggregate number of such shares of the
Stock exceeds 10% of the total number of shares of the Stock which all
Underwriters agreed to purchase hereunder. If the total number of shares of the
Stock which the defaulting Underwriter or Underwriters agreed to purchase shall
not be purchased or absorbed in accordance with the two preceding sentences, the
Company and each of the Selling Securityholders shall have the right, within 24
hours next succeeding the 24-hour period above referred to, to make arrangements
with other underwriters or purchasers satisfactory to you for purchase of such
shares and portion on the terms herein set forth. In any such case, either you
or the Company and each of the Selling Securityholders shall have the right to
postpone the Closing Date determined as provided in Section 5 hereof for not
more than seven business days after the date originally fixed as the Closing
Date pursuant to said Section 5 in order that any necessary changes in the
Registration Statement, the Prospectus or any other documents or arrangements
may be made. If neither the non-defaulting Underwriters nor the Company or any
of the Selling Securityholders shall make arrangements within the 24-hour
periods stated above for the purchase of all the shares of the Stock which the
defaulting Underwriter or Underwriters agreed to purchase hereunder, this
Agreement shall be terminated without further act or deed and without any
liability on the part of the Company or any of the Selling Securityholders to
any non-defaulting Underwriter and without any liability on the part of any non-
defaulting Underwriter to the Company or any of the Selling Securityholders.
Nothing in this paragraph (b), and no action taken hereunder, shall relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.

(c) On the basis of the representations, warranties and covenants herein
contained, and subject to the terms and conditions herein set forth, the Company
and the Other Selling Securityholders grant an option to the several
Underwriters to purchase, severally and not jointly, on a pro rata basis up to
100,000 shares in the aggregate of the Option Stock from the Company

14
<PAGE>

and up to 500,000 shares in the aggregate of the Option Stock from the Other
Selling Securityholders (in the amounts set forth in Schedule I with respect to
such Other Selling Securityholders) at the same price per share as the
Underwriters shall pay for the Underwritten Stock. Said option may be exercised
only to cover over-allotments in the sale of the Underwritten Stock by the
Underwriters and may be exercised in whole or in part from time to time on or
before the thirtieth day after the date of this Agreement upon written or
telegraphic notice by you to the Company setting forth the aggregate number of
shares of the Option Stock as to which the several Underwriters are exercising
the option. Delivery of certificates for the shares of Option Stock, and payment
therefor, shall be made as provided in Section 5 hereof. The number of shares of
the Option Stock to be purchased by each Underwriter shall be the same
percentage of the total number of shares of the Option Stock to be purchased by
the several Underwriters as such Underwriter is purchasing of the Underwritten
Stock, as adjusted by you in such manner as you deem advisable to avoid
fractional shares.

4. Offering by Underwriters.

(a) The terms of the public offering by the Underwriters of the Stock to be
purchased by them shall be as set forth in the Prospectus. The Underwriters may
from time to time change the public offering price after the closing of the
initial public offering and increase or decrease the concessions and discounts
to dealers as they may determine.

(b) The information set forth under "Underwriting" in the Registration
Statement, any Preliminary Prospectus and the Prospectus relating to the Stock
filed by the Company (insofar as such information relates to the Underwriters)
constitutes the only information furnished by the Underwriters to the Company
for inclusion in the Registration Statement, any Preliminary Prospectus, and the
Prospectus, and you on behalf of the respective Underwriters represent and
warrant to the Company that the statements made therein are correct.

5. Delivery of and Payment for the Stock.

(a) Delivery of certificates for the shares of the Underwritten Stock and
the Option Stock (if the option granted by Section 3(c) hereof shall have been
exercised not later than 7:00 A.M., San Francisco time, on the date two business
days preceding the Closing Date), and payment therefor, shall be made at the
office of Troop Steuber Pasich Reddick & Tobey, LLP, 2029 Century Park East,
24th Floor, Los Angeles, California 90067, at 7:00 a.m., San Francisco time, on
the fourth business day after the date of this Agreement, or at such time on
such other day, not later than seven full business days after such fourth
business day, as shall be agreed upon in writing by the Company, the Selling
Securityholders and you. The date and hour of such delivery and payment (which
may be postponed as provided in Section 3(b) hereof) are herein called the
"Closing Date."

(b) If the option granted by Section 3(c) hereof shall be exercised after
7:00 a.m., San Francisco time, on the date two business days preceding the
Closing Date, delivery of certificates for the shares of Option Stock, and
payment therefor, shall be made at the office of Troop Steuber Pasich Reddick &
Tobey, LLP, 2029 Century Park East, 24th Floor, Los Angeles, California 90067,
at 7:00 a.m., San Francisco time, on the third business day after the exercise
of

15
<PAGE>

such option. The date and hour of each such delivery and payment (each of
which may be postponed as provided in Section 3(b) hereof) are herein called an
"Option Closing Date."

(c) Payment for the Stock purchased from the Company shall be made to the
Company or its order and payment for the Stock purchased from the Selling
Securityholders shall be made to the Custodian, for the account of the Selling
Securityholders, in each case by one or more wire transfers of same day funds.
Such payment shall be made upon delivery of certificates for the Stock to you
for the respective accounts of the several Underwriters against receipt therefor
signed by you. Certificates for the Stock to be delivered to you shall be
registered in such name or names and shall be in such denominations as you may
request at least one business day before the Closing Date, in the case of
Underwritten Stock, and at least one business day prior to the purchase thereof,
in the case of the Option Stock. Such certificates will be made available to
the Underwriters for inspection, checking and packaging at the offices of
Simpson Thacher & Bartlett, 3373 Hillview Avenue, Suite 250, Palo Alto,
California, 94304 on the business day prior to the Closing Date or, in the case
of the Option Stock, by 3:00 p.m., New York time, on the business day preceding
the date of purchase.

It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
and the Selling Securityholders for shares to be purchased by any Underwriter
whose check shall not have been received by you on the Closing Date or any later
date on which Option Stock is purchased for the account of such Underwriter.
Any such payment by you shall not relieve such Underwriter from any of its
obligations hereunder.

6. Further Agreements of the Company and the Selling Securityholders. The
Company covenants and agrees as follows:

(a) The Company will (i) prepare and timely file with the Commission under
Rule 424(b) a Prospectus containing information previously omitted at the time
of effectiveness of the Registration Statement in reliance on Rule 430A and (ii)
not file any amendment to the Registration Statement or supplement to the
Prospectus of which you shall not previously have been advised and furnished
with a copy or to which you shall have reasonably objected in writing or which
is not in compliance with the Securities Act or the rules and regulations of the
Commission thereunder.

(b) The Company will promptly notify each Underwriter in the event of (i)
the request by the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, (iii) the institution or notice of intended institution
of any action or proceeding for that purpose, (iv) the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Stock for sale in any jurisdiction, or (v) the receipt by it of notice of the
initiation or threatening of any proceeding for such purpose. The Company and
the Selling Securityholders will make every reasonable effort to prevent the
issuance of such a stop order and, if such an order shall at any time be issued,
to obtain the withdrawal thereof at the earliest possible moment.

16
<PAGE>

(c) The Company will (i) on or before the Closing Date, deliver to you a
signed copy of the Registration Statement as originally filed and of each
amendment thereto filed prior to the time the Registration Statement becomes
effective and, promptly upon the filing thereof, a signed copy of each post-
effective amendment, if any, to the Registration Statement (together with, in
each case, all exhibits thereto unless previously furnished to you) and will
also deliver to you, for distribution to the Underwriters, a sufficient number
of additional conformed copies of each of the foregoing (but without exhibits)
so that one copy of each may be distributed to each Underwriter, (ii) as
promptly as possible deliver to you and send to the several Underwriters, at
such office or offices as you may designate, as many copies of the Prospectus as
you may reasonably request, and (iii) thereafter from time to time during the
period in which a prospectus is required by law to be delivered by an
Underwriter or a dealer, likewise send to the Underwriters as many additional
copies of the Prospectus and as many copies of any supplement to the Prospectus
and of any amended prospectus, filed by the Company with the Commission, as you
may reasonably request for the purposes contemplated by the Securities Act.

(d) If at any time during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing by
you, shall occur as a result of which it is necessary, in the opinion of counsel
for the Company or of counsel for the Underwriters, to supplement or amend the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser of the Stock,
the Company will forthwith prepare and file with the Commission a supplement to
the Prospectus or an amended prospectus so that the Prospectus as so
supplemented or amended will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time such Prospectus
is delivered to such purchaser, not misleading. If, after the initial public
offering of the Stock by the Underwriters and during such period, the
Underwriters shall propose to vary the terms of offering thereof by reason of
changes in general market conditions or otherwise, you will advise the Company
in writing of the proposed variation, and, if in the opinion either of counsel
for the Company or of counsel for the Underwriters such proposed variation
requires that the Prospectus be supplemented or amended, the Company will
forthwith prepare and file with the Commission a supplement to the Prospectus or
an amended prospectus setting forth such variation. The Company authorizes the
Underwriters and all dealers to whom any of the Stock may be sold by the several
Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Stock in accordance with the
applicable provisions of the Securities Act and the applicable rules and
regulations thereunder for such period.

(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment to
the Registration Statement and any supplement to the Prospectus or any amended
prospectus proposed to be filed.

(f) The Company will cooperate, when and as requested by you, in the
qualification of the Stock for offer and sale under the securities or blue sky
laws of such jurisdictions as you may designate and, during the period in which
a prospectus is required by law to be delivered by an Underwriter or dealer, in
keeping such qualifications in good standing under said securities or blue sky
laws; provided, however, that the Company shall not be obligated to file any
general

17
<PAGE>

consent to service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified. The Company will, from time to
time, prepare and file such statements, reports, and other documents as are or
may be required to continue such qualifications in effect for so long a period
as you may reasonably request for distribution of the Stock.

(g) During a period of five years commencing with the date hereof, the
Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports furnished to stockholders of
the Company and of all information, documents and reports filed with the
Commission, unless any of the foregoing reports, information and documents
previously has been filed with the Commission by EDGAR.

(h) Not later than the 45th day following the end of the fiscal quarter
first occurring after the first anniversary of the Effective Date, the Company
will make generally available to its security holders an earnings statement in
accordance with Section 11(a) of the Securities Act and Rule 158 thereunder.

(i) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, including all costs and
expenses incident to (i) the preparation, printing and filing with the
Commission and the NASD of the Registration Statement, any Preliminary
Prospectus and the Prospectus, (ii) the furnishing to the Underwriters of copies
of any Preliminary Prospectus and of the several documents required by paragraph
(c) of this Section 6 to be so furnished, (iii) the printing of this Agreement
and related documents delivered to the Underwriters, (iv) the preparation,
printing and filing of all supplements and amendments to the Prospectus referred
to in paragraph (d) of this Section 6, (v) the furnishing to you and the
Underwriters of the reports and information referred to in paragraph (g) of this
Section 6, (vi) the fees, disbursements and expenses of the Company's counsel,
the Company's accountants and any Selling Securityholders' counsel (in addition
to the Company's counsel) and (vii) the printing and issuance of stock
certificates, including the transfer agent's fees.

(j) The Company agrees to reimburse you, for the account of the several
Underwriters, for (1) blue sky fees and related disbursements (including counsel
fees and disbursements and cost of printing memoranda for the Underwriters) paid
by or for the account of the Underwriters or their counsel in qualifying the
Stock under state securities or blue sky laws and (2) fees and related
disbursements (including counsel fees and disbursements and costs of counsel to
Underwriters) paid by the Underwriters or their counsel in connection with the
review and clearance of the offering by the NASD.

(k) The provisions of paragraphs (i) and (j) of this Section are intended
to relieve the Underwriters from the payment of the expenses and costs which the
Company and the Selling Securityholders hereby agree to pay and shall not affect
any agreement which the Company and the Selling Securityholders may make, or may
have made, for the sharing of any such expenses and costs.

(l) The Company is familiar with the Investment Company Act of 1940, as
amended, and has in the past conducted its affairs, and will in the future
conduct its affairs, in such a manner to ensure that the Company was not and
will not be an "investment company" or a

18
<PAGE>

company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations
thereunder.

Each of the Selling Securityholders, severally and not jointly, agrees
to pay any transfer taxes incident to the transfer to the Underwriters of the
shares of the Stock being sold by such Selling Securityholder.

The Company and each of the Selling Securityholders hereby agrees
that, without the prior written consent of Chase Securities Inc. on behalf of
the Underwriters, the Company or such Selling Securityholder, as the case may
be, will not, for a period of 90 days following the commencement of the public
offering of the Stock by the Underwriters, directly or indirectly, (i) sell,
offer, contract to sell, make any short sale, pledge, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of any shares of
Common Stock or any securities convertible into or exchangeable or exercisable
for or any rights to purchase or acquire Common Stock or (ii) enter into any
swap or other agreement that transfers, in whole or in part, any of the economic
consequences or ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (A) the Stock to be sold to the Underwriters pursuant to this
Agreement, (B) shares of Common Stock issued by the Company upon the exercise of
options granted under the stock option plans of the Company (the "Option Plans")
or upon the exercise by any person other than the Selling Securityholders of
warrants outstanding as of the date hereof, all as described in the first
paragraph following the table under the caption "Capitalization" in the
Preliminary Prospectus, and (C) options to purchase Common Stock granted under
the Option Plans.

7. Indemnification and Contribution.

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<PAGE>

(a) Subject to the provisions of paragraph (f) of this Section 7, the
Company and the Selling Securityholders severally and not jointly agree to
indemnify and hold harmless each Underwriter and each person (including each
partner or officer thereof) who controls any Underwriter within the meaning of
Section 15 of the Securities Act from and against any and all losses, claims,
damages or liabilities, joint or several, to which such indemnified parties or
any of them may become subject under the Securities Act, the Exchange Act, or
the common law or otherwise, and the Company and the Selling Securityholders
severally and not jointly agree to reimburse each such Underwriter and
controlling person for any legal or other expenses (including, except as
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any Rule 462(b) registration statement), or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus or the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto) or the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that (1) the indemnity agreements of the Company and the
Selling Securityholders contained in this paragraph (a) shall not apply to any
such losses, claims, damages, liabilities or expenses if such statement or
omission was made in reliance upon and in conformity with information furnished
as herein stated or otherwise furnished in writing to the Company by or on
behalf of any Underwriter for use in any Preliminary Prospectus or the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto, (2) the indemnity agreement contained in this paragraph (a)
with respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages,
liabilities or expenses purchased the Stock which is the subject thereof (or to
the benefit of any person controlling such Underwriter) if at or prior to the
written confirmation of the sale of such Stock a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
(excluding the documents incorporated therein by reference) and the untrue
statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented) unless the failure is the result of noncompliance by the Company
with paragraph (c) of Section 6 hereof, and (3) each Selling Securityholder
shall only be liable under this paragraph with respect to (A) information
pertaining to such Selling Securityholder furnished in writing by or on behalf
of such Selling Securityholder expressly for use in any Preliminary Prospectus
or the Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto or (B) facts that would constitute a breach of any
representation or warranty of such Selling Securityholder set forth in Section
2(b) hereof. The indemnity agreements of the Company and the Selling
Securityholders contained in this paragraph (a) and the representations and
warranties of the Company and the Selling Securityholders contained in Section 2
hereof

20
<PAGE>

shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the delivery of and payment for the Stock.

(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its officers who signs the Registration Statement on his own
behalf or pursuant to a power of attorney, each of its directors, each other
Underwriter and each person (including each partner or officer thereof) who
controls the Company or any such other Underwriter within the meaning of Section
15 of the Securities Act, and each of the Selling Securityholders from and
against any and all losses, claims, damages or liabilities, joint or several, to
which such indemnified parties or any of them may become subject under the
Securities Act, the Exchange Act, or the common law or otherwise and to
reimburse each of them for any legal or other expenses (including, except as
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any Rule 462(b) registration statement) or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus or the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto) or the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, if
such statement or omission was made in reliance upon and in conformity with
information furnished as herein stated or otherwise furnished in writing to the
Company by or on behalf of such indemnifying Underwriter for use in any
Preliminary Prospectus or the Registration Statement or the Prospectus or any
such amendment thereof or supplement thereto. The indemnity agreement of each
Underwriter contained in this paragraph (b) shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery of and payment for the Stock.

(c) Each party indemnified under the provision of paragraphs (a) and (b)
of this Section 7 agrees that, upon the service of a summons or other initial
legal process upon it in any action or suit instituted against it or upon its
receipt of written notification of the commencement of any investigation or
inquiry of, or proceeding against, it in respect of which indemnity may be
sought on account of any indemnity agreement contained in such paragraphs, it
will promptly give written notice (herein called the "Notice") of such service
or notification to the party or parties from whom indemnification may be sought
hereunder. No indemnification provided for in such paragraphs shall be available
to any party who shall fail so to give the Notice if the party to whom such
Notice was not given was unaware of the action, suit, investigation, inquiry or
proceeding to which the Notice would have related and was prejudiced by the
failure to give the Notice, but the omission so to notify such indemnifying
party or parties of any such service or notification shall not relieve such
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution or otherwise than on account of such

21
<PAGE>

indemnity agreement. Any indemnifying party shall be entitled at its own expense
to participate in the defense of any action, suit or proceeding against, or
investigation or inquiry of, an indemnified party. Any indemnifying party shall
be entitled, if it so elects within a reasonable time after receipt of the
Notice by giving written notice (herein called the "Notice of Defense") to the
indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; provided, however, that (i) if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or parties
shall be entitled to conduct the defense to the extent reasonably determined by
such counsel to be necessary to protect the interests of the indemnified party
or parties and (ii) in any event, the indemnified party or parties shall be
entitled to have counsel chosen by such indemnified party or parties participate
in, but not conduct, the defense. If, within a reasonable time after receipt of
the Notice, an indemnifying party gives a Notice of Defense and the counsel
chosen by the indemnifying party or parties is reasonably satisfactory to the
indemnified party or parties, the indemnifying party or parties will not be
liable under paragraphs (a) through (c) of this Section 7 for any legal or other
expenses subsequently incurred by the indemnified party or parties in connection
with the defense of the action, suit, investigation, inquiry or proceeding,
except that (A) the indemnifying party or parties shall bear the legal and other
expenses incurred in connection with the conduct of the defense as referred to
in clause (i) of the proviso to the preceding sentence and (B) the indemnifying
party or parties shall bear such other expenses as it or they have authorized to
be incurred by the indemnified party or parties. If, within a reasonable time
after receipt of the Notice, no Notice of Defense has been given, the
indemnifying party or parties shall be responsible for any legal or other
expenses incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding.

(d) If the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under paragraph (a) or (b)
of this Section 7, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in paragraph (a) or (b) of this Section 7 (i) in such proportion as
is appropriate to reflect the relative benefits received by each indemnifying
party from the offering of the Stock or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of each indemnifying party in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, or actions in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company and each
of the Selling Securityholders, as the case may be, on the one hand and the
Underwriters on the other shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Stock received by
the Company and each of the Selling Securityholders, as the case may be, and the
total underwriting discount received by the

22
<PAGE>

Underwriters, as set forth in the table on the cover page of the Prospectus,
bear to the aggregate public offering price of the Stock. Relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by each indemnifying party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission.

The parties agree that it would not be just and equitable if contributions
pursuant to this paragraph (d) were to be determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d). The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities, or actions in respect thereof, referred to in the first sentence
of this paragraph (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigation,
preparing to defend or defending against any action or claim which is the
subject of this paragraph (d). Notwithstanding the provisions of this paragraph
(d), no Underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to the Stock purchased by such Underwriter. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this paragraph (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.

Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 7).

(e) Neither the Company nor the Selling Securityholders will, without the
prior written consent of each Underwriter, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such Underwriter or any person who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of such Underwriter and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding.

(f) The liability of each Selling Securityholder under such Selling
Securityholder's representations and warranties contained in paragraph (b) of
Section 2 hereof and the liability of each Selling Securityholder under the
indemnity and reimbursement agreements contained in the provisions of this
Section 7 and Section 11 hereof shall be limited to an amount equal to the
initial public offering price of the stock sold by such Selling Securityholder
to the Underwriters less any underwriting discounts and commissions paid thereon
by such Selling Securityholder.

23
<PAGE>

The Company and the Selling Securityholders may agree, as among themselves and
without limiting the rights of the Underwriters under this Agreement, as to the
respective amounts of such liability for which they each shall be responsible.

8. Termination. This Agreement may be terminated by you at any time
prior to the Closing Date by giving written notice to the Company and the
Custodian, on behalf of each of the Selling Securityholders, if after the date
of this Agreement trading in the Common Stock shall have been suspended, or if
there shall have occurred (i) the engagement in hostilities or an escalation of
major hostilities by the United States or the declaration of war or a national
emergency by the United States on or after the date hereof, (ii) any outbreak of
hostilities or other national or international calamity or crisis or change in
economic or political conditions if the effect of such outbreak, calamity,
crisis or change in economic or political conditions in the financial markets of
the United States would, in the Underwriters' reasonable judgment, make the
offering or delivery of the Stock impracticable, (iii) suspension of trading in
securities generally or a material adverse decline in value of securities
generally on the New York Stock Exchange, the American Stock Exchange, or The
Nasdaq Stock Market, or limitations on prices (other than limitations on hours
or numbers of days of trading) for securities on either such exchange or system,
(iv) the enactment, publication, decree or other promulgation of any federal or
state statute, regulation, rule or order of, or commencement of any proceeding
or investigation by, any court, legislative body, agency or other governmental
authority which in the Underwriters' reasonable opinion materially and adversely
affects or will materially or adversely affect the business or operations of the
Company, (v) declaration of a banking moratorium by either federal, California
or New York State authorities or (vi) the taking of any action by any federal,
state or local government or agency in respect of its monetary or fiscal affairs
which in the Underwriters' reasonable opinion has a material adverse effect on
the securities markets in the United States. If this Agreement shall be
terminated pursuant to this Section 8, there shall be no liability of the
Company or the Selling Securityholders to the Underwriters and no liability of
the Underwriters to the Company or the Selling Securityholders; provided,
however, that in the event of any such termination the Company and the Selling
Securityholders agree to indemnify and hold harmless the Underwriters from all
costs or expenses incident to the performance of the obligations of the Company
and the Selling Securityholders under this Agreement, including all costs and
expenses referred to in paragraphs (i) and (j) of Section 6 hereof.

9. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Stock shall be subject to the
performance by the Company and by or on behalf of the Selling Securityholders of
all their respective obligations to be performed hereunder at or prior to the
Closing Date or any Option Closing Date, as the case may be, and to the
following further conditions:

(a) The Registration Statement shall have become effective; and no stop
order suspending the effectiveness thereof shall have been issued and no
proceedings therefor shall be pending or threatened by the Commission.

(b) The legality and sufficiency of the sale of the Stock hereunder and
the validity and form of the certificates representing the Stock, all corporate
proceedings and other legal matters incident to the foregoing, and the form of
the Registration Statement and of the

24
<PAGE>

Prospectus (except as to the financial statements contained therein), shall have
been approved at or prior to the Closing Date by Simpson Thacher & Bartlett,
counsel for the Underwriters.

(c) You shall have received from Troop Steuber Pasich Reddick & Tobey LLP,
counsel for the Company and the Management Selling Securityholders, from Latham
& Watkins, counsel for the Other Selling Securityholders and from Clifford
Chance LLP, special Belgian counsel for the Company, opinions, addressed to the
Underwriters and dated the Closing Date, covering the matters set forth in Annex
A, Annex B and Annex C hereto, respectively, and if Option Stock is purchased at
any date after the Closing Date, additional opinions from each such counsel,
addressed to the Underwriters and dated such Option Closing Date, confirming
that the statements expressed as of the Closing Date in such opinions remain
valid as of such Option Closing Date.

(d) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true and
correct and neither the Registration Statement nor the Prospectus omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, respectively, not misleading, (ii) since the
Effective Date, no event has occurred which should have been set forth in a
supplement or amendment to the Prospectus which has not been set forth in such a
supplement or amendment, (iii) since the respective dates as of which
information is given in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, there has not
been any Material Adverse Effect, whether or not arising from transactions in
the ordinary course of business, and, since such dates, except in the ordinary
course of business, neither the Company nor any of its subsidiaries has entered
into any material transaction not referred to in the Registration Statement in
the form in which it originally became effective and the Prospectus contained
therein, (iv) neither the Company nor any of its subsidiaries has any material
contingent obligations which are not disclosed in the Registration Statement and
the Prospectus, (v) there are not any pending or known threatened legal
proceedings to which the Company or any of its subsidiaries is a party or of
which property of the Company or any of its subsidiaries is the subject which
are material and which are not disclosed in the Registration Statement and the
Prospectus, (vi) there are not any franchises, contracts, leases or other
documents which are required to be filed as exhibits to the Registration
Statement which have not been filed as required, (vii) the representations and
warranties of the Company and the Selling Securityholders herein are true and
correct in all material respects as of the Closing Date or any later date on
which Option Stock is to be purchased, as the case may be, and (viii) there has
not been any material change in the market for securities in general or in
political, financial or economic conditions from those reasonably foreseeable as
to render it impracticable in your reasonable judgment to make a public offering
of the Stock, or a material adverse change in market levels for securities in
general (or those of companies in particular) or financial or economic
conditions which render it inadvisable to proceed with such offering.

(e) The Prospectus shall have been printed and copies distributed to the
Underwriters not later than 10:00 a.m., San Francisco time, on the second
business day following the date of this Agreement or at such later date and time
as to which the Underwriters may agree.

25
<PAGE>

(f) You shall have received on the Closing Date and on any Option Closing
Date, dated the Closing Date or such Option Closing Date, as the case may be,
and signed by the President and the Chief Financial Officer of the Company,
stating that the respective signers of said certificate have carefully examined
the Registration Statement in the form in which it originally became effective
and the Prospectus contained therein and any supplements or amendments thereto,
that the statements included in clauses (i) through (vii) of paragraph (d) of
this Section 9 are true and correct (excluding clause (vii) with respect to the
Selling Securityholders) and that the Company has complied with all agreements
contained herein to be performed by the Company prior to the Closing Date or
such Option Closing Date, as the case may be.

(g) You shall have received on the Closing Date and on any Option Closing
Date, dated the Closing Date or such Option Closing Date, as the case may be,
and signed by an attorney-in-fact pursuant to the Powers of Attorney, stating
that the statements included in clause (vii), solely with respect to the
Management Selling Securityholders, are true and correct, and that each of the
Management Selling Securityholders has complied with all agreements contained
herein, as well as in the Custody Agreement and Power of Attorney signed by each
Selling Securityholder, to be performed by the Management Selling
Securityholders prior to the Closing Date or such Option Closing Date, as the
case may be.

(h) You shall have received on the Closing Date and on any Option Closing
Date, dated the Closing Date or such Option Closing Date, as the case may be,
and signed by an authorized person of each of the Other Selling Securityholders,
stating that the statements included in clause (vii), solely with respect to the
Other Selling Securityholders, are true and correct, and that each of the Other
Selling Securityholders has complied with all agreements contained herein to be
performed by the Other Selling Securityholders prior to the Closing Date or such
Option Closing Date, as the case may be.

(i) You shall have received from KPMG LLP, a letter or letters, addressed
to the Underwriters and dated the Closing Date and any Option Closing Date, as
the case may require, confirming that they are independent public accountants
with respect to the Company within the meaning of the Securities Act and the
applicable published rules and regulations thereunder and based upon the
procedures described in their letter delivered to you concurrently with the
execution of this Agreement (herein called the "Original Letter"), but carried
out to a date not more than three business days prior to the Closing Date or
such Option Closing Date (i) confirming, to the extent true, that the statements
and conclusions set forth in the Original Letter are accurate as of the Closing
Date or such Option Closing Date, and (ii) setting forth any revisions and
additions to the statements and conclusions set forth in the Original Letter
which are necessary to reflect any changes in the facts described in the
Original Letter since the date of the Original Letter or to reflect the
availability of more recent financial statements, data or information. The
letters shall not disclose any change, or any development involving a
prospective change, in or affecting the business or properties of the Company or
any of its subsidiaries which, in your sole judgment, makes it impractical or
inadvisable to proceed with the public offering of the Stock or the purchase of
the Option Stock as contemplated by the Prospectus.

26
<PAGE>

(j) You shall have been furnished evidence in usual written or telegraphic
form from the appropriate authorities of the several jurisdictions, or other
evidence satisfactory to you, of the qualification referred to in paragraph (f)
of Section 6 hereof.

(k) Prior to the Closing Date, the Stock to be issued and sold by the
Company shall have been duly authorized for listing by the Nasdaq National
Market upon official notice of issuance.

(l) On or prior to the Closing Date, you shall have received from all
directors, officers, key employees and Selling Securityholders agreements, in
form reasonably satisfactory to Chase Securities Inc., stating that without the
prior written consent of Chase Securities Inc. on behalf of the Underwriters,
such person or entity will not, for a period of 90 days following the
commencement of the public offering of the Stock by the Underwriters, directly
or indirectly, (i) sell, offer, contract to sell, make any short sale, pledge,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for or any rights to purchase or acquire Common
Stock or (ii) enter into any swap or other agreement that transfers, in whole or
in part, any of the economic consequences or ownership of Common Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise.

All the agreements, opinions, certificates and letters mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if Simpson Thacher & Bartlett, counsel for the
Underwriters, shall be satisfied that they comply in form and scope.

In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company and to the Selling Securityholders. Any such termination shall be
without liability of the Company or the Selling Securityholders to the
Underwriters and without liability of the Underwriters to the Company or the
Selling Securityholders; provided, however, that (i) in the event of such
termination, (A) the Company agrees to indemnify and hold harmless the
Underwriters from all costs or expenses incident to the performance of the
obligations of the Company and the Management Selling Securityholders under this
Agreement, including all costs and expenses referred to in paragraphs (i) and
(j) of Section 6 hereof, and (B) each of the Selling Securityholders, severally
but not jointly, agrees to indemnify and hold harmless the Underwriters from all
costs or expenses referred to in the second to last paragraph of Section 6
hereof, and (ii) if this Agreement is terminated by you because of any refusal,
inability or failure on the part of the Company or the Selling Securityholders
to perform any agreement herein, to fulfill any of the conditions herein, or to
comply with any provision hereof other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally upon demand
for all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the
transactions contemplated hereby.

27
<PAGE>

10. Conditions of the Obligation of the Company and the Selling
Securityholders. The obligation of the Company and the Selling Securityholders
to deliver the Stock shall be subject to the conditions that (a) the
Registration Statement shall have become effective and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.

In case either of the conditions specified in this Section 10 shall not be
fulfilled, this Agreement may be terminated by the Company and the Selling
Securityholders by giving notice to you. Any such termination shall be without
liability of the Company and the Selling Securityholders to the Underwriters and
without liability of the Underwriters to the Company or the Selling
Securityholders; provided, however, that in the event of any such termination,
(A) the Company agrees to indemnify and hold harmless the Underwriters from all
costs or expenses incident to the performance of the obligations of the Company
and the Management Selling Securityholders under this Agreement, including all
costs and expenses referred to in paragraphs (i) and (j) of Section 6 hereof,
and (B) each of the Selling Securityholders, severally but not jointly, agrees
to indemnify and hold harmless the Underwriters from all costs or expenses
referred to in the second to last paragraph of Section 6 hereof.

11. Reimbursement of Certain Expenses. In addition to their other
obligations under Section 7 of this Agreement (and subject, in the case of a
Selling Securityholder, to the provisions of paragraph (f) of Section 7), the
Company and the Selling Securityholders hereby severally but not jointly agree
to reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 7 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 11 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them together with interest at the prime rate and (ii) such
persons shall provide to the Company, upon request, reasonable assurances of
their ability to effect any refund, when and if due.

12. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of the Company, the Selling Securityholders and the several
Underwriters and, with respect to the provisions of Section 7 hereof, the
several parties (in addition to the Company, the Selling Securityholders and the
several Underwriters) indemnified under the provisions of said Section 7, and
their respective personal representatives, successors and assigns. Nothing in
this Agreement is intended or shall be construed to give to any other person,
firm or corporation any legal or equitable remedy or claim under or in respect
of this Agreement or any provision herein contained. The term "successors and
assigns" as herein used shall not include any purchaser, as such purchaser, of
any of the Stock from any of the several Underwriters.

13. Notices. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to Chase Securities Inc., One Bush Street,
San Francisco, California 94104, with a

28
<PAGE>

copy, which shall not constitute notice, to Simpson Thacher & Bartlett, 3373
Hillview Avenue, Suite 250, Palo Alto, California 94304, Attention: Michael
Nooney; if to the Company, shall be mailed, telegraphed or delivered to it at
the Company's office, 820 Flynn Road, Suite A, Camarillo, California 93012,
Attention: President with a copy, which shall not constitute notice, to Troop
Steuber Pasick Reddick & Tobey, LLP, 2029 Century Park East, 24th Floor, Los
Angeles, California 90067, Attention: Scott Alderton; and if to the Selling
Securityholders, shall be mailed, telegraphed or delivered to the Custodian to
its attention at U.S. Stock Transfer Corporation, 1745 Gardena Avenue, Glendale,
California 91204-2991, Attention: Henry Artaza. All notices given by telegraph
shall be promptly confirmed by letter.

14. Miscellaneous. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or the Selling Securityholders or their respective directors or
officers, and (c) delivery and payment for the Stock under this Agreement;
provided, however, that if this Agreement is terminated prior to the Closing
Date, the provisions of paragraphs (l) of Section 6 hereof shall be of no
further force or effect.

This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

This Agreement shall be governed by, and construed in accordance with, the
laws of the State of California.

29
<PAGE>

Please sign and return to the Company and to the Selling Securityholders in
care of the Company the enclosed duplicates of this letter, whereupon this
letter will become a binding agreement among the Company, the Selling
Securityholders and the several Underwriters in accordance with its terms.

Very truly yours,

BIOSOURCE INTERNATIONAL, INC.

By: _____________________________________
Name: James H. Chamberlain
Title: Chairman of the Board, Chief
Executive Officer and
President

THE MANAGEMENT SELLING
SECURITYHOLDERS NAMED
IN SCHEDULE II HERETO

By: _____________________________________
Attorney-in-Fact

GENSTAR CAPITAL PARTNERS II, L.P.

By: Genstar Capital LLC, its general
partner

By: _____________________________________
Name:
Title:

STARGEN II LLC

By: ______________________________________
Name:
Title:

30
<PAGE>

The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.

CHASE SECURITIES INC.
DAIN RAUSCHER INCORPORATED
THOMAS WEISEL PARTNERS LLC
By Chase Securities Inc.

By __________________________
Managing Director

Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.

31
<PAGE>

SCHEDULE I

UNDERWRITERS

<TABLE>
<CAPTION>
Underwriters Number of Shares to be Purchased
- ------------ --------------------------------
<S> <C>
Chase Securities Inc. ......................
Dain Rauscher Incorporated .................
Thomas Weisel Partners LLC..................

________
Total.................................. 4,000,000
=========
</TABLE>

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<PAGE>

SCHEDULE II

SELLING SECURITYHOLDERS

<TABLE>
<CAPTION>
Number of Shares Number of Shares
Name of Selling Securityholders of Underwritten Stock of Option Stock
- ------------------------------- --------------------- ------------------
<S> <C> <C>
Management Selling Securityholders:
----------------------------------
James H. Chamberlain 83,000 --
Gus E. Davis 18,000 --
Leonard M. Hendrickson 8,000 --
David J. Moffa, Ph.D 7,000 --
John R. Overturf, Jr. 7,000 --
Robert D. Weist 6,000 --
Richard O. Buford 6,000 --
Valerie A. Bressler-Hill 2,000 --
Jordan B. Fishman, Ph.D 3,000 --

Other Selling Securityholders:
------------------------------

Genstar Capital Partners II, L.P. 500,308 490,498
Stargen II LLC 9,692 9,502
------- -------

Totals.............................. 650,000 500,000
======= =======
</TABLE>

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<PAGE>

ANNEX A

Matters to be Covered in the Opinion of Troop Steuber Pasich Reddick & Tobey,
LLP Counsel for the Company and the Management Selling Securityholders

(i) Each of the Company and its subsidiaries has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified as a foreign corporation
and in good standing in each jurisdiction in which its ownership or leasing of
property requires such qualification, and has full corporate power and authority
to own or lease its properties and conduct its business as described in the
Registration Statement (such counsel being entitled to rely in respect of the
opinion in this clause upon the opinion of Clifford Chance LLP set forth as
Annex C to this Agreement); all the issued and outstanding capital stock of each
of the subsidiaries of the Company has been duly authorized and validly issued
and is fully paid and nonassessable, and is owned by the Company free and clear
of all liens, encumbrances and security interests, and to the best of such
counsel's knowledge, no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interests in such
subsidiaries are outstanding;

(ii) the authorized capital stock of the Company consists of _____ shares
of ___ Stock, of which there are outstanding _____ shares, and _____
shares of Common Stock, $____ par value, of which there are outstanding ______
shares (including the Underwritten Stock plus the number of shares of Option
Stock issued on the date hereof) and such additional number of shares, if any,
as may have been issued after ______ and prior to the Closing Date, pursuant to
_______; proper corporate proceedings have been taken validly to authorize such
authorized capital stock; all of the outstanding shares of such capital stock
(including the Underwritten Stock and the shares of Option Stock issued, if any)
have been duly and validly issued and are fully paid and nonassessable; any
Option Stock purchased after the Closing Date, when issued and delivered to and
paid for by the Underwriters as provided in the Underwriting Agreement, will
have been duly and validly issued and be fully paid and nonassessable; and no
preemptive rights of, or rights of refusal in favor of, stockholders exist with
respect to the Stock, or the issue and sale thereof, pursuant to the Certificate
of Incorporation or Bylaws of the Company and, to the knowledge of such counsel,
there are no contractual preemptive rights that have not been waived, rights of
first refusal or rights of co-sale which exist with respect to the Stock being
sold by the Selling Securityholders or the issue and sale of the Stock;

(iii) the Registration Statement has become effective under the Securities
Act and, to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or suspending or preventing the use
of the Prospectus is in effect and no proceedings for that purpose have been
instituted or are pending or contemplated by the Commission;

34
<PAGE>

(iv) the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial data contained therein,
as to which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act, the Exchange Act
and with the rules and regulations of the Commission thereunder;

(v) such counsel have no reason to believe that the Registration Statement
(except as to the financial statements and schedules and other financial and
statistical data contained or incorporated by reference therein, as to which
such counsel need not express any opinion or belief) at the Effective Date
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus (except as to the financial statements
and schedules and other financial and statistical data contained or incorporated
by reference therein, as to which such counsel need not express any opinion or
belief) as of its date or at the Closing Date (or any Option Closing Date),
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading;

(vi) the information required to be set forth in the Registration Statement
in answer to Items 9 and 10 (insofar as it relates to such counsel) of Form S-3
is to the best of such counsel's knowledge accurately and adequately set forth
therein in all material respects or no response is required with respect to such
Items;

(vii) such counsel do not know of any franchises, contracts, leases,
documents or legal proceedings, pending or threatened, which in the opinion of
such counsel are of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement, which are not described and filed as required;

(viii) the Company has the corporate power and authority to enter into the
Underwriting Agreement and to issue, sell and deliver to the Underwriters the
Stock to be issued and sold thereunder; and the Underwriting Agreement has been
duly authorized, executed and delivered by the Company;

(ix) the Underwriting Agreement has been duly executed and delivered by or
on behalf of the Management Selling Securityholders and the Custody Agreement
between the Management Selling Securityholders and U.S. Stock Transfer
Corporation, as Custodian, and the Powers of Attorney that are exhibits to the
Custody Agreements have been duly executed and delivered by or on behalf of the
several Management Selling Securityholders;

(x) the execution and delivery of the Underwriting Agreement and the issue
and sale by the Company of the shares of Stock sold by the Company as
contemplated by the Underwriting Agreement will not conflict with, or result in
a breach of, (A) the Certificate of Incorporation or Bylaws of the Company or
any of its subsidiaries, (B) any agreement or instrument filed with or
incorporated by reference as an exhibit to the Registration Statement or any
document incorporated by reference therein, (C) any applicable law or
regulation, or (D) so far as is known to such counsel, any order, writ,
injunction or decree, of any jurisdiction, court or governmental
instrumentality;

35
<PAGE>

(xi) to such counsel's knowledge and other than as set forth in the
Prospectus, there are no legal or governmental proceedings pending to which the
Company is a party or of which any property of the Company is the subject which,
if determined adversely to the Company or any of its subsidiaries, would have a
Material Adverse Effect; and, to such counsel's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others;

(xii) to such counsel's knowledge, none of the Company or its subsidiaries
is in violation of its Certificate of Incorporation or Bylaws or equivalent
organizational documents;

(xiii) all holders of securities of the Company having rights to the
registration of shares of Common Stock, or other securities, because of the
filing of the Registration Statement by the Company have waived such rights or
such rights have expired by reason of lapse of time following notification of
the Company's intent to file the Registration Statement;

(xiv) good and marketable title to the shares of Stock sold by the
Management Selling Securityholders under the Underwriting Agreement, free and
clear of all liens, encumbrances, equities, security interests and claims, has
been transferred to the Underwriters who have severally purchased such shares of
Stock under the Underwriting Agreement, assuming for the purpose of this opinion
that the Underwriters purchased the same in good faith without notice of any
adverse claims;

(xv) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the transactions
contemplated in the Underwriting Agreement, except such as have been obtained
under the Securities Act or otherwise and such as may be required under state
securities or blue sky laws in connection with the purchase and distribution of
the Stock by the Underwriters;

(xvi) the information in the Prospectus under the captions "Relationships
and Related Transactions," and "Description of Capital Stock," to the extent
that such information constitutes matters of law or legal conclusions, has been
reviewed by such counsel and is an accurate summary in all material respects of
such matters and conclusions; and the form of certificate evidencing Common
Stock and incorporated by reference as an exhibit to the Registration Statement
complies with the Delaware General Corporation Law and applicable stock market
rules and regulations;

(xvii) the Stock sold by the Selling Securityholders is listed and duly
admitted to trading on the Nasdaq National Market, and the Stock issued and sold
by the Company will have been duly authorized for listing by the Nasdaq National
Market upon official notice of issuance; and

(xviii) the Company is not, and upon receipt and pending application of
the net proceeds from the sale of Stock to be sold by the Company in the manner
described in the Prospectus will not be, an "investment company" within the
meaning of such term under the Investment Company Act and the rules and
regulations of the Commission thereunder;

____________________________________

36
<PAGE>

Counsel rendering the foregoing opinion may rely as to questions of law not
involving the laws of the United States or of the State of California, upon
opinions of local counsel satisfactory in form and scope to counsel for the
Underwriters. Copies of any opinions so relied upon shall be delivered to the
Representative and to counsel for the Underwriters and the foregoing opinion
shall also state that counsel knows of no reason the Underwriters are not
entitled to rely upon the opinions of such local counsel.

In addition, such counsel shall state that, with respect to the opinions in
numbered paragraphs (viii), (ix) and (xiv), Simpson Thacher & Bartlett, as
counsel for the Underwriters may rely on the opinion of such counsel, for the
purpose of rendering its opinion letter to the Underwriters.

37
<PAGE>

ANNEX B

Matters to be Covered in the Opinion of Latham & Watkins
Counsel for the Other Selling Securityholders

(i) Each of the Other Selling Securityholders has full power and authority
to enter into the Underwriting Agreement and to sell and deliver to the
Underwriters the Stock to be sold under the Underwriting Agreement; and the
Underwriting Agreement has been duly authorized, executed and delivered by or on
behalf of the Other Selling Securityholders;

(ii) the sale by the Other Selling Securityholders of the shares of Stock
as contemplated by the Underwriting Agreement will not conflict with, or result
in a breach of, (A) the organizational documents of any of the Other Selling
Securityholders, (B) any applicable law or regulation, or (C) so far as is known
to such counsel, any order, writ, injunction or decree, of any jurisdiction,
court or governmental instrumentality to which such Other Selling Securityholder
is a party or by which such Other Selling Securityholder is bound or to which
any of the property or assets of such Selling Securityholders is subject;

(iii) each of the Other Selling Securityholders has waived all
registration rights or rights of first refusal resulting from the filing of the
Registration Statement by the Company (other than with respect to Stock sold to
the Underwriters pursuant to the Underwriting Agreement) or such rights have
expired by reason of lapse of time following notification of the Company's
intent to file the Registration Statement;

(iv) good and marketable title to the shares of Stock sold by the Other
Selling Securityholders under the Underwriting Agreement, free and clear of all
liens, encumbrances, equities, security interests and claims, has been
transferred to the Underwriters who have severally purchased such shares of
Stock under the Underwriting Agreement, assuming for the purpose of this opinion
that the Underwriters purchased the same in good faith without notice of any
adverse claims; and

(v) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the transactions
by the Other Selling Securityholders contemplated in the Underwriting Agreement,
except such as have been obtained under the Securities Act and such as may be
required under state securities or blue sky laws in connection with the purchase
and distribution of the Stock by the Underwriters.

____________________________________

Counsel rendering the foregoing opinion may rely as to questions of law not
involving the laws of the United States or of the State of California, upon
opinions of local counsel

38
<PAGE>

satisfactory in form and scope to counsel for the Underwriters. Copies of any
opinions so relied upon shall be delivered to the Representative and to counsel
for the Underwriters and the foregoing opinion shall also state that counsel
knows of no reason the Underwriters are not entitled to rely upon the opinions
of such local counsel.

39
<PAGE>

ANNEX C

Matters to be Covered in the Opinion of Clifford Chance LLP
Special Belgian Counsel for the Company

BioSource Europe S.A. has been duly incorporated and is validly existing as
a corporation in good standing under the laws of Belgium, is duly qualified as a
foreign corporation and in good standing in each jurisdiction in which its
ownership or leasing of property requires such qualification, and has full
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement; all the issued and
outstanding capital stock of BioSource Europe S.A. has been duly authorized and
validly issued and is fully paid and nonassessable.

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
BioSource International, Inc.:

We consent to the use of our report incorporated herein by reference and to
the references to our firm under the headings "Selected Consolidated Financial
Data" and "Experts" in the prospectus.

KPMG LLP

Los Angeles, California

April 12, 2000