EMERGENT BIOSOLUTIONS INC. - DEF 14A - 20090403 - AUDIT_COMMITTEE
other interested parties and for providing copies or summaries
to the other directors as he or she considers appropriate.
Under procedures approved by a majority of our independent
directors, communications are forwarded to all directors if they
relate to important substantive matters and include suggestions
or comments that the lead director considers to be important for
the directors to know. In general, communications relating to
corporate governance and corporate strategy are more likely to
be forwarded than communications relating to ordinary business
affairs, personal grievances and matters as to which we receive
repetitive or duplicative communications.
Stockholders and other interested parties who wish to send
communications on any topic to our board of directors should
address such communications to Board of Directors,
Secretary, Emergent BioSolutions Inc., 2273 Research Boulevard,
Suite 400, Rockville, Maryland 20850.
Registered Public Accounting Firms Fees
The following table summarizes the fees of Ernst &
Young LLP, our independent registered public accounting firm,
billed to us for each of the last two fiscal years for audit and
other services. For 2008, audit fees include an estimate of
amounts not yet billed.
All Other Fees
Audit fees consist of fees for the audit of our consolidated
financial statements and other professional services provided in
connection with statutory and regulatory filings or engagements.
Audit-related fees consist of fees for assurance and related
services that are reasonably related to the performance of the
audit and the review of our financial statements and which are
not reported under Audit Fees. These services relate
to the filing of our shelf registration statement.
Tax fees consist of fees for tax compliance, tax advice and tax
planning services. Tax compliance services, which relate to
preparation of tax returns and claims for refunds, accounted for
$119,731 of the total tax fees billed in 2008 and $82,980 of the
total tax fees billed in 2007. Tax advice and tax planning
services relate to assistance with tax credit and deduction
studies and calculations, tax advice related to acquisitions,
structure and transfer pricing and tax audits.
Policies and Procedures
Our audit committee has adopted policies and procedures relating
to the approval of all audit and non-audit services that are to
be performed by our independent registered public accounting
firm. These policies generally provide that we will not engage
our independent registered public accounting firm to render
audit or non-audit services unless the service is specifically
approved in advance by the audit committee or the engagement is
entered into pursuant to one of the pre-approval procedures
From time to time, our audit committee may pre-approve specified
types of services that are expected to be provided to us by our
independent registered public accounting firm during the next
12 months. Any such pre-approval is detailed as to the
particular service or type of services to be provided and is
also generally subject to a maximum dollar amount.
The audit committee has reviewed our audited financial
statements for the fiscal year ended December 31, 2008 and
discussed them with our management and our independent
registered public accounting firm.
The audit committee also has received from, and discussed with,
our independent registered public accounting firm various
communications that our independent registered public accounting
firm is required to provide to the audit committee, including
the matters required to be discussed by the Statement on
Auditing Standards No. 61, as
, Vol. 1, AU
section 380), as adopted by the Public Company Accounting
Oversight Board in Rule 3200T.
The audit committee has received the written disclosures and the
letter from our independent registered public accounting firm
required by the applicable requirements of the Public Company
Accounting Oversight Board regarding the independent registered
public accounting firms communications with the audit
committee concerning independence, and has discussed with our
independent registered public accounting firm their independence.
Based on the review and discussions referred to above, the audit
committee recommended to our board of directors that the audited
financial statements be included in our Annual Report on
for the year ended December 31, 2008.
By the Audit Committee of the Board of Directors of Emergent
Zsolt Harsanyi, Ph.D., Chair
Ronald B. Richard
Louis W. Sullivan, M.D.
with Related Persons
The Hauer Group provides us strategic consulting and domestic
marketing advice pursuant to a consulting agreement we initially
entered in March 2006. In March 2007, we amended this consulting
agreement to extend its term through March 2008. Effective as of
April 1, 2008, upon the expiration of this consulting
agreement, we entered into a new consulting agreement with The
Hauer Group with a term that expires on April 1, 2009,
unless extended by mutual agreement. Jerome Hauer, who is a
member of our board of directors, is the chief executive officer
of The Hauer Group, and Mr. Hauer and his wife are the sole
owners of The Hauer Group. Under the terms of both the
consulting agreement in effect before April 1, 2008 and the
consulting agreement in effect after April 1, 2008, we
agreed to pay The Hauer Group $15,000 per month for its
services. Under these consulting agreements, we paid The Hauer
Group approximately $180,000 in 2008 and $45,000 in the three
months ended March 31, 2009.
with Intergen N.V.
On February 10, 2009, we entered into an amended and
restated marketing agreement with Intergen N.V. The marketing
agreement amends and restates a prior amended and restated
marketing agreement. The marketing agreement is effective as of
November 5, 2008, the date the prior agreement expired in
accordance with its terms. Yasmine Gibellini, the chairperson
and a major shareholder of Intergen, is the sister of Fuad
El-Hibri, our chief executive officer and chairman of our board
of directors. Under the marketing agreement, we appointed
Intergen as our marketing representative for the sale and
promotion of BioThrax, recombinant Protective Antigen (rPA)
anthrax vaccine, anthrax immune globulin, recombinant botulinum
vaccine and botulinum immune globulin in Saudi Arabia, Qatar and
United Arab Emirates, unless the export of such products to any
of these countries is prohibited by the U.S. government.
The appointment is non-exclusive. We agreed to pay Intergen a
fee equal to 17.5% of net sales of the marketed products
pursuant to customer contracts in Saudi Arabia, and 15% in Qatar
and United Arab Emirates. Under the marketing agreement, we
agreed to reimburse Intergen for out-of-pocket expenses
attributable to a particular purchase contract up to a specified
percentage of net sales under that contract. The term of the
marketing agreement expires on November 5, 2009, and will
be extended automatically for successive one-year terms unless
terminated by either party. Either party may terminate the
marketing agreement on 90 days notice. We have not paid
Intergen any fees to date under this agreement.
In January 2000, we entered into a termination and settlement
agreement with Intergen under which we were obligated to pay
Intergen a $70,000 settlement payment when we received more than
$3.0 million in the aggregate pursuant to contracts for
sale of anthrax vaccine to a party other than the
U.S. government. This settlement payment was made in
In September 2006, we granted registration rights with respect
to shares of our common stock to our principal stockholders. The
following table sets forth the number of shares of our common
stock subject to these registration rights that are held by our
5% stockholders and their affiliates.
Number of Shares of
Intervac Management, L.L.C.
Demand registration rights.
specified limitations, holders of these registrations rights
may, beginning 90 days after our initial public offering,
require that we register all or part of our common stock subject
to the registration rights for sale under the Securities Act of
1933. These holders may demand registration of our common stock
so long as the offering price to the public of the shares
requested to be registered is at least $25,000,000. We are
required to effect only one demand registration, subject to
Incidental registration rights.
If we propose
to register any of our common stock under the Securities Act of
1933, subject to specified exceptions, either for our own
account or for the account of other security holders, holders of
registration rights are entitled to notice of the registration
and to include shares of common stock subject to the
registration rights in the registered offering.
Limitations and expenses.
exceptions, the right to include shares in a registration is
subject to the right of underwriters for the offering to limit
the number of shares included in the offering. We are required
to pay one-half of all fees, costs and expenses of any demand
registration, other than underwriting discounts and commissions.
We have engaged Wilmer Cutler Pickering Hale and Dorr LLP, or
WilmerHale, to provide legal services to us, including with
respect to general corporate, securities law and licensing
matters and for litigation strategy and counseling. Denise
Esposito, our senior vice president, legal affairs and general
counsel is married to a former partner at WilmerHale, who did
not participate in providing legal services to the Company. We
incurred fees for legal services rendered by WilmerHale of
approximately $1,473,000 in 2008. Ms. Espositos
husband was not affiliated with WilmerHale during 2009. We
engage WilmerHale in the ordinary course of our business on an
arms length basis and pay WilmerHale based on its standard
and Procedures for Related Person Transactions
In March 2007, our board of directors adopted written policies
and procedures for the review of any transaction, arrangement or
relationship in which Emergent BioSolutions is a participant,
the amount involved exceeds $120,000 and one of our executive
officers, directors, director nominees or 5% stockholders (or
their immediate family members), each of whom we refer to as a
related person, has a direct or indirect material
If a related person proposes to enter into such a transaction,
arrangement or relationship, which we refer to as a
related person transaction, the related person must
report the proposed related person transaction to our general
counsel. The policy calls for the proposed related person
transaction to be reviewed and, if deemed appropriate, approved
by the audit committee. Whenever practicable, the reporting,
review and approval will occur prior to entry into the
transaction. If advance review and approval is not practicable,
the committee will review, and, in its discretion, may ratify
the related person transaction. The policy also permits the
chairman of the committee to review and, if deemed appropriate,
approve proposed related person transactions that arise between
committee meetings, subject to ratification by the committee at
its next meeting. Any related person transactions that are
ongoing in nature will be reviewed annually.
A related person transaction reviewed under the policy will be
considered approved or ratified if it is authorized by the
committee after full disclosure of the related persons
interest in the transaction. As appropriate for the
circumstances, the committee will review and consider:
the related persons interest in the related person
the approximate dollar value of the amount involved in the
related person transaction;
the approximate dollar value of the amount of the related
persons interest in the transaction without regard to the
amount of any profit or loss;
whether the transaction was undertaken in the ordinary course of
whether the terms of the transaction are no less favorable to us
than terms that could have been reached with an unrelated third
the purpose of, and the potential benefits to us of, the
any other information regarding the related person transaction
or the related person in the context of the proposed transaction
that would be material to investors in light of the
circumstances of the particular transaction.
The committee may approve or ratify the transaction only if the
committee determines that, under all of the circumstances, the
transaction is consistent with our best interests. The committee
may impose any conditions on the related person transaction that
it deems appropriate.
In addition to the transactions that are excluded by the
instructions to the SECs related person transaction
disclosure rule, the board of directors has determined that the
following transactions do not create a material direct or
indirect interest on behalf of related persons and, therefore,
are not related person transactions for purposes of this policy:
interests arising solely from the related persons position
as an executive officer of another entity (whether or not the
person is also a director of such entity), that is a participant
in the transaction, where (a) the related person and all
other related persons own in the aggregate less than a 10%
equity interest in such entity, (b) the related person and
his or her immediate family members are not involved in the
negotiation of the terms of the transaction and do not receive
any special benefits as a result of the transaction,
(c) the amount involved in the transaction equals less than
the greater of $1 million dollars or 2% of the annual gross
revenues of the other entity that is a party to the transaction,
and (d) the amount involved in the transaction equals less
than 2% of our annual gross revenues; and
a transaction that is specifically contemplated by provisions of
our charter or bylaws.
The policy provides that transactions involving compensation of
executive officers shall be reviewed and approved by the
compensation committee in the manner specified in its charter.
Under the audit committee charter that was in place prior to our
initial public offering, the audit committee was responsible for
reviewing and approving related person transactions. In
reviewing such transactions, the audit committee considered the
nature of and business reason for such transactions, how the
terms of such transactions compared to those which might be
obtained from unaffiliated third parties and whether such
transactions were otherwise fair to and in the best interests
of, or not contrary to, our best interests. In addition, all
related person transactions required prior approval, or later
ratification, by the audit committee. There were no related
person transactions in 2008 with respect to which these policies
and procedures were not followed.
OFFICERS OF THE REGISTRANT
Our executive officers and their respective ages and positions
as of March 23, 2009 are as follows:
Chairman of the Board of Directors and Chief Executive Officer
Daniel J. Abdun-Nabi
President and Chief Operating Officer
R. Don Elsey
Senior Vice President, Finance and Administration, Chief
Financial Officer and Treasurer
Senior Vice President, Legal Affairs, General Counsel and
Kyle W. Keese
Senior Vice President, Manufacturing Operations
Senior Vice President, Product Development
For more information
about Mr. El-Hibri, see his biography under the caption
Proposal One Election of Directors.
Daniel J. Abdun-Nabi.
information about Mr. Abdun-Nabi, see his biography under
the caption Proposal One Election of
R. Don Elsey.
Mr. Elsey has
served as senior vice president, finance and administration
since May 2007, chief financial officer since March 2006 and
treasurer since June 2005. Mr. Elsey previously served as
vice president, finance from June 2005 to May 2007.
Mr. Elsey served as the director of finance and
administration at IGEN International, Inc., a biotechnology
company, and its successor BioVeris Corporation, from April 2000
to June 2005. Prior to joining IGEN, Mr. Elsey served as
director of finance at Applera, a genomics and sequencing
company, and in several finance positions at International
Business Machines, Inc. Mr. Elsey received an M.B.A. in
finance and a B.A. in economics from Michigan State University.
Mr. Elsey is a certified management accountant.
Ms. Esposito has
served as senior vice president, legal affairs and general
counsel since April 2007 and secretary since January 2008.
Ms. Esposito previously served as vice president and deputy
general counsel from December 2004 to April 2007.
Ms. Esposito was a partner at the law firm Wilmer Cutler
Pickering Hale and Dorr LLP from January 2000 to December 2004.
Ms. Esposito received a J.D. from the University of
Michigan School of Law and a B.A. in economics from Rutgers
Kyle W. Keese.
Mr. Keese has
served as senior vice president, manufacturing operations since
January 2008. Mr. Keese previously served as senior vice
president, corporate affairs from May 2007 to January 2008,
senior vice president, marketing and communications from March
2006 to May 2007 and vice president, sales and marketing of
Emergent BioSolutions from June 2004 to March 2006 and of
BioPort Corporation from June 2003 to June 2004. Mr. Keese
served as vice president, business development for Antex
Biologics, Inc., a biotechnology company, from March 2001 to May
2003, when we acquired substantially all of the assets of Antex.
Prior to joining Antex, Mr. Keese served in various
business development, marketing and sales management positions
at IGEN International and Abbott Laboratories and as an officer
in the U.S. Navy. Mr. Keese received an M.B.A. from
National University and a B.A. in mathematics and computer
science from Tulane University.
Dr. Lockhart has
served as senior vice president, product development since June
2008. Dr. Lockhart previously served as the president of
our subsidiary, Emergent BioSolutions Product Development UK
Ltd., from October 2007 to June 2008. Prior to joining Emergent,
Dr. Lockhart served as assistant vice president in charge
of global bacterial vaccine clinical research at Wyeth
Pharmaceuticals, a pharmaceutical and health care product
company, from January 2005 until October 2007 and as senior
director of global bacterial vaccine clinical research at Wyeth
from August 2000 to January 2005. Dr. Lockhart
received an M.A. from Cambridge University and received his
advanced medical and research degrees from the University of
Oxford. Dr. Lockhart is a Fellow of the Faculty of