LIFE MEDICAL SCIENCES, INC.
PO Box 219
Little Silver, NJ 07739
NOTICE OF 2003 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY APRIL 23, 2003
Notice is hereby given that the Annual Meeting of Stockholders of LIFE
MEDICAL SCIENCES, INC., a Delaware corporation (the "Company"), will be held at
the offices of Warshaw Burstein Cohen Schlesinger Koh, LLP, 555 Fifth Ave. 11th
Floor, New York, NY 10117 on Wednesday April 23, 2003, at 10:00 a.m. local time
(the "Meeting") for the following purposes:
1. To consider and vote upon the election of five directors;
2. To ratify the appointment of Eisner LLP (formerly Richard A. Eisner &
Company, LLP), as the independent auditors of the Company; and
3. To transact such other business as may properly come before the Meeting or
any adjournments thereof.
The close of business on March 21, 2003, has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Meeting. A complete list of those stockholders will be open to examination of
any stockholder, for any purpose germane to the Meeting, during ordinary
business hours at the Company's offices for a period of 10 days prior to the
Meeting. The stock transfer books of the Company will not be closed.
All stockholders are cordially invited to attend the Meeting. Whether or
not you expect to attend, you are respectfully requested by the Board of
Directors to sign, date and return the enclosed proxy promptly. Stockholders who
execute proxies retain the right to revoke them at any time prior to the voting
thereof. A return envelope, which requires no postage if mailed in the United
States, is enclosed for your convenience.
By the order of the Board of Directors,
Robert P. Hickey
Chairman
Little Silver, New Jersey
Dated: March 31, 2003
LIFE MEDICAL SCIENCES, INC.
PO Box 219
Little Silver, NJ 07739
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Life Medical Sciences, Inc.,
a Delaware corporation (the "Company"), for the Annual Meeting of Stockholders
to be held at the offices of Warshaw Burstein Cohen Schlesinger Kuh, LLP 555
Fifth Ave. 11th Floor, New York, NY 10117 on Wednesday, April 23, 2003 at 10:00
a.m., local time, and for any adjournment or adjournments thereof (the
"Meeting"), for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders. Any stockholder giving such a proxy has the power to
revoke it at any time before it is voted. Written notice of such revocation
should be forwarded directly to the Secretary of the Company, at the above
stated address. Attendance at the Meeting will not have the effect of revoking
the proxy unless such written notice is given.
If the enclosed proxy is properly executed and returned, the shares
represented thereby will be voted in accordance with the directions thereon and
otherwise in accordance with the judgment of the persons designated as proxies.
Any proxy on which no direction is specified will be voted in favor of the
actions described in this Proxy Statement, for the election of the nominees set
forth under the caption "Election of Directors" and for the ratification of the
appointment of Eisner LLP, as the independent auditors of the Company.
The approximate date on which this Proxy Statement and the accompanying
form of proxy will first be mailed or given to holders of the Company's Common
Stock, par value $.001 per share (the "Common Stock") is April 7, 2003.
The cost of solicitation of proxies will be borne by the Company. In
addition to the use of mail, employees of the Company may solicit proxies by
telephone or by other electronic means. Upon request, the Company will reimburse
brokers, dealers, bankers and trustees, or their nominees, for reasonable
expenses incurred by them in forwarding proxy materials to the beneficial
owners.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO SIGN AND RETURN THE
ACCOMPANYING PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
LIFE MEDICAL SCIENCES, INC.
PO Box 219
Little Silver, NJ 07739
VOTING
Only holders of shares of Common Stock of record as at the close of
business on the Record Date (the "Voting Stock") are entitled to vote at the
Meeting. The Record Date for the Meeting is March 21, 2003. On the Record Date
there were issued and outstanding 34,804,877 shares of Common Stock. Each
outstanding share of Common Stock is entitled to one vote upon all matters to be
acted upon at the Meeting. A majority in interest of the votes represented by
the outstanding shares of Voting Stock represented at the Meeting in person or
by proxy shall constitute a quorum. The affirmative vote of a plurality of the
votes represented by the shares of Voting Stock so represented is necessary to
elect the nominees as directors and the affirmative vote of a majority of the
votes represented by the shares of Voting Stock so represented at the Meeting is
necessary to ratify the appointment of Eisner LLP, as the independent auditors
of the Company. The stockholders vote at the Meeting by casting ballots (in
person or by proxy) which will be tabulated by a person appointed by the Board
before the Meeting to serve as the inspector of election at the Meeting and who
has executed and verified an oath of office. Abstentions and broker non-votes
are included in the determination of the number of shares of Common Stock
present at the Meeting for quorum purposes but broker non-votes are not counted
in the tabulation of the votes cast on proposals presented to stockholders.
THUS, AN ABSTENTION FROM VOTING ON ANY MATTER IS THE SAME LEGALLY AS A VOTE
-------------- -- ---------
"AGAINST" THE MATTER, EVEN THOUGH THE STOCKHOLDER MAY (MISTAKENLY) BELIEVE THAT
- ---------
AN ABSTENTION IS NEITHER A VOTE FOR OR A VOTE AGAINST A PROPOSAL.
ELECTION OF DIRECTORS
INFORMATION CONCERNING NOMINEES
At the Meeting, five directors will be elected by the stockholders to serve
until the next Annual Meeting of Stockholders or until their successors are
elected and shall qualify. Each of the nominees is currently a director of the
Company. MANAGEMENT RECOMMENDS THAT THE PERSONS NAMED BELOW BE ELECTED AS
DIRECTORS OF THE COMPANY and it is intended that the accompanying proxy will be
voted for their election as directors, unless the proxy contains contrary
instructions. The Company has no reason to believe that any of the nominees will
not be a candidate or will be unable to serve. However, in the event that any of
the nominees should become unable or unwilling to serve as a director, the
persons named in the proxy have advised that they will vote for the election of
such person or persons as shall be designated by management.
The following table sets forth the names of the nominees and certain
information with regard to each nominee:
Held Position with
Name of Nominee Age Office Since Company
--------------- --- ------------ -------------
Edward A. Celano . . . . . . . . . . . . . . . . . . . . . . . 64 November 1996 Director
Richard L. Franklin, MD 57 December 2000 Director
Robert P. Hickey . . . . . . . . . . . . . . . . . . . . . . . . 57 May 1996 Chairman, President, CEO
and CFO
Walter R. Maupay, Jr . . . . . . . . . . . . . . . . . . . . . . . 64 July 1996 Director
Irwin M. Rosenthal, Esq . . . . . . . . . . . . . . . . . . . . . 74 August 1990 Director
NOMINEES FOR ELECTION AT THE MEETING
Edward A. Celano has served as a director of the Company since November
1996. Since February 2001, Mr. Celano has been Managing Director of the
Corporate Finance Group of M. R. Weiser & Co., LLP, an investment banking firm.
From May 1996 to January 2001, Mr. Celano had been an executive vice president
of Atlantic Bank of New York, a commercial
2
bank. From November 1984 to May 1996, Mr. Celano was a senior vice president of
NatWest Bank, a commercial bank. Mr. Celano is currently a director of the
following publicly traded companies: Entrade, Inc. and Asta Funding, Inc.
Richard L. Franklin, MD, has served as a director of the Company since
December 2000. Since September 2002, Dr. Franklin has been Chairman of DMS Data
Systems, an internet-based information services company. From May 1996 to
September 2002, Dr. Franklin had been Chief Executive of Phairson, Ltd., a
medical product development company. From January 1991 to May 1996, Dr. Franklin
was founder and principal of Richard Franklin & Associates and from January 1988
to December 1990, Dr. Franklin was with Boston Capital Group, both of which are
consulting firms to the healthcare industry. From July 1986 to December 1987,
Dr. Franklin was head of Healthcare Corporate Finance at Tucker Anthony, an
investment banking firm.
Robert P. Hickey has served as Chairman of the Company's Board of Directors
since May 1999, Chief Financial Officer since March 2000, President and Chief
Executive Officer of the Company since May 1996 and as a director since July
1996. From May 1994 until joining the Company, Mr. Hickey was founder and
president of Roberts Healthcare Resources, Inc., a company engaged in project
consulting to Fortune 500 and leading edge companies in the healthcare industry.
From 1975 to 1994, Mr. Hickey served in various positions at Johnson & Johnson.
From 1992 to 1994, Mr. Hickey was vice president, marketing and director of
Ethicon, Inc., a unit of Johnson & Johnson.
Walter R. Maupay, Jr. has served as a director of the Company since July
1996. At his retirement in 1995, Mr. Maupay was a group executive with
Bristol-Myers Squibb and president of Calgon Vestal Laboratories. From May 1988
to January 1995, Mr. Maupay had been president of Calgon Vestal Laboratories, a
division of Merck & Co., Inc. From 1984 to 1988, Mr. Maupay served as vice
president of Calgon Vestal Laboratories. Mr. Maupay is currently a director of
the following publicly traded companies: Kinsey Nash Corporation and Cubist
Pharmaceuticals.
Irwin M. Rosenthal is a co-founder of the Company and has served as
Secretary of the Company since May 1999 and as a director of the Company since
its inception in 1990. Mr. Rosenthal is an attorney specializing in securities
law and has been a senior partner at Warshaw Burstein Cohen Schlesinger Kuh, LLP
since March 2002. From May 2001 to February 2002, Mr. Rosenthal was a senior
partner at Harris Beach & Wilcox, LLP. From June 2000 to May 2001, Mr. Rosenthal
was a senior partner at Greenberg Traurig, LLP. From June 1998 to June 2000, Mr.
Rosenthal was a senior partner at Graham & James. Mr. Rosenthal was a senior
partner at Rubin Baum Levin Constant & Friedman from December 1991 to June 1998.
Each director shall hold office until the Company's next meeting of its
shareholders and until such director's successor is duly elected and qualified
or until such director's earlier resignation or removal.
GENERAL INFORMATION CONCERNING THE BOARD AND ITS COMMITTEES
The Board met five times in the fiscal year ended December 31, 2002. The
Delaware General Corporation Law provides that the Board, by resolution adopted
by a majority of the entire Board, may designate one or more committees, each of
which shall consist of one or more directors. The Board annually elects from its
members the Executive Committee, Audit Committee and the Compensation Committee.
During the last fiscal year each of the directors then serving, with the
exception of Mr. Rosenthal, attended at least 75% of the aggregate of (1) the
total number of meetings of the Board and (2) the total number of meetings held
by all committees of the Board on which he served.
Executive Committee. The Executive Committee exercises all the powers and
authority of the Board in the management and affairs of the Company between
meetings of the Board, to the extent permitted by law. The members of the
Executive Committee are Mr. Hickey as Chairman, Dr. Franklin and Mr. Rosenthal.
During fiscal 2002, the Executive Committee did not meet separately from the
Board but performed its duties in the context of Board meetings.
3
Audit Committee. The Audit Committee is composed of three directors, a
majority of whom are independent as defined in the NASD guidelines. The Audit
Committee reviews the Company's auditing, accounting, financial reporting and
internal control functions and selects the independent auditors. In addition,
the committee monitors the non-audit services of the independent auditors.
During fiscal 2002, the Audit Committee met two times. In addition, during 2002,
the Chairman met with the independent auditors to review each of the Company's
Form 10-QSB filings. The members of the Audit Committee are Mr. Maupay as
Chairman, Mr. Celano and Dr. Franklin. For additional information relating to
the Audit Committee, see the Report of Audit Committee on page 9 of this proxy
statement.
Compensation Committee. The Compensation Committee reviews and recommends
to the Board remuneration arrangements, compensation plans and approves option
grants for the Company's officers, key employees, directors and others. The
Compensation Committee is composed of Mr. Celano as Chairman and Mr. Maupay.
During fiscal 2002, the Compensation Committee met three times.
PRINCIPAL STOCKHOLDERS
Set forth below is information concerning the stock ownership of all
persons known by the Company to own beneficially 5% or more of the outstanding
shares of any class of voting securities of the Company, all directors
(including nominees), the Named Executive Officers (as defined in "Executive
Compensation - Summary Compensation Table") and all directors and executive
officers of the Company as a group, as of March 21, 2003. For the purpose of
this Proxy Statement, beneficial ownership is defined in accordance with the
rules of the Securities and Exchange Commission (the "Commission") and generally
means the power to vote and/or to dispose of the securities regardless of any
economic interest therein.
PRINCIPAL STOCKHOLDERS TABLE
SHARES OF COMMON
STOCK ("CS") OR
NAME AND ADDRESS SERIES C PREFERRED
OF BENEFICIAL OWNER ("PS") PERCENT
OR NUMBER IN GROUP BENEFICIALLY OWNED (1) OF CLASS
------------------- --------------------- --------
Phairson, Ltd. 6,895,561CS (2) 19.8%
250 City Rd.
London EC1V 2QQ
United Kingdom
Aran Asset Mngt. SA 8,380,000CS (9) 21.5%
Alpenstrasse 11
6304 Zug Switzerland
Schweizerishe Gesellschaft 3,666,660CS (10) 10.0%
Fur Aldlenhandel und
Resaarch AG
Kirchstrasse 6
8807 Freienbach Switzerland
4
Robert P. Hickey 1,902,032CS (3) 5.2%
c/o Life Medical Sciences, Inc.
PO Box 219
Little Silver, NJ 07739
Hexagon Ltd. 3,125,000CS (11) 8.7%
PO Box 53254
Lihocsol 3303 Cyprus
Richard L. Franklin, MD 2,000,000CS (4) 5.4%
c/o Life Medical Sciences, Inc.
PO Box 219
Little Silver, NJ 0739
Irwin M. Rosenthal 434,940CS (5) 1.2%
c/o Life Medical Sciences, Inc.
PO Box 219
Little Silver, NJ 0739
Walter R. Maupay 571,775CS (6) 1.6%
c/o Life Medical Sciences, Inc.
PO Box 219
Little Silver, NJ 07739
Edward A. Celano 414,683CS (7) 1.2%
c/o Life Medical Sciences, Inc.
PO Box 219
Little Silver, NJ 07739
Clariden Bank 83,000PS (8) 17.4%
Claridenstrasse 26 1,660,000CS (12) 4.6%
CH-8022 Zurich, Switzerland
Clubb BioCapital Ltd. 83,000PS (8) 17.4%
2 Physic Place 1,660,000CS (12) 4.6%
London SW3 4HQ, United Kingdom
5
Banque Edouard Constant SA 83,000PS (8) 17.4%
Cours de Rive 11 1,660,000CS (12) 4.6%
CH-1211 Geneva, Switzerland
Pineridge Foundation 60,000PS (8) 12.6%
Altenbach 8 1,200,000CS (12) 3.3%
FL-9490 Vaduz, Liechtenstein
Luzerner Kantonalbank 60,000PS (8) 12.6%
Pilatusstrasse 12 1,200,000CS (12) 3.3%
CH-8404 Winterthur, Switzerland
Falcon Corporate Investments Ltd. 55,000PS (8) 11.5%
2 Water Street 1,100,000CS (12) 3.1%
Ramsey, Isle of Man IM8 1JP
All executive officers and directors 5,323,430CS (13) 13.4%
as a group (5 persons)
(1) All shares outstanding are beneficially owned, and sole voting and
investment power is held by the persons named, except as otherwise noted
and do not include shares underlying options and warrants which are not
exercisable within 60 days from March 21, 2003.
(2) Represents shares held of record by wholly-owned subsidiaries of Phairson,
Ltd.
(3) Includes 1,839,448 shares of Common Stock issuable upon exercise of options
which are currently exercisable and 40,584 shares owned by Mr. Hickey's
wife.
(4) Includes 2,000,000 shares of Common Stock issuable upon exercise of options
which are currently exercisable.
(5) Includes 380,940 shares of Common Stock issuable upon exercise of options
which are currently exercisable.
(6) Includes 375,107 shares of Common Stock issuable upon exercise of options
which are currently exercisable.
(7) Includes 351,877 shares of Common Stock issuable upon exercise of options
which are currently exercisable and 22,222 shares of Common Stock owned by
Walworth Financial Services, Inc., Defined Benefit Trust, controlled by Mr.
Celano.
(8) Each share of Series C Convertible Preferred Stock is currently entitled to
10 votes per share and votes, as a class, together with the Common Stock on
matters submitted to stockholders. The shares automatically convert to
Common Stock on March 26, 2004. The Series C Convertible Preferred Stock
was issued subsequent to the Record Date and, as such, is not entitled to
vote at the Meeting.
(9) Includes 4,190,000 shares of Common Stock underlying warrants currently
exercisable.
(10) Includes 1,833,330 shares of Common Stock underlying warrants currently
exercisable.
(11) Includes 1,250,000 shares of Common Stock underlying warrants currently
exercisable.
(12) Represents shares of Common Stock underlying warrants currently exercisable
from the Series C Convertible preferred stock financing.
(13) Includes 4,947,372 shares of Common Stock issuable upon exercise of options
which are currently exercisable.
6
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the aggregate
compensation paid or accrued by the Company during the fiscal years ended
December 31, 2002, 2001 and 2000 to the Company's Chief Executive Officer, the
only executive officer whose annual compensation exceeded $100,000 in fiscal
2002 (the "Named Executive Officer").
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------- --------------------
SECURITIES OTHER
NAME AND PRINCIPAL CAPACITIES UNDERLYING COMPEN-
IN WHICH SERVED YEAR SALARY BONUS OPTIONS SATION (1)
- -------------------------------------------------- ------------- ------------- -------------------- -------------
Robert P. Hickey 2002 $200,000 1,500,000 $2,299
Chairman, President, CEO and 2001 $225,000 $2,168
CFO 2000 $217,604 415,313 (2) $2,043
(1) Represents premium payments for term life insurance for the benefit of the
Named Executive Officer.
(2) Of the 415,313 options granted during 2000, 263,820 were granted to replace
previously granted options which were cancelled.
The following table sets forth certain information with respect to stock
option exercises by the Named Executive Officer during the year ended December
31, 2002 and the value of unexercised options at December 31, 2002.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR END (#)AT FISCAL YEAR END($)(1)
ACQUIRED ON VALUE -------------------------------------------------------
NAME EXERCISED(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ --------------- ------------------------------- ---------------------------------- --------------------
Robert P. Hickey N/A N/A 1,339,448 1,000,000 $ 6,001 N/A
- ---------------------------------------------------------------------------------------------------------------------------------
(1) Based upon the closing price of $0.12 per share of Common Stock on December
31, 2002, less the option exercise price.
EMPLOYMENT AND RELATED AGREEMENTS
In May 2001, the Company entered into a new employment agreement with
Robert P. Hickey, pursuant to which Mr. Hickey currently receives an annual base
salary of $210,000 subject to adjustments for cost-of-living increases and other
increases as determined by the Board. Hickey serves as Chairman, President, CEO
and CFO of the Company. The term of Mr. Hickey's employment agreement is for a
period of one year and is automatically renewed on an annual basis absent three
months prior written notice. Pursuant to such agreement, Mr. In March 2002, the
Board issued to Mr. Hickey a non-qualified stock option to purchase an aggregate
of 1,500,000 shares of Common Stock under the Company's 2001 Non-Qualified Stock
Option Plan. The option is exercisable at $0.12 per share and vests in three
equal installments commencing on the issuance date. The vesting schedule
accelerates upon a change in control of the Company. The option expires as to
each installment seven years from vesting.
7
If Mr. Hickey dies, is terminated for cause, voluntarily resigns other than
for Good Reason, as such term is defined in the agreement, or is unable to
perform his duties on account of death or disability and the agreement is
terminated, he or his legal representative shall receive from the Company the
base salary which would otherwise be due to the date which termination of
employment occurred. If Mr. Hickey's employment is terminated for any other
reason by the Company or if Mr. Hickey resigns for Good Reason during the term
of the agreement, Mr. Hickey will receive from the Company the base salary which
would otherwise be due to the date which termination of employment occurred plus
severance pay equal to six months of salary. The agreement with Mr. Hickey
contains confidentiality and non-competition provisions.
Under the foregoing employment agreement, the Company is required to obtain
life insurance coverage on the life and for the benefit of Mr. Hickey in an
amount equal to twice the amount of his base salary then in effect. Mr. Hickey
will also have the right to participate in all group insurance, hospital,
dental, major medical and disability benefits, stock option plans and other
similar benefits afforded to executives.
In April 2001, the Company entered into a consulting agreement with Richard
L. Franklin, MD, pursuant to which Dr. Franklin agreed to render advisory and
consulting services to the Company in the areas of strategic planning, business
management, fund raising, investor relations and other areas consistent with Dr.
Franklin's experience and expertise. The initial term of this agreement is one
year and is automatically renewed on an annual basis absent three months written
notice prior to the termination date. For his services under this agreement, the
Company agreed to pay Dr. Franklin a fee of $10,000 per month and, in March
2002, the Board issued to Dr. Franklin a non-qualified stock option to purchase
an aggregate of 3,000,000 shares of Common Stock under the Company's 2001
Non-Qualified Stock Option Plan. The option is exercisable at $0.12 per share,
and vests in three equal installments commencing upon the issuance date. The
vesting schedule accelerates upon a change in control of the Company. The option
expires as to each installment seven years from vesting.
In March 2003, the Company entered into a employment agreement with Dr.
Pines, pursuant to which Dr. Pines currently receives an annual base salary of
$180,000 subject to adjustments for cost-of-living increases and other increases
as determined by the Board. Dr. Pines serves as Vice President of Research and
Chief Scientific Officer of the Company. The term of Dr. Pines' employment
agreement is for a period of three years and is automatically renewed on an
annual basis absent three months prior written notice.
If Dr. Pines dies, is terminated for cause, voluntarily resigns other than
for Good Reason, as such term is defined in the agreement, or is unable to
perform his duties on account of death or disability and the agreement is
terminated, he or his legal representative shall receive from the Company the
base salary which would otherwise be due to the date which termination of
employment occurred. If Dr. Pines' employment is terminated for any other reason
by the Company or if Dr. Pines resigns for Good Reason during the term of the
agreement, Dr. Pines will receive from the Company the base salary which would
otherwise be due to the date which termination of employment occurred plus
severance pay equal to six months of salary. The agreement with Dr. Pines
contains confidentiality and non-competition provisions. Dr. Pines will have the
right to participate in all group insurance, hospital, dental, major medical and
disability benefits, stock option plans and other similar benefits afforded to
executives.
Dr. Pines had previously been providing consulting services to the Company
at the rate of $4,000 per month when the consulting arrangement began and at the
rate of $8,000 per month since January 2002. In March 2002, the Board issued to
Dr. Pines a non-qualified stock option to purchase up to 700,000 shares of the
Company's Common Stock under the Company's 2001 Non-Qualified Stock Option Plan
(the "Plan"). The option is exercisable at $0.12 per share, and vests in three
equal installments commencing upon issuance date. The vesting schedule
accelerates upon a change in control of the Company. The option expires as to
each installment seven years from vesting.
8
DIRECTOR COMPENSATION
All directors of the Company are reimbursed for reasonable expenses
incurred by them in acting as a director or as a member of any committee of the
Board. All outside directors are entitled to receive $1,000 for attendance at
each Special Meeting and $500 for participation in each teleconference meeting.
All existing outside directors, with the exception of Dr. Franklin, are entitled
to receive an annual option grant of 50,000 shares on the occasion of the
Company's Annual Meeting of Stockholders and any new outside director is
entitled to receive an initial grant of 50,000 shares on the occasion of his/her
appointment/election to the Board.
In April, the Company issud to Messrs. Celano, Maupay and Rosenthal,
options for each to acquire up to 50,000 shares of Common Stock at $0.19 per
share. Such options vested immediately and are exercisable for seven years from
the issuance date.
REPORT OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
The Audit Committee is comprised solely of directors, a majority of whom
are independent as defined in the NASD guidelines, and it operates under a
written charter adopted by the Board of Directors, a copy of which is attached
to this proxy statement as Exhibit A. The written charter attached to the proxy
statement is identical to the charter included in last year's annual meeting
proxy statement, except that the provision requiring all directors to be
independent has been replaced with a requirement that a majority of the
directors serving on the committee be independent. This change was made in
recognition of the fact that one of the three directors serving on the committee
receives compensation as a consultant to the Company in an amount which would
disqualify him from being deemed independent. The Committee reviews and assesses
the adequacy of its charter on an annual basis.
The primary focus of the Audit Committee is to assist the Board of
Directors in its general oversight of the Company's financial reporting,
internal control and audit functions. Management is responsible for the
preparation, presentation and integrity of the Company's financial statements,
accounting and financial reporting principles, internal controls and procedures
designed to assure compliance with accounting standards, applicable laws and
regulations. The Company's independent auditing firm is responsible for
performing an independent audit of the consolidated financial statements in
accordance with generally accepted auditing standards.
The Committee serves an oversight role to the Board of Directors in which
it provides advice, counsel and direction to management and the auditors on the
basis of the information it receives, discussions with management and the
auditors, and the experience of the Committee's members in business, financial
and accounting matters. The Committee members are not professional auditors and
their functions are not intended to duplicate or to certify the activities of
management and the independent auditors nor can the Committee certify that the
independent auditors are "independent" under applicable laws.
In this context, the Audit Committee has reviewed and discussed with
management the audited financial statements of the Company for the fiscal year
ended December 31, 2002. Management represented to the Audit Committee that said
financial statements were prepared in accordance with generally accepted
accounting principles which was affirmed by the Company's independent auditors,
Richard A. Eisner & Company, LLP. The Audit Committee has discussed with Richard
A. Eisner & Company, LLP matters required to be discussed by Statement on
Auditing Standards No. 61, "Communication with Audit Committee."
9
The Audit Committee has received and reviewed the written disclosures and
the letter from Richard A. Eisner & Company, LLP required by Independence
Standards Board Standard No. 1, "Independence Discussions with Audit
Committees," and the Audit Committee discussed with Richard A. Eisner & Company,
LLP the firm's independence.
Based on the aforementioned actions, the Audit Committee recommended that
the Board of Directors include the audited financial statements in the Company's
Annual Report on Form 10-K for the year ended December 31, 2002, as filed with
the Securities and Exchange Commission.
Submitted by the Audit Committee of the Company's Board of Directors:
Walter R. Maupay, Jr., Chairman
Edward A. Celano
Richard L. Franklin, MD
AUDIT AND RELATED FEES
Subject to ratification by the stockholders, the Board of Directors has
reappointed Eisner LLP as independent auditors to audit the financial statements
of the Company for the current fiscal year.
Fees for the last annual audit and review of financial statements included
in that year's Form 10-Q filings. were $43,760. Audit-related services generally
include fees for statutory audits, accounting consultations and SEC registration
statements. There were no non-audit fees.
CERTAIN TRANSACTIONS
In March, 2003, the Company completed the purchase of the polymer
technology assets of a private medical technology company based in the United
Kingdom, Phairson Medical Limited (and an affiliated entity; collectively,
"Phairson"), in exchange for the issuance of 6,895,561 shares of restricted
Common Stock of the Company. The assets comprise a series of United States and
foreign patent applications as well as scientific and clinical documentation.
The Company also assumed Phairson's rights and obligations under a development
agreement with the Swiss Federal Institute of Technology and the University of
Zurich, as well as with the principal investigator of the technology development
project, Professor JA Hubbell. Under these agreements, the Company is required
to pay royalties of no more than 1.1% of net sales of products incorporating the
technology. If the Company fails to pursue development efforts involving the
technology for an extended period of time, the Company is obligated to negotiate
a return of the technology to the university.
Mr. Rosenthal was, until May 2001, a partner at Greenberg Traurig, LLP,
which firm served, from June 2000 through January 2002, as counsel to the
Company. The Company paid or accrued approximately $94,000 in the year ended
December 31, 2001, for legal services rendered by that firm and a prior firm of
which Mr. Rosenthal was a partner during that period.
For a description of certain other compensation arrangements with
management and other directors of the Company, see "Executive Compensation."
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company believes that during 2002 all reports for the Company's
executive officers and directors that were required to be filed under Section
16(a) of the Securities Exchange Act of 1934 were timely filed. To the Company's
knowledge, the following holders of 10% or more of the shares of the Company's
Common Stock have failed to file Form 3 Statements of Beneficial Ownership:
Affaires Financieres SA, Banque IPPA & Associes, Schweizerishe Gesellschaft Fur
Aldlenhandel und Resaarch AG and Hexagon Ltd., each with respect to their
purchase of Series B Preferred Stock and related warrants in March 2002.
10
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Eisner LLP has served as the Company's independent auditors. The Company
has requested that a representative of Eisner LLP, attend the Meeting. Such
representative will have an opportunity to make a statement, if he or she
desires, and will be available to respond to appropriate questions of
stockholders. Management of the Company recommends a vote for the ratification
of Eisner LLP, as the independent auditors for the Company.
OTHER MATTERS
The Board is not aware of any matters not set forth herein that may come
before the Meeting. If, however, further business properly comes before the
Meeting, the persons named in the proxies will vote the shares represented
thereby in accordance with their judgment.
STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for stockholder
action at annual meetings in accordance with regulations adopted by the
Commission. To be considered for inclusion in the proxy statement and form of
proxy relating to the 2004 Annual Meeting of Stockholders, such proposals must
be received by the Company not later than December 1, 2003. Proposals should be
directed to the attention of the Secretary of the Company.
ANNUAL REPORT ON FORM 10-KSB
The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2002 accompanies this Proxy Statement. The Annual Report on Form
10-KSB does not constitute a part of the proxy soliciting material.
By order of the Board of Directors,
Robert P. Hickey
Chairman
Dated: March 31, 2003
11
LIFE MEDICAL SCIENCES, INC.
PO BOX 219
LITTLE SILVER, NJ 07739
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 23, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert P. Hickey and Irwin M. Rosenthal,
and each of them, (with full power to act without the other), as proxies with
full power of substitution, to represent the undersigned at the Annual Meeting
of Stockholders to be held at the offices of Warshaw Burstein Cohen Schlesinger
Kuh, LLP 555 Fifth Ave., New York, NY on April 23, 2003 at 10:00 a.m. and at any
adjournment thereof, and to vote the shares of Common Stock the undersigned
would be entitled to vote if personally present, as indicated on the reverse
side:
(CONTINUED, AND TO BE SIGNED ON REVERSE SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
LIFE MEDICAL SCIENCES, INC.
APRIL 23, 2003
[down arrow] Please Detach and Mail in the Envelope Provided [down arrow]
PLEASE MARK YOUR
/X/ VOTES AS IN THIS
EXAMPLE
FOR all nominees WITHHOLD AUTHORITY NOMINEES: Edward A. Celano
Listed at right (except to vote for all nominees Richard L.Franklin, MD
as marked to the listed at right Robert P. Hickey
contrary below) Walter R. Maupay, Jr.
Irwin M. Rosenthal
1. Election of / / / /
Directors.
(INSTRUCTION: To withhold authority to vote for any individual nominee, print
that nominee's name on the line provided below.)
- ---------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. To ratify the appointment of Richard A. Eisner & / / / / / /
Company, as the independent auditors of the Company.
3. In their discretion, the proxies are authorized to vote upon such business
as may properly come before the Meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO
CONTRARY INSTRUCTION IS GIVEN, THE SHARES WILL BE VOTED FOR THE ELECTION OF
THE NOMINEES AND FOR PROPOSAL 2. ON ANY OTHER MATTERS THAT MAY COME BEFORE
THE MEETING THE PROXY WILL BE VOTED IN THE DISCRETION OF THE ABOVE-NAMED
PERSONS.
SIGNATURE ___________________________ _____________________________________ DATED_____________, 2003
SIGNATURE IF HELD JOINTLY
Note: (Please date, sign as name appears above and return promptly. If the
Shares are registered in the names of two or more persons, each should sign.
When signing as Corporate Officer, Partner, Executor, Administrator, Trustee or
Guardian, please give full title. Please note any changes in your address
alongside the address as it appears in the proxy.)