LIFE SCIENCES RESEARCH, INC.
METTLERS ROAD, P.O. BOX 2360
EAST MILLSTONE, NJ 08875
(732) 649-9961
August 8, 2003
Dear Stockholder:
The directors and officers of Life Sciences Research, Inc. cordially invite
you to attend the Annual Meeting of Stockholders of the Company to be held on
September 9, 2003 at 10:00 a.m., local time. The meeting will be held at 53 St.,
Urbanizacion Obarrio, Panama, Republic of Panama. Notice of the Annual Meeting,
the Proxy Statement and a proxy card are enclosed.
At this year's meeting you will be asked to (i) elect directors and (ii)
transact such other business as may properly come before the meeting.
You are urged to mark, sign, date and mail the enclosed Proxy immediately.
By mailing your Proxy now you will not be precluded from attending the meeting.
Your Proxy is revocable, and in the event you find it convenient to attend the
meeting, you may, if you wish, withdraw your Proxy and vote in person.
Very truly yours,
/s/ Andrew H. Baker
Andrew H. Baker
Chairman of the Board
and Chief Executive Officer
LIFE SCIENCES RESEARCH, INC.
METTLERS ROAD, P.O. BOX 2360
EAST MILLSTONE, NJ 08875
(732) 649-9961
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 9, 2003
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Life Sciences Research, Inc., a Maryland corporation (the
"Company" or "LSR"), will be held at 53 St., Urbanizacion Obarrio, Panama,
Republic of Panama on September 9, 2003 at 10:00 a.m., local time, for the
purpose of considering and voting on the following matters described in the
attached Proxy Statement:
1. Election of directors;
2. Transacting such other business as may properly come before the
Meeting or any adjournment thereof.
Holders of record of voting common stock at the close of business on August
1, 2003 (the "Record Date") shall be entitled to notice of and to vote at the
Meeting or any adjournment thereof. You are invited to attend the Meeting in
person. Whether or not you intend to attend the Meeting, please mark, sign, date
and return the enclosed Proxy to make certain that your shares are represented
at the Meeting. Stockholders who attend the Meeting may vote their shares
personally, even though they have previously returned Proxies.
PLEASE NOTE THAT YOU WILL NEED PROOF THAT YOU OWN LSR STOCK TO BE ADMITTED
TO THE MEETING.
The Meeting may be adjourned from time to time without notice other than
announcement at the Meeting and any business for which notice of the Meeting is
hereby given may be transacted at a reconvened meeting following such
adjournment.
Your attention is invited to the attached Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS:
Richard Michaelson
Secretary and Chief Financial Officer
Dated: August 8, 2003
LIFE SCIENCES RESEARCH, INC.
METTLERS ROAD, P.O. BOX 2360
EAST MILLSTONE, NJ 08875
(732) 649-9961
PROXY STATEMENT
GENERAL INFORMATION
PROXY SOLICITATION
This Proxy Statement is furnished in connection with the solicitation of
proxies (the "Proxies") by and on behalf of the Board of Directors of Life
Sciences Research, Inc., a Maryland corporation ("LSR" or the "Company"), for
its Annual Meeting of Stockholders (the "Meeting") to be held at 10:00 a.m.,
local time, on September 9, 2003 at 53 St., Urbanizacion Obarrio, Panama,
Republic of Panama, or at any adjournment thereof. The Company anticipates that
this Proxy Statement and the accompanying form of Proxy will be first mailed or
given to the stockholders of the Company on or about August 8, 2003.
The cost of soliciting Proxies will be borne by the Company. Officers and
regular employees of the Company, without additional compensation, may solicit
Proxies by further mailing, telephone, telegraph, facsimile transmission or by
personal conversations. The Company will, upon request, reimburse banks,
brokerage firms, nominees, fiduciaries and other custodians for their expenses
in forwarding solicitation material to the beneficial owners of the Company's
voting common stock, par value $.01 per share (the "Common Stock").
Any Proxy that is properly submitted to the Company may be revoked by the
person giving it at any time before it has been voted. Proxies may be revoked by
(i) delivering to the Secretary of the Company at or before the Meeting a
written notice of revocation bearing a later date than the Proxy, (ii) duly
executing a subsequent Proxy relating to the same shares of Common Stock and
delivering it to the Secretary of the Company at or before the Meeting or (iii)
attending the Meeting and voting in person (although attendance at the Meeting
will not in and of itself constitute revocation of a Proxy).
INFORMATION ABOUT VOTING
The persons named in the Proxies will vote the Proxies in accordance with
the instructions specified therein. Unless instructed to the contrary in a Proxy
that is returned by a stockholder of the Company, the Proxy will be voted FOR
the persons named below in the election of the Company's Board of Directors. The
persons named in the Proxy will exercise their judgment with respect to other
matters which may properly come before the Meeting. The Company is not currently
aware of any other matters to come before the Meeting.
If you participate in the Huntingdon Life Sciences Inc. Savings and
Investment Plan (the Company's "401(k) Plan"), you may vote shares of Common
Stock of the Company credited to your 401(k) account by instructing the trustee
of the 401(k) Plan, pursuant to the separate 401(k) Plan instruction card being
mailed with this Proxy Statement to plan participants. You should complete and
return the 401(k) Plan instruction card to the proxy tabulators at the address
set forth on that card. The trustee will vote your shares in accordance with
your duly executed instructions received by September 3, 2003. If you do not
send instructions, the shares credited to your account will be voted by the
trustee in the same proportion that it votes share equivalents for which it did
receive timely instructions.
You may also revoke previously given voting instructions by September 1,
2003 by filing with the proxy solicitor either a written notice of revocation or
a properly completed and signed voting 401(k) Plan instruction card bearing a
later date.
Holders of a majority of the shares of Common Stock of the Company entitled
to vote, present in person or represented by proxy, constitute a quorum at the
Meeting. Abstentions are counted as present for purposes of establishing the
quorum necessary for the Meeting to proceed. Likewise, if a broker indicates on
the proxy that it does not have discretionary authority as to certain shares to
vote on a particular matter (a "broker non-vote"), such broker non-vote is
counted as present for purposes of establishing the quorum necessary for the
Meeting to proceed.
Directors will be elected by a favorable vote of a plurality of the shares
of Common Stock present and entitled to vote, in person or by proxy, at the
Meeting. Accordingly, abstentions and broker non-votes as to the election of
directors will not affect the election of the candidates receiving the plurality
of votes. All other matters to come before the Meeting require the approval of a
majority of the shares of Common Stock voted, in person or by proxy, at the
Meeting, provided a quorum is present. For purposes of the vote on such matters,
abstentions and broker non-votes will not be counted as votes cast and will have
no effect on the result of the vote, although they will count toward the
presence of a quorum.
SHARES OUTSTANDING AND VOTING RIGHTS
Holders of record of Common Stock at the close of business on August 1,
2003 (the "Record Date"), will be entitled to vote at the Meeting. The holders
of the shares of LSR Common Stock are entitled to one vote per share. Such
shares may not be voted cumulatively. As of the Record Date, there were
11,932,338 shares of LSR Common Stock issued and outstanding and entitled to
vote. The presence in person or by Proxy of the holders of at least a majority
of the outstanding shares of Common Stock is necessary to constitute a quorum at
the Meeting. The directors and executive officers of the Company as a group as
of the Record Date (6 persons), who as of the Record Date beneficially owned of
record in the aggregate 3,652,479 (approximately 28.4 %) of the outstanding
shares of Common Stock, have indicated that they intend to vote all such shares
FOR all of the proposals set forth herein.
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees to each of the five positions on the Board of Directors of the
Company are to be elected at the Meeting. If elected, each will serve for one
year or until his successor is elected and qualified. Each such nominee is a
current director. The Company does not contemplate that any of the persons named
below will be unable or will decline to serve; however, if any such nominee is
unable or declines to serve, the persons named in the accompanying Proxy will
vote for a substitute, or substitutes, in their discretion.
Listed below are the names and ages of the nominees, the year in which each
first became a director and their principal occupations for at least the past
five years.
Name and Age Principal Occupation
Andrew Baker - 55 Andrew Baker was appointed to the Huntingdon Life Sciences
Group plc ("Huntingdon") Board as Executive Chairman in September 1998 in
connection with his leadership of a rescue plan for Huntingdon. He became
Chairman and CEO of LSR on January 10, 2002. He is a chartered accountant
and has operating experience in numerous companies involved in the delivery
of healthcare ancillary services. He spent 18 years until 1992 with Corning
Incorporated ("Corning") and held the posts of President and CEO of MetPath
Inc., Corning's clinical laboratory subsidiary, from 1985 to 1989. He
became President of Corning Laboratory Services Inc. in 1989, which at the
time controlled MetPath Inc. (now trading as Quest Diagnostics Inc.), and
Hazleton Corporation, G. H. Besselaar Associates and SciCor Inc., (all
three now trading as Covance Inc.). Since leaving Corning in 1992, Mr.
Baker has focused on investing in and developing companies in the
healthcare sector including Unilab Corporation, a clinical laboratory
services provider in California where Mr. Baker served as CEO from 1992 to
1996. Mr. Baker also started Focused Healthcare Partners ("FHP") in 1997 to
invest in healthcare-related entities. See "Certain Relationships and
Transactions with Related Persons".
GaborBalthazar - 61 Gabor Balthazar was appointed to the Huntingdon Board as
the Senior Independent Non-Executive Director in March 2000. He became a
director of LSR on January 10, 2002. He has been active in international
marketing and management consulting for almost 30 years. Mr. Balthazar sat
on Unilab's board from 1992 until November 1999. From 1985 to 1997 Mr.
Balthazar served as a consultant to Frankfurt Consult, the
merger/acquisition subsidiary of BHF-Bank, Frankfurt, Germany and to
Unilabs Holdings SA, a Swiss clinical laboratory testing holding company,
from 1987 to 1992.
Brian Cass - 54, Brian Cass, FCMA, CBE, was appointed to the Huntingdon Board as
Managing Director/Chief Operating Officer in September 1998 and became
President and Managing Director of LSR on January 10, 2002. Prior to
joining Huntingdon he was a Vice President of Covance Inc. and Managing
Director of Covance Laboratories Ltd (previously Hazleton Europe Ltd) for
nearly 12 years, having joined the company in 1979 as Controller. Mr. Cass
worked at Huntingdon Research Centre between 1972 and 1974 and has previous
experience with other companies in the electronics and heavy plant
industries. He has also held directorships with North Yorkshire Training &
Enterprise Council Ltd and Business Link North Yorkshire Ltd. In June 2002,
in recognition of his contribution to science and professional achievement,
Mr. Cass was appointed by the Queen of England as a Commander in the Most
Excellent Order of the British Empire.
Afonso Junqueiras - 46, Afonso Junqueiras became a director of LSR on January
15, 2003. He is a civil engineer and has been President and director of a
South American private civil engineering firm since 1997.
Richard Michaelson - 51 Richard Michaelson became Chief Financial Officer and
Secretary of LSR effective January 10, 2002. Mr. Michaelson was director of
Strategic Finance of Huntingdon from September 1998 to December 2001. He
served as Senior Vice President of Unilab from September 1997 to December
1997, Senior Vice President-Finance, Treasurer and Chief Financial Officer
of Unilab from February 1994 to September 1997, and Vice President-Finance,
Treasurer and Chief Financial Officer of Unilab from November 1993 to
February 1994. Mr. Michaelson also served as Vice President of Unilab
beginning in October 1990. Mr. Michaelson joined MetPath, Inc., the
clinical laboratory subsidiary of Corning Incorporated, in 1980 and served
as Vice President of MetPath from 1983 and Treasurer of Corning Lab
Services, Inc. from 1990 through, in each case, September 1992.
Yaya Sesay - 60 Yaya Sesay became a director of LSR on January 10, 2003. He
served as a senior government official of an African nation for
approximately 25 years, culminating in his service as Financial Secretary
of the Ministry of Finance for three years. For the past five years, Mr.
Sesay has been an international businessman with an interest in the
development of pharmaceutical products.
During 2003 John Caldwell and Kirby Cramer served as directors of LSR from
January 1, 2003 to January 8, 2003, when they voluntarily resigned. Mohammed
Faruque served as a director of LSR from January 10, 2003 to January 24, 2003,
when he voluntarily resigned.
The Articles of Amendment and Restatement of LSR provide that the directors
shall be not less than one in number and there shall be no maximum number of
directors. Any director appointed by the Board of Directors holds office only
until the next following annual meeting, at which time he shall be eligible for
re-election by the stockholders. Directors may be removed from office only for
cause.
No director or executive officer has a family relationship with any other
director or executive officer.
SECURITY OWNERSHIP OF MANAGEMENT AND DIRECTORS AND CERTAIN BENEFICIAL OWNERS
Ownership of Management and Directors
The following table sets forth certain information known to LSR regarding
the beneficial ownership of LSR Common Stock as of the Record Date by: (i) each
of LSR's directors and executive officers and (ii) all directors and executive
officers as a group. For purposes of this table, a person or group of persons is
deemed to have "beneficial ownership" of any shares as of a given date which
such person has the right to acquire within 60 days after such date. For
purposes of computing the percentage of outstanding shares held by each person
or group of persons named below on a given date, any security which such person
or persons have the right to acquire within 60 days after such date is deemed to
be outstanding, but is not deemed to be outstanding for the purpose of computing
the percentage ownership of any other person. Except as noted below, each person
has full voting and investment power over the shares indicated.
Number of Shares of LSR Percent of LSR
Name and Address of Common Stock Common Stock
Beneficial Owner Beneficially Owned Beneficially Owned
Mr. A. Baker 2,710,089 (1) 21.6%
Mr. G. Balthazar 20,000 (2) *
Mr. B. Cass 620,000 (3) 5.1%
Mr. A. Junqueiras -- --
Mr. R. Michaelson 302,390 (4) 2.5%
Mr. Y. Sesay -- --
All Directors and Executive Officers 3,652,479 28.4%
as a Group
<FN>
* Signifies less than 1%. All percentages calculated on the basis of
11,932,338 outstanding shares of Common Stock. Shares subject to issuance
upon presently exercisable options or warrants are included in the number
of outstanding shares for purposes of calculating that holder's percentage
interest, as well as the aggregate percentage interest of all directors and
executive officers as a group.
(1) Includes presently exercisable options to purchase 200,000 shares and
presently exercisable warrants to purchase 410,914 shares. As of the Record
Date, 1,335,175 of such shares are beneficially owned by First Investments
LLC, a Nevada limited liability company of which Mr. Baker owns 69% of the
membership interests, with the remaining 31% of the membership interests
being owned by Search for a Cure LLC, a company that is unrelated to Mr.
Baker. As of the Record Date, 684,000 of such shares are beneficially owned
by Focused Healthcare Partners Ltd, a Bahamas corporation that is
controlled by Mr. Baker. As of the Record Date, 490,914 of such shares
(including the 410,914 shares subject to presently exercisable warrants
noted above) are beneficially owned by Focused Healthcare Partners LLC, a
New Jersey limited liability company that is controlled by Mr. Baker.
(2) Includes presently exercisable options to purchase 20,000 shares.
(3) Includes presently exercisable options to purchase 200,000 shares.
(4) Includes presently exercisable options to purchase 90,000 shares.
</FN>
Ownership of Certain Beneficial Owners
The following table sets forth certain information, to the knowledge of
LSR, regarding the beneficial ownership of LSR Common Stock as of the Record
Date by all stockholders known by LSR (based on public filings with the
Commission, except as otherwise noted) to be the beneficial owners of more than
5% of the outstanding shares of LSR Common Stock. For purposes of this table, a
person or group of persons is deemed to have "beneficial ownership" of any
shares as of a given date when such person has the right to acquire such shares
within 60 days after such date. For purposes of computing the percentage of
outstanding shares held by each person or group of persons named above on a
given date, any security which such person or persons has the right to acquire
within 60 days after such date is deemed to be outstanding, but is not deemed to
be outstanding for the purpose of computing the percentage ownership of any
other person. Except as noted below, each person has full voting and investment
power over the shares indicated.
Name and Address Number of Shares of Common Stock Percent of Common Stock
of Beneficial Owner Beneficially Owned Beneficially Owned (1)
------------------- ------------------ ----------------------
Andrew Baker 2,710,089 (2) 21.6%
c/o Life Sciences Research, Inc.
Mettlers Road
East Millstone, NJ 08875
Brian Cass 620,000 (3) 5.1%
c/o Life Sciences Research, Inc.
Mettlers Road
East Millstone, NJ 08875
- ---------------
<FN>
(1) Calculated pursuant to Rule 13d-3 promulgated under the Exchange Act and
based on 11,932,338 shares of Common Stock outstanding as of the Record
Date.
(2) Mr. Baker is the Chairman and Chief Executive Officer of the Company.
Includes presently exercisable options to purchase 200,000 shares and
presently exercisable warrants to purchase 410,914 shares. As of the Record
Date, 1,335,175 of such shares are beneficially owned by First Investments
LLC, a Nevada limited liability company of which Mr. Baker owns 69% of the
membership interests, with the remaining 31% of the membership interests
being owned by Search for a Cure LLC, a company that is unrelated to Mr.
Baker. As of the Record Date, 684,000 of such shares are beneficially owned
by Focused Healthcare Partners Ltd, a Bahamas corporation that is
controlled by Mr. Baker. As of the Record Date, 490,914 of such shares
(including the 410,914 shares subject to presently exercisable warrants
noted above) are beneficially owned by Focused Healthcare Partners LLC, a
New Jersey limited liability company that is controlled by Mr. Baker. Based
on Company records, a Schedule 13D amendment filed by Mr. Baker on June 17,
2002 and a Form 4 filed by Mr. Baker on March 3, 2003.
(3) Mr. Cass is a director and President of the Company. Based on Company
records, a Form 4 filed by Mr. Cass on March 3, 2003 and a Schedule 13D
filed by Mr. Cass on March 3, 2003.
</FN>
Meetings and Committees of Board of Directors
Meetings of Board of Directors
During 2002 six (6) meetings of the Board of Directors of LSR were
convened. From January 1, 2003 to the date of this Proxy Statement, the Board of
Directors of LSR held two (2) meetings. Each of the directors attended all such
meetings of the Board and all members of Board Committees attended all such
meetings for the Committee on which he served.
Audit Committee
The Audit Committee of the Board of Directors of LSR is authorized to
retain and evaluate the Company's independent accountants; to review and approve
any major changes in accounting policy; to review the arrangements for, scope
and results of the independent audit; to review and approve the scope of
non-audit services to be performed by independent accountants and to consider
the possible effect on the independence of the accountants; to review the
effectiveness of internal auditing procedures and personnel; to review LSR's
policies and procedures for compliance with disclosure requirements with respect
to conflicts of interest and for prevention of unethical, questionable or
illegal payments; and to take such other actions as the Board shall from time to
time so authorize. Messrs. Balthazar, Junqueiras and Sesay comprise the Audit
Committee. Mr. Balthazar serves as Chairman. Each member of the Audit Committee
is considered to be an independent director. The Audit Committee of LSR held
five (5) meetings during 2002 and two (2) meetings during 2003 prior to the date
of this Proxy Statement.
The Audit Committee operates under a written charter adopted by the Board
of Directors, that was included as Appendix A to the Company's 2002 Proxy
Statement.
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management is responsible for the Company's
financial statements and the financial reporting process, including the system
of internal controls. The independent auditors are responsible for expressing an
opinion on the conformity of those audited financial statements with accounting
principles generally accepted in the United States. In fulfilling its oversight
responsibilities, the Audit Committee has reviewed and discussed with management
and the independent auditors the Company's audited financial statements
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002, including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments, and the clarity of disclosures in the financial statements.
Review of Financial Statements and Other Matters with Independent Accountant
The Audit Committee discussed with the Company's independent auditors for
the fiscal year ended December 31, 2002, Deloitte & Touche, the matters required
to be discussed by Statement on Auditing Standards No. 61, Communication with
Audit Committees, as amended. In addition, the Audit Committee discussed with
D&T the auditors' independence from the Company and its management including the
matters in the written disclosures provided to the Audit Committee as required
by Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees, and considered the compatibilities of non-audit services with
the auditors' independence.
The Committee discussed with D&T the overall scope and plans for their 2002
audit. The Committee met with the internal and independent auditors, with and
without management present, to discuss the results of their examinations, their
evaluations of the Company's internal controls, and the overall quality of the
Company's financial reporting.
Audit Fees of Independent Accountant
The aggregate fees billed for professional services rendered by Deloitte &
Touche for the audit of the Company's annual financial statements for fiscal
year 2002 were $295,000.
Financial Information Systems Design and Implementation Fees
There were no fees billed for professional services rendered by Deloitte &
Touche for financial information systems design and implementation assistance
for fiscal year 2002.
All Other Fees
The aggregate fees billed for services rendered by Deloitte & Touche during
fiscal year 2002 other than for those professional services described above were
$92,000. Such services included $72,000 in services provided in connection with
the Company's registration statement on Forms S-4 regarding LSR's acquisition of
Huntingdon. The remainder of non-audit fees primarily related to foreign
payrolls consultations.
The Audit Committee has considered whether the provision of the foregoing
services is compatible with maintaining the principal accountant's independence,
and has determined that such independence has been maintained.
Recommendation that Financial Statements be Included in Annual Report
Based on the reviews and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the last fiscal year
for filing with the Securities and Exchange Commission.
Deloitte & Touche audited the Company's financial statements for the fiscal
year ended December 31, 2002. Deloitte & Touche declined to stand for
re-appointment as the Company's auditors following completion of the 2002 audit
because of harassment it received from animal rights extremists. The Company has
not yet retained an auditor to audit its financial statements for the year ended
December 31, 2003.
Other Matters
In accordance with the rules of the Securities and Exchange Commission, the
foregoing information, which is required by paragraphs (a) and (b) of Regulation
S-K Item 306, shall not be deemed to be "soliciting material", or to be "filed"
with the Commission or subject to the Commission's Regulation 14A, other than as
provided in that Item, or to the liabilities of Section 18 of the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically requests that the information be treated as soliciting material or
specifically incorporates it by reference into a document filed under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.
Gabor Balthazar (Chairman) March 26, 2003
Afonso Junqueiras
Yaya Sesay
Compensation Committee
The Compensation Committee is authorized to establish and approve
compensation policies, salary levels and bonus payments; to grant stock options,
stock appreciation rights, phantom stock rights, incentive compensation and all
other forms of compensation-related credits, guarantees, employee loans and
policies except as may be precluded by applicable law and to provide an overview
of compensation programs. The Compensation Committee is comprised of Messrs.
Balthazar, Junqueiras and Sesay. Mr. Balthazar serves as Chairman. Each is
considered to be an independent director. In addition, the Compensation
Committee addresses issues required or recommended to be addressed by
independent directors, including administration of the Company's 2001 Equity
Incentive Plan. The Compensation Committee of LSR held three (3) meetings during
2002.
Compensation of Directors
Non-employee directors (Messrs. Balthazar, Junqueiras and Sesay) receive an
annual cash payment of $20,000 for their services as directors of LSR, payable
quarterly. In addition, each Chairman of a Board Committee receives an
additional annual payment of $2,500. Messrs. Baker and Cass receive no payment
for services as a director because they are employees of the Company. Directors
receive no additional per-meeting payments.
Mr. Balthazar, as well as the other non-employee directors at the time,
received on March 1, 2002, a grant of ten-year options to purchase 20,000 shares
of LSR Common Stock at an exercise price of $1.50 per share. Each such option
vested 50% on grant and 50% on the first anniversary of the date of grant.
Each director is reimbursed for all travel expenses related to each meeting
of the Board or Committee that he attends in person.
Executive Compensation
In the 12 months ended December 31, 2002 the aggregate compensation of the
Executive Officers as a group, paid or accrued, was $1,254,750.
Employment Agreements
Andrew Baker
The services of Mr. Baker are provided for not less than 100 days per year
through a management services contract between Huntingdon and FHP. Mr. Baker
controls FHP. Under the contract, FHP agrees to provide the services of Mr.
Baker as Chairman and CEO of the Company. The management services contract will
continue until terminated on 12 months' written notice from either party.
Under the management services contract FHP is paid an annual fee of
(pound)200,000. Mr. Baker receives contributions to his private pension
arrangements, equivalent to 33 percent of this basic annual fee. The management
services contract may be terminated if either FHP or Mr. Baker is guilty of
serious misconduct or is in material breach of the terms of the contract, among
other reasons. In the event of termination without "cause" following a "change
in control", as defined, FHP would receive a payment equal to 2.99 times this
annualized fee plus an amount equal to 2.99 times all incentive compensation
earned or received by FHP or Mr. Baker during the 12 months prior to
termination.
Both FHP and Mr. Baker are bound by confidentiality restrictions and a
restriction preventing Mr. Baker from holding any interests conflicting with
those of the Company, without the Company's consent. Mr. Baker has undertaken to
the Company that, during the continuance of the management services contract, he
will not without the prior consent of the Company, be concerned or interested in
any business, which competes or conflicts with the business of the Company.
Brian Cass
The services of Mr. Cass are provided through a service agreement between
Huntingdon Life Sciences Limited (a wholly owned subsidiary of the Company) and
Mr. Cass, which appoints Mr. Cass as President/Managing Director of the Company.
Mr. Cass' service agreement can be terminated on two years' written notice from
either party.
Mr. Cass receives a gross salary of (pound)200,000 per annum. Under the
service agreement, Mr. Cass is also entitled to health insurance, life
insurance, personal accident insurance and medical expenses insurance. Mr. Cass
receives contributions to his private pension arrangements, equivalent to 33
percent of his basic annual salary. He is also entitled to a non-pensionable car
allowance of (pound)1,000 gross per month and (pound)2,000 per month as
relocation allowance. Mr. Cass' service agreement also provides for payment to
Mr. Cass of a bonus, at the absolute discretion of the Company's Board. In the
event of termination without "cause" following a "change in control", as
defined, Mr. Cass would receive a payment equal to 2.99 times his annual salary
plus an amount equal to 2.99 times all incentive compensation earned or received
by Mr. Cass during the 12 months prior to termination.
Mr. Cass' service agreement may be terminated if Mr. Cass is guilty of
serious misconduct or is in material breach of the terms of the service
agreement or is in breach of the model code for securities transactions by
directors of listed companies, among other reasons.
Mr. Cass is bound by confidentiality restrictions and a restriction
preventing him from being engaged, concerned or interested in any business that
conflicts with the business of the Company or any subsidiary unless either the
Company's Board otherwise consents or the interest is limited to a holding or
other interest of no more than 5 percent of the total amount of shares or
securities of any company quoted on a recognized investment exchange.
Richard Michaelson
The services of Mr. Michaelson are provided through a service agreement
between him and Huntingdon Life Sciences Inc. (a wholly owned subsidiary of the
Company). The service agreement appoints Mr. Michaelson as Chief Financial
Officer and Secretary of the Company. Mr. Michaelson's service agreement will
continue until terminated by Mr. Michaelson on thirty days' written notice or by
Huntingdon Life Sciences Inc. on 12 months' written notice. In the event of
termination without "cause" following a "change in control", as defined, Mr.
Michaelson would receive a payment equal to 2.99 times his annual salary plus an
amount equal to 2.99 times all incentive compensation earned or received by Mr.
Michaelson during the 12 months prior to termination.
Mr. Michaelson receives an annual salary of $200,000 gross and is entitled
to health insurance, life insurance, personal accident insurance, medical
expenses insurance and participation in the 401(k) Plan of Huntingdon Life
Sciences Inc. Mr. Michaelson's service agreement also provides for the payment
of a bonus to Mr. Michaelson in the absolute discretion of the Company's Board.
In addition, Mr. Michaelson is entitled to a car allowance of $1,000 gross per
month.
The agreement may be terminated if Mr. Michaelson is guilty of serious
misconduct or is in material breach of the terms of the service agreement,
amongst other reasons.
Mr. Michaelson is bound by confidentiality restrictions and a restriction
preventing him from being engaged, concerned or interested in any business
conflicting with the business of the Company or any subsidiary unless the Board
otherwise consents or the interest is limited to a holding or other interest of
no more than 5 percent of the total amount of shares or securities of any
company quoted on a recognized investment exchange.
Discretionary bonus plan
The Company operates a discretionary bonus plan for executive officers and
key managers based upon improvements to operating income and achievement of
pre-defined targets. No bonus awards were made in respect of 2000, 2001 or 2002.
The following table shows the remuneration of Executive Officersin any
given year in the 12 Months ended December 31, 2002, 2001, and 2000:
Summary Compensation Table Long Term Compensation
Awards
Name And Principal Year Salary (6) Bonus Other Annual Number Of Shares
Position Compensation (7) Underlying Options
Mr. A H Baker (1) 2002 $300,780 - 100,160 200,000
Chairman and Chief 2001 288,006 - 95,990 -
Executive Officer 2000 288,000 - 95,040 -
Dr F W Bonner (2) 2002 221,073 - 20,053 30,000
Director of Science & 2001 211,680 - 20,395 10,000
Technology of Huntingdon 2000 211,680 - 19,367 7,500
Mr. B Cass (3) 2002 300,780 - 160,327 200,000
Managing Director and 2001 280,741 - 153,311 -
President
2000 288,800 - 153,936 -
Mr. J T Griffiths (4) 2002 187,988 - 54,547 60,000
Finance Director of 2001 120,960 - 40,229 10,000
Huntingdon 2000 120,960 - 44,070 7,500
Mr. Richard A. Michaelson (5) 2002 196,923 - 11,917 90,000
<FN>
(1) Mr. Baker served as Executive Chairman of Huntingdon since September 1998.
He became Chairman and Chief Executive Officer of LSR on January 10, 2002.
See "Employment Agreements - Andrew Baker".
(2) Dr. Bonner served as Director of Science and Technology of Huntingdon from
September 1998 to March 2003 and as a Director of LSR from January 10, 2002
until June 11, 2002.
(3) Mr. Cass has served as Managing Director of Huntingdon since September
1998. He became President and Managing Director of LSR on January 10, 2002.
See "Employment Agreements - Brian Cass".
(4) Mr. Griffiths has served as Finance Director of Huntingdon since February
1999 and served as a Director of LSR from January 10, 2002 until June 11,
2002.
(5) Mr. Michaelson has served as Chief Financial Officer and Secretary of the
Company since January 10, 2002.
(6) All payments contained in this table were made in pounds sterling except
for payments made to Mr. Michaelson, which were in U.S. dollars. The
amounts listed were converted into U.S. dollars on the basis of an exchange
rate of $1.5039 to (pound)1.00.
(7) For Mr. Baker, represents the benefits from a contribution to a private
pension account. For Mr. Cass, represents the benefits from a contribution
to a private pension account, a car allowance, private health insurance
contributions and relocation reimbursement. For Dr. Bonner and Mr.
Griffiths represents the benefits from a contribution to a private pension
account, car allowance and private health insurance contributions. For Mr.
Michaelson, represents the benefits from a car allowance.
</FN>
Messrs. Baker, Bonner, Cass and Griffiths were paid in UK pounds sterling. The
amounts have been converted at the rate of $1.5039 to (pound)1.00 for the
purposes of the above table.
Dr. Bonner and Mr. Griffiths served as directors of the Company from January 10,
2002 but did not stand for re-election as directors of LSR at the June 11, 2002
Annual Meeting of stockholders and accordingly ceased being directors of LSR as
of that date.
One Director is a member of the Group Personal Pension Plan. The other
Directors' pension contributions are privately invested.
LSR 2001 Equity Incentive Plan (the "LSR 2001 Equity Incentive Plan")
The LSR 2001 Equity Incentive Plan was adopted effective October 4, 2001.
Adoption of the LSR 2001 Equity Incentive Plan enables LSR to use stock-based
awards as a means to attract, retain and motivate key personnel.
Awards under the LSR 2001 Equity Incentive Plan may be granted by a
committee designated by the LSR Board pursuant to the terms of the LSR 2001
Equity Incentive Plan (which has designated the Compensation Committee for such
purpose) and may include: (i) options to purchase shares of LSR Voting Common
Stock, including incentive stock options ("ISOs"), non-qualified stock options
or both; (ii) stock appreciation rights ("SARs"), whether in conjunction with
the grant of stock options or independent of such grant, or stock appreciation
rights that are only exercisable in the event of a change in control or upon
other events; (iii) restricted stock consisting of shares that are subject to
forfeiture based on the failure to satisfy employment-related restrictions; (iv)
deferred stock, representing the right to receive shares of stock in the future;
(v) bonus stock and awards in lieu of cash compensation; (vi) dividend
equivalents, consisting of a right to receive cash, other awards, or other
property equal in value to dividends paid with respect to a specified number of
shares of Common Stock or other periodic payments; or (vii) other awards not
otherwise provided for, the value of which are based in whole or in part upon
the value of the Common Stock. Awards granted under the LSR 2001 Equity
Incentive Plan are generally not assignable or transferable except pursuant to a
will and by operation of law.
The flexible terms of the LSR 2001 Equity Incentive Plan are intended to,
among other things, permit the Compensation Committee to impose performance
conditions with respect to any award, thereby requiring forfeiture of all or
part of any award if performance objectives are not met or linking the time of
exercisability or settlement of an award to the attainment of performance
conditions. For awards intended to qualify as "performance-based compensation"
within the meaning of Section 162 (m) of the United States Internal Revenue Code
such performance objectives shall be based solely on (i) annual return on
capital; (ii) annual earnings or earnings per share; (iii) annual cash flow
provided by operations; (iv) changes in annual revenues; (v) stock price; and/or
(vi) strategic business criteria, consisting of one or more objectives based on
meeting specified revenue, market penetration, geographic business expansion
goals, cost targets, and goals relating to acquisitions or divestitures.
LSR's Compensation Committee, which administers the 2001 LSR Equity
Incentive Plan, has the authority, among other things, to: (i) select the
directors, officers and other employees and independent contractors entitled to
receive awards under the 2001 LSR Equity Incentive Plan; (ii) determine the form
of awards, or combinations of awards, and whether such awards are to operate on
a tandem basis or in conjunction with other awards; (iii) determine the number
of shares of Common Stock or units or rights covered by an award; and (iv)
determine the terms and conditions of any awards granted under the 2001 LSR
Equity Incentive Plan, including any restrictions or limitations on transfer,
any vesting schedules or the acceleration of vesting schedules, any forfeiture
provision or waiver of the same and including any terms and conditions necessary
or desirable to ensure the optimal tax result for participating personnel and
the Company including by way of example to ensure that there is no tax on the
grant of the rights and that such tax only arises on the exercise of rights or
otherwise when the Common Stock unconditionally vests and is at the disposal of
such participating personnel. The exercise price at which shares of Common Stock
may be purchased pursuant to the grant of stock options under the 2001 LSR
Equity Incentive Plan is to be determined by the Compensation Committee at the
time of grant in its discretion, which discretion includes the ability to set an
exercise price that is below the fair market value of the shares of Common Stock
covered by such grant at the time of grant.
The number of shares of Common Stock that may be subject to outstanding
awards granted under the 2001 LSR Equity Incentive Plan (determined immediately
after the grant of any award), may not exceed 20 percent of the aggregate number
of shares of Common Stock then outstanding.
The 2001 LSR Equity Incentive Plan may be amended, altered, suspended,
discontinued, or terminated by the LSR Board without LSR Common Stockholder
approval unless such approval is required by law or regulation or under the
rules of any stock exchange or automated quotation system on which LSR Common
Stock is then listed or quoted. Thus, LSR Common Stockholder approval will not
necessarily be required for amendments which might increase the cost of the plan
or broaden eligibility. LSR Common Stockholder approval will not be deemed to be
required under laws or regulations that condition favorable tax treatment on
such approval, although the LSR Board may, in its discretion, seek LSR Common
Stockholder approval in any circumstances in which it deems such approval
advisable.
No awards were granted in 2001 pursuant to the 2001 LSR Equity Incentive
Plan.
LSR made grants under the LSR 2001 Equity Incentive Plan on March 1, 2002
to certain directors and key employees at the time:
Grants to Directors
-------------------
Name Number Granted
- ---- --------------
Gabor Balthazar 20,000
John Caldwell 20,000
Kirby Cramer 40,000
Grants to Executive Officers
----------------------------
Name Number Granted
- ---- --------------
Andrew Baker 200,000
Brian Cass 200,000
Frank Bonner 35,000
Julian Griffiths 60,000
Richard Michaelson 90,000
All such options have ten-year terms; 50% of the shares subject to grant
are immediately exercisable with the remaining 50% exercisable one year after
the grant date; and all have an exercise price of $1.50 per share, the price at
which the Company sold shares of Common Stock in the March 2002 private
placement. Options to purchase an aggregate of 1,177,000 shares of LSR Common
Stock (including those specified above) were granted to employees and directors,
on the terms set forth above, are listed as follows:
Date of Grant Numbers Granted Exercise Price
- ------------- --------------- --------------
March 1, 2002 1,142,000 $1.50
September 3, 2002 20,000 $2.40
October 21, 2002 15,000 $2.03
Huntingdon Life Sciences Group plc Stock Option Plan
Huntingdon Life Sciences Group plc issued options prior to December 31,
1997 pursuant to several stock option plans. However, the ability to exercise
options under all such Huntingdon plans lapsed on March 26, 2002 in connection
with LSR's acquisition of Huntingdon, except for those granted under the
Unapproved Stock Option Plan (the "Unapproved Plan"). Under the Unapproved Plan,
some options technically remain outstanding. However, such options are
exercisable only for shares of Huntingdon, a 100% wholly owned subsidiary of
LSR, and are considered to have no value.
Option Exercises and Fiscal Year-End Values
No options to purchase LSR ordinary shares were exercised by any persons
during the fiscal year ended December 31, 2002. The following table lists the
number and value of the unexercised options to purchase LSR shares held by the
executive officers at December 31, 2002.
Number of Securities Value of Unexercised
Underlying Options In-the-Money Options
At Fiscal Year-End (#) At Fiscal Year-End ($) (1)
Shares
Acquired Value
Name on Exercise Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------ ----------- ------------- ----------- -------------
Andrew Baker 0 0 100,000 100,000 65,000 65,000
Brian Cass 0 0 100,000 100,000 65,000 65,000
Frank Bonner 0 0 17,500 17,500 11,375 11,375
Julian Griffiths 0 0 30,000 30,000 19,500 19,500
Richard Michaelson 0 0 45,000 45,000 29,250 29,250
<FN>
(1) Represents the fair market value as of December 31, 2002 ($2.15 per share
closing stock price) of the option shares less the exercise price of the
options ($1.50 per share).
</FN>
Pension Contributions
Under the terms of their respective employment agreements, Messrs. Baker
and Cass each received contributions to his private pension arrangements
equivalent to 33% of his annual base salary. See "Employment Agreements".
Compensation Committee
Report on Executive Compensation
Philosophy
The Company has developed an overall compensation program and specific
compensation plans which are designed to enhance corporate performance, and thus
stockholder value, by aligning the financial interests of executives with those
of its stockholders. In pursuit of these overall objectives, the structure and
scope of the Company's compensation program are designed to attract key
executives to the Company and retain the best possible executive talent; to
reinforce and link executive and stockholder interests through equity-based
plans; and to provide a compensation package that recognizes individual
performance in conjunction with overall corporate performance.
Principal Components of Executive Compensation
The principal elements of the Company's executive compensation program
consist of both annual and long-term programs and include base salary, annual
cash and/or stock bonus if performance objectives are achieved, and, at
appropriate intervals, long-term incentive compensation in the form of stock
option grants. Such stock option grants are issued to the Company's executives
and other employees under the LSR 2001 Equity Incentive Plan. The Company also
provides medical and other fringe benefits generally available to Company
employees and, for certain of its selected senior executives, car allowances
and/or pension and insurance contributions.
Base Salaries. Base salaries for executives are determined by evaluating
the responsibilities of the position held and the experience of the individual,
with reference to the competitive marketplace for executive talent, including a
comparison to base salaries for positions having comparable responsibilities at
other companies in the contract research organization industry. In addition to
comparing base salary compensation of other companies, consideration is given to
the relative overall corporate performance of the Company in relation to its
competitors in the industry, with the objective of achieving standards and
setting base executive salaries in the Company consistent with the market rate
paid for comparable positions in the contract research organization industry.
Bonus. The Company's executive officers and other key persons may be
eligible for an annual cash and/or stock bonus under their individual employment
agreements. However, no such bonuses have been paid in the last three years.
Individual performance objectives formulated by Company management are
recommended by the Chief Executive Officer for approval by the Compensation
Committee or the Board and are awarded upon the discretionary recommendation of
the CEO. Eligible executives may receive bonus awards based upon certain
percentages of base salary at threshold and maximum levels appropriate to the
nature of their position in the Company. Whether any bonus is awarded, and, if
so, the amount thereof depends upon actual performance against predetermined
individual and corporate objectives established by the CEO or the Compensation
Committee.
Stock Options. Awards of stock options have been made periodically to
executive officers and other employees of the Company upon consultation with and
recommendation of the Chief Executive Officer and approval of the Compensation
Committee. LSR options were granted during 2002 prior to the commencement of
trading of LSR Common Stock at an exercise price of $1.50 per share, equal to
the sale price in the Company's sale of approximately five million shares of
Common Stock in a private placement transaction in March 2002. Stock options
granted in 2002 after the commencement of trading were granted at closing market
price on the date of grant. The purpose of these awards has been to provide a
meaningful equity interest in the Company to Company employees in a format that
is designed to retain and align the financial interests of these employees with
those of stockholders. It has been the practice of the Company to make grants of
stock options with a staggered vesting schedule and forfeiture of shares if not
exercised within a specified period following separation from the Company's
employ. These restrictions on stock option awards are designed to encourage
recipients to remain in the Company's employ in order to recognize the full
value of the awards. To date, only stock options have been granted under the
2001 Equity Incentive Plan; however, the Compensation Committee expects that
other forms of equity-based compensation permitted under that plan may also be
granted with similar restrictions. No stock options have been awarded in 2003
and the Compensation Committee is currently examining the utility of stock
option grants versus other potential incentive approaches.
Other Benefits. In addition, the Company provides health care benefits and
profit sharing for senior executives and other key persons on terms generally
available to all Company employees. The Compensation Committee believes that
such benefits are comparable to those offered by other contract research
companies. To the extent that the value of perquisites to executive officers
exceeded $50,000 or 10% of their total salary and bonus, such amounts are
disclosed under "Other Compensation" in the Summary Compensation Table.
Since no executive officer of the Company received compensation for
purposes of Section 162(m) of the Internal Revenue Code in excess of $1 million
during 2001, the Compensation Committee presently anticipates that all
compensation paid to executive officers will qualify for deductibility under
Section 162(m), which limits in certain circumstances the deductibility of
compensation in excess of $1 million paid to certain executive officers, except
for "performance-based compensation" which complies with requirements imposed
under Section 162(m).
Chief Executive Officer's Compensation
For 2002, Andrew H. Baker, the Chairman and Chief Executive Officer of LSR,
was paid through FHP a base consulting fee of (pound)200,000 (equivalent to
$300,780 based on an exchange rate of $1.5039 to (pound)1.00), as specified in
his service agreement. The Compensation Committee considered Mr. Baker's base
compensation to be appropriate in light of (i) Mr. Baker's compensation at his
prior employers, (ii) the compensation of other senior executives in the
contract research organization industry, (iii) the fact that the base fee was
the same as Mr. Cass' and (iv) the fact that Mr. Baker's base salary has been at
the same level since 1998. Mr. Baker received no cash bonus in 2002. Mr. Baker
received in 2002 a pension contribution of (pound)66,000 ($100,160) as specified
in his service agreement, which brought his annual cash compensation for 2001 to
$400,940. See "Employment Agreements - Andrew Baker".
Compensation of Other Executive Officers and Key Management Personnel
The Company has also entered into employment or service agreements with the
Company's other executive officers and other key management personnel. See
"Employment Agreements". Each agreement provides a base salary plus potential
bonus, at the discretion of the Board, and other specified incentive
compensation.
Gabor Balthazar (Chairman)
Afonso Junqueiras
Yaya Sesay
Members of the Compensation Committee
Comparison of Cumulative Total Return
The following graphs compare the cumulative total shareholder return on
Huntingdon's American Depositary Shares from December 31, 1997 through January
10, 2002, and LSR's common stock from April 9, 2002 to December 31, 2002 with
the cumulative total return for the same period on the Nasdaq Composite Stock
Market (U.S.) Index and the Nasdaq Biotechnology Index. The graphs assume that
at the beginning of the period indicated, $100 was invested in LSR's Common
Stock or Huntingdon's American Depositary Shares, as applicable, and the stock
of the companies comprising the Nasdaq Composite Stock Market (U.S.) Index and
the Nasdaq Biotechnology Index and that all dividends were reinvested.
COMPARISON OF 9 MONTH CUMULATIVE TOTAL RETURN*
Among Life Sciences Research, Inc., The Nasdaq Stock Market (U.S.) Index
and the Nasdaq Biotechnology Index
[OBJECT OMITTED]
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Huntingdon Life Sciences, The Nasdaq Stock Market (U.S.) Index
and the Nasdaq Biotechnology Index
[OBJECT OMITTED]
Indexed Cumulative Total Return
Huntingdon ADS 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
- -------------- -------- -------- -------- -------- --------
Huntingdon Life Sciences 100.00 34.48 25.86 1.03 2.76
Nasdaq Stock Market (U.S.) 100.00 140.99 261.49 157.77 125.23
Nasdaq Biotechnology 100.00 156.66 362.72 454.15 377.60
LSR Common Stock 4/9/02 12/31/02
Life Sciences Research, Inc. 100.00 215.00
Nasdaq Stock Market (U.S.) 100.00 77.18
Nasdaq Biotechnology 100.00 75.08
</FN>
CERTAIN RELATIONSHIPS AND
TRANSACTIONS WITH RELATED PERSONS
Private Placement. On March 28, 2002 LSR completed the sale of 5,085,334
shares of Common Stock in a private placement transaction (the "Private
Placement"). All shares were sold for a purchase price of $1.50 per share.
Certain persons related to LSR purchased shares of LSR Common Stock in the
Private Placement:
Andrew Baker. Mr. Baker, Chairman and CEO of LSR, acquired
1,480,000 shares of LSR Common Stock in the Private Placement.
1,400,000 of such shares were acquired through conversion of
$2,100,000 of the (pound)2,000,000 ($2,910,000) loan made by Mr. Baker
to Huntingdon in September 2002 (the "Baker Loan") and 80,000 shares
were acquired through conversion of a portion of the $550,000
participation in the Baker Loan entered into by FHP in March 2001 (the
"FHP Participation").
Brian Cass. Mr. Cass, President and Managing Director of LSR,
acquired 400,000 shares of LSR Common Stock in the Private Placement.
Mr. Cass acquired such shares through the delivery of two promissory
notes. Both such promissory notes, each in the amount of
(pound)211,678.60, are due on March 28, 2007; bear interest at the rate
of 5% per annum; and are secured by the 200,000 shares of LSR Common
Stock purchased with the proceeds of each such loan. The due date of
each promissory note would be accelerated if Mr. Cass voluntarily
resigned from his employment with LSR or had his employment terminated.
Repayment of one of the promissory notes will be made by automatic
deduction of (pound)44,000 per year from the (pound)66,000 per year
pension contribution made by the Company to a pension plan established
by Mr. Cass. The other note is further collateralized by the
(pound)214,500 accrued in such pension account. In addition, one-third
of any yearly bonus received by Mr. Cass will be used to reduce
principal of the promissory notes.
Richard Michaelson. Mr. Michaelson, Chief Financial Officer and
Secretary of LSR, acquired 150,000 shares of LSR Common Stock in the
Private Placement. 100,000 of such shares were acquired for cash and
50,000 of such shares were acquired through conversion of a portion of
the FHP Participation, representing Mr. Michaelson's former ownership
interests in FHP. Mr. Michaelson no longer has any ownership interest
in FHP.
In view of the proposed participation in the Private Placement by certain
directors and officers of LSR and Huntingdon, a Special Committee of the LSR
Board was formed to consider, negotiate and approve the Company's decision to
sell shares in the Private Placement and the terms of that sale. The members of
the Special Committee were Messrs. Balthazar and Caldwell, both of whom were
non-employee directors at the time and considered to be independent directors
and neither of whom participated in the Private Placement.
FHP Warrants. Warrants to acquire 410,914 shares of Common Stock at an
exercise price of $1.50 were issued to FHP on June 12, 2002 following approval
of such issuance by LSR's stockholders at the 2002 Annual Meeting of
Stockholders. FHP is controlled by Andrew Baker, Chairman and Chief Executive
Officer of LSR. Mr. Baker is currently the beneficial owner of 2,710,089 shares
of LSR Common Stock, including such warrants. See "Management and Directors" and
"Ownership".
Baker Loan. In September 2000 Mr. Baker made the Baker Loan to Huntingdon.
$1,445,400 of this amount was drawn down immediately, a further $705,400 and
$300,000 were drawn down on March 21, 2001 and May 21, 2001, respectively, while
the final $450,000 was drawn down on July 18, 2001. The loan was repayable on
demand, although it was subordinate to the Company's $33 million bank loan, was
unsecured and interest was payable monthly at a rate of 10% per annum. By
Amendment No. 2 to the Baker Loan, dated March 20, 2001, FHP became party to the
loan and $550,000 of the amount loaned was transferred to FHP. On March 28, 2002
$2,100,000 of Mr. Baker's loan was converted into 1,400,000 shares of LSR Common
Stock and $300,000 of FHP's loan was converted into 200,000 shares of LSR Common
Stock. As a result of such conversions approximately $260,000 remained payable
to Mr. Baker and $250,000 remained payable to FHP. On March 24, 2003 $128,000
was repaid to Mr. Baker. On April 5, 2003, the remaining $132,000 was repaid to
Mr. Baker and the remaining $250,000 was repaid to FHP.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review of Forms 3, 4, and 5 filed with the Commission by the
Company's directors and officers in 2002 the Company believes that all such
required forms were filed on a timely basis, except that Richard Michaelson, the
Company's Chief Financial Officer and Secretary, filed an amendment to Form 4 on
June 25, 2003, amending and correcting prior Form 4 filings.
ANNUAL REPORT AND FINANCIAL STATEMENTS
You are referred to the Annual Report on Form 10-K for the fiscal year
ended December 31, 2002, including the financial statements and the management's
discussion and analysis of the Company's financial condition and results of
operations contained therein, which has been previously or concurrently
delivered to stockholders, for your information. The Annual Report on Form 10-K
is not to be regarded as proxy soliciting material or a communication by means
of which any solicitation is to be made.
STOCKHOLDER PROPOSALS
Any proposal by a stockholder intended to be presented at the Company's
2004 Meeting of Stockholders must be received by the Company no later than March
15, 2003 to be included in the Company's proxy statement and form of proxy
relating to such annual meeting. Any proposal should be addressed to the offices
of the Company, Mettlers Road, P. O. Box 2360, East Millstone, NJ 08875,
Attention: Secretary.
HOUSEHOLDING OF PROXY MATERIALS
Only one copy of this Proxy Statement has been sent to multiple
stockholders who share the same address and last name, unless we have received
contrary instructions from one or more of those stockholders. This procedure is
referred to as "householding". We have been notified that certain intermediaries
(brokers or banks) also will household proxy materials. We will deliver
promptly, upon oral or written request, separate copies of the Proxy Statement
to any stockholder at the same address. If you wish to receive separate copies
of one or both of these documents, you may write to Life Sciences Research,
Inc., P. O. Box 2360, Mettlers Road, East Millstone, NJ 08875, Attention:
Secretary. You may contact your broker or bank to make a similar request.
Stockholders sharing an address who now receive multiple copies of our Proxy
Statement may request delivery of a single copy of each document by writing or
calling us at the above address or by contacting their broker or bank (provided
the broker or bank has determined to household proxy materials).
OTHER MATTERS
The Board does not know of any other matters to be brought before the
Meeting. However, if any other matters should properly come before the Meeting,
it is the intention of the persons named in the accompanying Proxy to vote such
Proxy as in their discretion they may deem advisable.
By Order of the Board of Directors
/s/ Richard Michaelson
Richard Michaelson
Chief Financial Officer & Secretary
Dated: August 8, 2003