<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 30, 1998
REGISTRATION NO. 33-49008
REGISTRATION NO. 33-64908
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
POST-EFFECTIVE AMENDMENT NO. 1
ON
FORM S-3
TO
REGISTRATION STATEMENTS
ON FORM S-1
UNDER
THE SECURITIES ACT OF 1933
----------------
LIFE MEDICAL SCIENCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
14-1745197
(I.R.S. EMPLOYER IDENTIFICATION NO.)
379 THORNALL STREET
EDISON, NJ 08837
(732) 494-0444
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ROBERT P. HICKEY
CHIEF EXECUTIVE OFFICER AND PRESIDENT
LIFE MEDICAL SCIENCES, INC.
379 THORNALL STREET
EDISON, NJ 08837
(732) 494-0444
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
WITH A COPY TO:
IRWIN M. ROSENTHAL, ESQ.
GRAHAM & JAMES LLP
885 THIRD AVENUE
NEW YORK, NY 10022
(212) 848-1000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Post-Effective Amendment.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier registration statement for the
same offering. [_]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
Pursuant to Rule 416, there are also being registered such additional shares
as may become issuable pursuant to anti-dilution provisions of the Class A
Warrants and the Class B Warrants, as defined herein.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
EXPLANATORY NOTE
This Post-Effective Amendment relates to the issuance and sale by Life
Medical Sciences, Inc. (the "Company") of an aggregate of 4,768,059 shares of
its common stock, $.001 par value per share (the "Common Stock") issuable upon
exercise of (i) 1,650,000 outstanding Redeemable Class A Warrants (the "Class
A Warrants"), (ii) 1,650,000 Redeemable Class B Warrants (the "Class B
Warrants", together with the Class A Warrants, the "Warrants") underlying the
Class A Warrants, and (iii) 1,150,000 outstanding Class B Warrants. 1,150,000
of the outstanding Class A Warrants and all of the 1,150,000 outstanding Class
B Warrants were issued in the Company's initial public offering which was
declared effective by the Securities and Exchange Commission (the
"Commission") in September 1992 (the "IPO"). The balance of the outstanding
Class A Warrants (500,000) were issued in a subsequent public offering which
was declared effective by the Commission in July 1993 (the "Second Offering").
As originally issued, each Class A Warrant was exercisable for one share of
Common Stock and one Class B Warrant, and each Class B Warrant was exercisable
for one share of Common Stock. As a result of certain antidilution
adjustments, the number of shares underlying the Warrants has been increased
from one to 1.071474. The IPO is covered by a Registration Statement on Form
S-1 (No. 33-49008) and the Second Offering is covered by a Registration
Statement on Form S-1 (No. 33-64908). Pursuant to Rule 429 under the
Securities Act, the Exercise Offer/Prospectus forming a part of this Post-
Effective Amendment relates to both Registration Statements.
This Post-Effective Amendment also relates to the offer (the "Exercise
Offer") by the Company to holders of all of its outstanding Class A Warrants
and Class B Warrants to reduce the exercise prices of such Warrants during a
period commencing on the effective date of this Registration Statement and,
unless extended, ending on September 21, 1998, the current expiration date of
the Warrants.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JULY , 1998
EXERCISE OFFER/PROSPECTUS
LIFE MEDICAL SCIENCES, INC.
OFFER TO REDUCE THE EXERCISE PRICES OF CLASS A WARRANTS
AND CLASS B WARRANTS TO $1.205 PER WARRANT
FOR EXERCISES BEFORE 5:00 P.M. ON SEPTEMBER 21, 1998
4,768,059 SHARES OF COMMON STOCK UNDERLYING
CLASS A WARRANTS AND CLASS B WARRANTS
(INCLUDING CLASS B WARRANTS UNDERLYING CLASS A WARRANTS)
Life Medical Sciences, Inc. (the "Company"), hereby offers (the "Exercise
Offer") to the holders (the "Holders") of the Company's Redeemable Class A
Warrants (the "Class A Warrants") and Redeemable Class B Warrants (the "Class B
Warrants"; together with the Class A Warrants, the "Warrants") who exercise
their Warrants pursuant to the Exercise Offer, to reduce the exercise prices of
the Class A Warrants and Class B Warrants from $8.40 and $12.60, respectively,
to $1.205 per Warrant, in each case if and only if a Holder exercises the
Holder's Warrants prior to 5:00 p.m., New York City time, on September 21,
1998, unless such date is extended by the Company as described herein (such
date, or such date as so extended, being referred to as the "Expiration Date").
ALL WARRANTS NOT EXERCISED PRIOR TO THE EXPIRATION DATE WILL CEASE TO BE
EXERCISABLE AND WILL EXPIRE AT THAT TIME.
THE EXERCISE OFFER WILL EXPIRE ON SEPTEMBER 21, 1998, AT 5:00 P.M., NEW YORK
CITY TIME, UNLESS EXTENDED. WITHDRAWAL RIGHTS WILL ALSO EXPIRE AT THAT TIME.
FURTHER, ANY WARRANTS NOT EXERCISED BY THE EXPIRATION DATE WILL CEASE TO BE
EXERCISABLE AND WILL EXPIRE AT THAT TIME.
This Exercise Offer/Prospectus also relates to the issuance of up to an
aggregate of 4,768,059 shares of Common Stock issuable upon exercise of (i)
1,650,000 outstanding Class A Warrants, (ii) 1,650,000 Class B Warrants
underlying the Class A Warrants, and (iii) 1,150,000 outstanding Class B
Warrants.
In September and October of 1992, the Company completed an initial public
offering ("IPO") of 1,150,000 units (the "IPO Units"), at an offering price of
$6.00 per IPO Unit. Each IPO Unit consisted of one share of Common Stock, one
Class A Warrant and one Class B Warrant. Each Class A Warrant initially
entitled the Holder thereof to purchase, at an exercise price of $9.00, subject
to adjustment, one share of Common Stock and one Class B Warrant, and each
Class B Warrant initially entitled the Holder thereof to purchase, at an
exercise price of $13.50, subject to adjustment, one share of Common Stock. The
number of shares of Common Stock underlying each Warrant was subsequently
increased from one to 1.071474 as a result of antidilution adjustments. The
components of the IPO Units became transferable separately immediately upon
issuance and the Warrants were immediately exercisable. In or about July 1993,
the Company completed an offering of 500,000 units (the "Second Offering
Units") at an offering price of $16.78 per Second Offering Unit. Each Second
Offering Unit consisted of two shares of Common Stock and one Class A Warrant.
The Second Offering Units did not trade separately as a unit and the components
became transferable separately immediately upon issuance. The Warrants are
subject to redemption by the Company for $.05 per Warrant, upon 30 days'
written notice, if the average closing bid price of the Common Stock exceeds
$12.60 per share with respect to the Class A Warrants, and $18.90 per share
with respect to the Class B Warrants for 20 consecutive business days ending
within 15 days of the date the Warrants are called for redemption. As of July
28, 1998, none of the Warrants have been exercised.
-----------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 9.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS EXERCISE OFFER/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The Common Stock, Class A Warrants and Class B Warrants are traded on the
Nasdaq National Market under the symbols "CHAI," "CHAIW" and "CHAIZ,"
respectively. The last sale prices of these securities as of July 28, 1998 were
$1.4375, $.375 and $.0625, respectively.
<TABLE>
<CAPTION>
WARRANT
WARRANT SOLICITATION PROCEEDS TO
EXERCISE PRICE FEE(1) COMPANY(2)
-------------- ------------ -----------
<S> <C> <C> <C>
Per Class A Warrant..................... $ 1.205 $ .048 $ 1.157
Total(3).............................. 1,988,250 79,200 1,924,000
Per Class B Warrant..................... $ 1.205 $ .048 $ 1.157
Total(3).............................. 3,374,000 134,400 3,239,600
</TABLE>
- -----
(1) Represents a Warrant solicitation fee (the "Solicitation Fee") equal to 4%
of the aggregate exercise price of each Warrant exercised, which may become
payable, under certain conditions, to D.H. Blair Investment Banking Corp.,
the underwriter of the IPO ("Blair"). See "Plan of Distribution."
(2) Before deducting approximately $145,000 in other estimated expenses of the
offering payable by the Company.
(3) Assumes the exercise of all Warrants of each class (including Class B
Warrants underlying Class A Warrants). There can be no assurance that any
of the Warrants will be exercised.
-----------
THE DATE OF THIS EXERCISE OFFER/PROSPECTUS IS , 1998
<PAGE>
IMPORTANT
Any Holder desiring to exercise all or any portion of such Holder's Class A
and/or Class B Warrants should either (1) complete and sign the appropriate
Letter of Transmittal or a facsimile copy thereof in accordance with the
instructions in the Letter of Transmittal, mail or deliver it together with a
certified or bank check payable to "Life Medical Sciences, Inc." in the amount
of $1.205 per Warrant exercised in the Exercise Offer and any other required
documents to American Stock Transfer & Trust Company (the "Warrant Agent") and
either mail or deliver the Holder's Warrant certificate(s) to the Warrant
Agent or follow the procedure for book-entry exercise set forth under the
caption "Terms of the Exercise Offer--Procedures for Exercising Warrants--Book
Entry Exercise," or (2) request the Holder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for the Holder. A
Holder having Warrants registered in the name of a broker, dealer, commercial
bank, trust company or other nominee must contact that broker, dealer,
commercial bank, trust company or other nominee if such Holder desires to
exercise such Warrants. Holders who desire to exercise Warrants and whose
certificates for such Warrants are not immediately available should exercise
such Warrants by following the procedures for guaranteed delivery set forth
under the caption "Terms of the Exercise Offer--Procedures for Exercising
Warrants--Guaranteed Delivery."
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MAKING OF
THE EXERCISE OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS IS
MAKING ANY RECOMMENDATION TO ANY HOLDER AS TO WHETHER TO EXERCISE WARRANTS
PURSUANT TO THE EXERCISE OFFER. EACH HOLDER SHOULD MAKE ITS OWN DECISION,
AFTER READING THIS EXERCISE OFFER/PROSPECTUS, AS TO WHETHER TO EXERCISE
WARRANTS AND, IF SO, HOW MANY WARRANTS TO EXERCISE.
THE COMPANY HAS BEEN ADVISED THAT ITS CHAIRMAN OF THE BOARD, THE ONLY
OFFICER AND/OR DIRECTOR OWNING WARRANTS, INTENDS TO EXERCISE HIS WARRANTS
PURSUANT TO THE EXERCISE OFFER.
Questions and requests for assistance or for additional copies of this
Exercise Offer/Prospectus, the Letter of Transmittal or the Notice of
Guaranteed Delivery may be directed to the Warrant Agent at its address and
telephone number set forth in "Transfer Agent and Warrant Agent."
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Commission. All such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at the locations referred to above and copies of such information
can be obtained from the Public Reference Section of the Commission, Room
1024, 450 Fifth Street, N.W., Washington D.C. 20549, as well as at the
Commission's Regional Offices at 7 World Trade Center, Suite 1300, New York,
New York 10048, and at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material may be obtained at prescribed rates by
addressing written requests for such copies to the public reference section of
the office of the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549. In addition, the Commission maintains a Web site on the Internet
at http://www.sec.gov that contains reports, proxy and information statements
and other information of issuers that file electronically with the Commission.
The Common Stock, Class A Warrants and Class B Warrants are quoted on the
Nasdaq National Market and the IPO Units are quoted on the OTC Bulletin Board.
Reports, proxy statements and other information concerning the Company may be
inspected at the National Association of Securities Dealers, Inc. at 1735 K
Street, N.W., Washington D.C. 20006-1500.
This Exercise Offer/Prospectus constitutes a part of a Registration
Statement which is a Post-Effective Amendment on Form S-3 to Registration
Statements on Form S-1 filed by the Company with the Commission under the
Securities Act. This Exercise Offer/Prospectus omits certain of the
information contained in the
2
<PAGE>
Registration Statements, and reference is hereby made to the Registration
Statements and related exhibits for further information with respect to the
Company and the securities offered hereby. Any statements contained herein
concerning the provisions of any document are not necessarily complete, and,
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statements or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
The Company intends to furnish its security holders with annual reports
containing audited financial statements and such interim unaudited reports as
it deems appropriate.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission by the Company (File No.
0-20580) are hereby incorporated by reference into this Exercise
Offer/Prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, filed pursuant to Sections 13(a) or 15(d) of the
Exchange Act.
(2) The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1998, filed pursuant to Sections 13(a) or 15(d) of the
Exchange Act.
(3) The description of the Company's Common Stock contained under the
heading "Description of Securities" in the Company's Registration
Statement on Form S-1 (Registration No. 33-49008) which is incorporated
by reference in the Company's Registration Statement on Form 8-A dated
August 25, 1992, including any amendments or reports filed for the
purpose of updating such description.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Exercise Offer/Prospectus and prior to the termination of the offering
registered hereby shall be deemed to be incorporated by reference into this
Exercise Offer/Prospectus and to be a part hereof from the date of the filing
of such document.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Exercise Offer/Prospectus to the extent that a statement
contained herein (or in any subsequently filed document that also is or is
deemed to be incorporated by reference herein) modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Exercise
Offer/Prospectus. All information appearing in this Exercise Offer/Prospectus
is qualified in its entirety by information and financial statements
(including the notes thereto) appearing in the documents incorporated by
reference herein, except to the extent set forth in the two immediately
preceding sentences.
The Company will provide, without charge, to each person to whom a copy of
this Exercise Offer/Prospectus is delivered, including any beneficial owner,
upon written or oral request from such person, a copy of any or all of the
documents incorporated by reference herein (other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference
into the information that the Exercise Offer/Prospectus incorporates).
Requests should be directed to Allen & Caron, Inc., 3 Imperial Promenade,
Suite 850, Santa Ana, California 92707, telephone number (800) 452-1346 (8:30
a.m. to 5:30 p.m. PDT), attention: Lynn Johnson.
3
<PAGE>
FORWARD-LOOKING INFORMATION
Certain statements in this Exercise Offer/Prospectus or incorporated by
reference in this Exercise Offer/Prospectus constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, including, without limitation, statements regarding future cash
requirements. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company, or industry results, to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: delays in product development; problems or delays
with clinical trials; failure to receive or delays in receiving regulatory
approval; lack of enforceability of patents and proprietary rights; lack of
reimbursement; general economic and business conditions; industry capacity;
industry trends; demographic changes; competition; material costs and
availability; the loss of any significant customers; changes in business
strategy or development plans; quality of management; availability, terms and
deployment of capital; business abilities and judgment of personnel;
availability of qualified personnel; changes in, or the failure to comply
with, government regulations; and other factors referenced in this Exercise
Offer/Prospectus or incorporated by reference in this Exercise
Offer/Prospectus. When used in this Exercise Offer/Prospectus, statements that
are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "believes",
"anticipates," "plans," "intends," "expects" and similar expressions are
intended to identify such forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date of this Exercise Offer/Prospectus. The Company undertakes
no obligation to publicly release the result of any revisions to these
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
4
<PAGE>
SUMMARY
The following summary should be read in conjunction with, and is qualified in
its entirety by, the more detailed information in this exercise
offer/prospectus. Unless otherwise indicated, the information contained in this
exercise offer/prospectus assumes no exercise of any outstanding options.
THE COMPANY
GENERAL
Life Medical Sciences, Inc. (the "Company") is a biomaterials company engaged
in the development and commercialization of innovative and cost-effective
medical devices for therapeutic applications. During 1997, the Company
refocused its strategy as a biomaterials company developing bioresorbable
polymers. The Company's proposed products are derived from its proprietary
polymer technology. The Company's strategy is to apply its platform technology
to the development of multiple products that address unmet therapeutic needs or
offer improved, cost-effective alternatives to current methods of treatment.
Products currently under development focus on preventing or reducing post-
operative surgical adhesions and are in various stages of clinical trials and
preclinical studies.
The Company has also developed the CLINICEL(TM) product line of novel,
patented, silicone gel-filled cushions intended for the treatment of
hypertrophic and keloid scars. The cushions are applied to intact skin for
diminishing the size, discoloration and associated discomfort of unsightly
scars. The CLINICEL product line was approved by the United States Food and
Drug Administration ("FDA") for over-the-counter promotion direct to the
consumer. The Company launched the CLINICEL product line in April 1998 through
a consumer media campaign and, for the quarter ended June 30, 1998, recorded
sales of $515,000. Distribution will be expanded through drug stores,
supermarket pharmacies, and mass merchandise pharmacies in the United States
("United States" or "U.S.") as well as through independent distributors in
international markets.
The Company's polymer technology is based on a proprietary group of polymers.
The Company believes that these polymers display desirable properties which
enable them to be tailored to a wide variety of applications. These properties
include bioresorbability, flexibility, strength and biocompatibility. Potential
applications for products derived from these polymers are in medical areas such
as the prevention of post-operative surgical adhesions, drug delivery, sutures
and stents. The Company is currently developing bioresorbable adhesion barrier
films for the prevention or reduction of post-operative surgical adhesions in
gynecological and general surgical procedures (REPEL(TM)) as well as in cardio-
vascular surgery (REPEL-CV(TM)), and bioresorbable adhesion barrier coatings
(viscous solutions) for the prevention or reduction of post-operative surgical
adhesions in gynecological and general surgical procedures (RESOLVE(TM)) and
orthopedic surgical procedures (RELIEVE(TM)).
The Company's product development strategy is to maintain a relatively small
core of scientists and researchers within the Company. The Company currently
conducts substantially all of its research and product development through
arrangements with specialized academic and industrial organizations which
broaden the development capabilities of the Company. The Company has
established contract manufacturing arrangements for each of its product lines.
The Company plans to retain marketing and distribution rights within the United
States, but will seek joint venture, licensing or collaborative arrangements
elsewhere.
The Company previously developed and marketed the Sure-Closure System(TM), a
disposable wound closure device. As a result of a strategic decision to focus
on the development and commercialization of its proposed products utilizing its
platform technologies, the Company, in July 1994, sold the Sure-Closure System
to MedChem Products, Inc. ("MedChem") which was subsequently acquired by C.R.
Bard, Inc. ("C.R. Bard"). In October 1996, Zimmer, Inc., a subsidiary of
Bristol-Myers Squibb ("Zimmer"), acquired the Sure-Closure
5
<PAGE>
System from C.R. Bard. The Company receives a 10% royalty on all net sales of
the Sure-Closure System products through June 30, 2004.
The Company was developing three products utilizing its in-situ tissue
culturing technology: CARIEL(TM), primarily for chronic wound healing;
PILIEL(TM), for stimulating hair regrowth and reducing hair loss; and
LIPOEL(TM), for improving the success rate of fat transplantation from a donor
site to a recipient site in the same individual (autologous) for reconstructive
or cosmetic surgery with long-term benefits. During 1997, the Company
terminated all clinical development efforts on these products since they did
not yield the desired benefits to the intended user during clinical evaluation.
For the three months ended June 30, 1998, the Company recorded revenues of
$519,000, with a net loss of approximately $2,600,000, reflecting increased
operating expenses associated with the introduction and promotional costs for
CLINICEL, compared with revenues of $24,000 and a net loss of approximately
$1,900,000 for the corresponding period of the prior year. For the six months
ended June 30, 1998, the Company recorded a net loss of approximately
$4,300,000, compared with a net loss of approximately $3,700,000 for the
corresponding period of the prior year. The increased six month loss is
primarily due to CLINICEL marketing costs, which were partially offset by
revenues attributable to the sale of CLINICEL and a reduction in research and
development and general and administrative expenses. See "Risk Factors--Limited
Operating History; History of Losses."
The Company is a Delaware corporation which was organized in August 1990
under the name BioMedical Polymers International, Ltd. The Company changed its
name to Life Medical Sciences, Inc. in June 1992. The Company's principal
executive office is located at 379 Thornall Street, Edison, New Jersey 08837
and its telephone number is (732) 494-0444.
EXERCISE OFFER
The purpose of the Exercise Offer is to raise additional capital by
encouraging Holders to exercise their Warrants. In the absence of the Exercise
Offer, the Company anticipates that its current cash reserves will be
sufficient to fund the Company's currently-budgeted operations through
September 1998. The Company will require significant additional financing to
continue its operations beyond such date. In the absence of the Exercise Offer,
the Company will not have sufficient resources to continue operations and,
therefore, the ability of the Company to successfully develop and commercialize
any products or proposed products is dependent upon raising capital through the
Exercise Offer or otherwise.
The Exercise Offer represents, in the opinion of the Company, a critical
opportunity to raise needed significant capital, particularly in light of the
fact that there is no assurance that the Company will be able to secure
significant capital through other sources. Assuming an exercise price per
Warrant of $1.205 and that 100%, 75% and 50% of the Warrants are exercised in
the Exercise Offer, the Company will receive net proceeds (after payment of a
4% solicitation fee (which may become payable under certain conditions) and
estimated expenses of approximately $145,000) of approximately $5,005,000,
$3,718,000 and $2,430,000, respectively. These proceeds, together with the
Company's current cash position, would be expected to be sufficient to fund the
Company's planned operations (including expenditures made possible from the
proceeds of the offering) through approximately May 1999, March 1999, and
January 1999, respectively. See "Risk Factors--Capital Needs; Uncertainty of
Additional Financing."
6
<PAGE>
THE OFFERING
<TABLE>
<C> <S>
Securities offered................... 4,768,059 shares of Common Stock
issuable upon exercise of (i) 1,650,000
outstanding Class A Warrants, (ii)
1,650,000 Class B Warrants underlying
the Class A Warrants, and (iii)
1,150,000 outstanding Class B Warrants.
Expiration Date...................... September 21, 1998, unless extended by
the Company. "Expiration Date" is the
original expiration date of the Exercise
Offer or as that date may be extended.
See "The Exercise Offer--Terms of the
Exercise Offer."
Warrant Exercise Price:
During the Exercise Offer........... $1.205 per Warrant
Common Stock outstanding:
Prior to Exercise Offer............. 7,922,559 shares of Common Stock(1)
After exercise of all Class A
Warrants........................... 9,690,491 shares of Common Stock(2)
After exercise of all Class A
Warrants and Class B Warrants...... 12,690,618 shares of Common Stock(2)
Class A Warrants Outstanding:
Prior to the Exercise Offer......... 1,650,000 Class A Warrants
After the Exercise Offer............ (3)
Class B Warrants Outstanding:
Prior to the Exercise Offer......... 1,150,000 Class B Warrants
After the Exercise Offer............ (3)
Closing Sale Price Prior to
Announcement of
Exercise Offer (July 28, 1998)...... Common Stock: $1.4375 per share
Class A Warrants: $.375 per Class A
Warrant
Class B Warrants: $.0625 per Class B
Warrant
Ownership of Class A Warrants
and Class B Warrants................ The Chairman of the Board of the Company
(the only officer and/or director owning
Warrants) owns Class A Warrants and
Class B Warrants and has advised the
Company that he intends to exercise his
Class A Warrants and Class B Warrants in
the Exercise Offer.
<CAPTION>
Information Agent.................... Allen & Caren, Inc., 3 Imperial
Promenade, Suite 850, Santa Ana,
California 92707, telephone number (800)
452-1346 (8:30 a.m. to 5:30 p.m. PDT),
attention: Lynn Johnson.
Warrant Agent........................ American Stock Transfer & Trust Company,
40 Wall Street, 46th Floor, New York, NY
10005, 1-800-937-5449 (Reorganization
Department).
<C> <S>
Method of Exercising................. In order to exercise Warrants, Holders
must follow the procedures set forth
under the caption "Exercise Offer--
Procedures for Exercising Warrants."
</TABLE>
7
<PAGE>
<TABLE>
<C> <S>
Warrant Solicitation Fee............ Pursuant to the terms of the Warrant
Agreements governing the Warrants, the
Company may be required to pay to Blair a
Warrant solicitation fee equal to 4% of
the gross proceeds received by the
Company upon the exercise of the
Warrants, under certain conditions. See
"Plan of Distribution."
Use of Proceeds..................... Any funds received upon exercise of the
Warrants will be used for continued
clinical trials and research and
development for adhesion-prevention
products; working capital in support of
the growth of the CLINICEL product line,
including funding of accounts receivable
and the purchase of inventory related
thereto; and general corporate purposes.
The amount allocated to the foregoing
activities will depend on the number of
Warrants exercised. There is no assurance
that any or all of the Warrants will be
exercised. See "Use of Proceeds."
Risk Factors........................ The securities offered hereby involve a
high degree of risk and are subject to
immediate and substantial dilution and
should not be purchased by investors who
cannot afford the loss of their entire
investment. See "Risk Factors."
Nasdaq National Market Symbols:
Common Stock....................... CHAI
Class A Warrants................... CHAIW
Class B Warrants................... CHAIZ
</TABLE>
- --------
(1) Does not include an aggregate of 2,679,501 shares of Common Stock issuable
upon exercise of (i) options granted or available for grant under the
Company's Amended and Restated 1992 Stock Option Plan (the "Plan") and (ii)
options granted not under the Plan. Also does not include 200,000 shares of
Common Stock issuable upon exercise of a warrant granted to a previous
underwriter.
(2) There is no assurance that any or all of the Warrants will ever be
exercised.
(3) All Warrants will cease to be exercisable and will expire on the Expiration
Date.
8
<PAGE>
RISK FACTORS
The securities offered hereby involve a high degree of risk. In addition to
the other information in this Exercise Offer/Prospectus and the information
incorporated herein by reference, the following risk factors should be
considered carefully by potential purchasers in evaluating an investment in
the securities offered hereby.
RISK THAT TECHNOLOGIES OR PROPOSED PRODUCTS WILL NEVER BE SUCCESSFULLY
DEVELOPED. The Company's polymer technology and proposed products are still
under development and are subject to the risks of failure inherent in the
development of new technologies and products based on new technologies. The
Company's polymer technology and proposed products will require significant
further research, development and testing, including extensive clinical
testing and regulatory approval, prior to commercial use. Unsuccessful results
from clinical trials of the Company's proposed products or adverse findings
with respect to these products could adversely affect some or all of the
Company's proposed products. No assurance can be given that such proposed
products will prove to be safe, efficacious and non-toxic, receive requisite
regulatory approvals, demonstrate substantial therapeutic benefit, be
commercialized on a timely basis, experience no design or manufacturing
problems, be manufactured on a large scale, be economical to market, be
accepted by the marketplace, or generate sufficient revenues to support future
research and development programs. In addition, no assurance can be given that
proprietary rights of third parties will not preclude the Company from
marketing its proposed products or that third parties will not market superior
or equivalent products.
RISKS ASSOCIATED WITH UNCERTAINTIES OF CLINICAL TRIALS. The Company is
required to obtain approval from the FDA prior to marketing its proposed
therapeutic products in the United States and the approval of foreign
regulatory authorities to commercialize its proposed products in other
countries. To obtain such approvals, the Company is required to prove the
safety and efficacy of its proposed products through extensive preclinical
studies and clinical trials. The Company is in various stages of such testing.
The completion of any of the Company's clinical trials is dependent upon many
factors including the rate of patient enrollment and the heterogeneity of the
patients and indications to be treated. Delays in patient enrollment, as well
as the heterogeneity of patients and indications to be treated, may result in
increased trial costs and delays in FDA submissions, which could have a
material adverse effect on the Company.
A number of companies in the biotechnology and pharmaceutical industries
have suffered significant setbacks in clinical trials, even after showing
promising results in earlier studies or trials. Although the Company has
obtained favorable results to date in preclinical studies and clinical trials
of certain of its proposed products, such results may not be indicative of
results that will ultimately be obtained in or throughout such preclinical
studies and clinical trials. There can be no assurance that the Company will
not encounter problems in its clinical trials that will cause the Company to
delay or suspend its clinical trials, that the clinical trials of its proposed
products will be completed at all, that such testing will ultimately
demonstrate the safety or efficacy of such proposed products or that any
proposed products will receive regulatory approval on a timely basis, if at
all. If any such problems occur, they could have a material adverse effect on
the Company.
CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING; LOSS ON SALE OR MERGER.
The Company believes that available cash will be sufficient to meet its cash
requirements for currently-budgeted operations through September 1998. The
Company is in need of substantial additional funds to continue its plan of
operations beyond that date. The Exercise Offer is an integral part of the
Company's financing activities. The Company further anticipates a need for
additional funding beyond the proceeds of the Exercise Offer, and may attempt
to procure such funds through equity or debt financings or both. There can be
no assurance that necessary financings will be obtained. Failure to achieve
sufficient proceeds from the Exercise Offer or other needed financings will
require the Company to delay, scale back or eliminate some or all of its
research and development programs and manufacturing and marketing efforts, or
require it to license to third parties certain products or technologies that
the Company would otherwise seek to commercialize itself. If the Company is
not able to raise additional funds as needed to continue its research and
development programs and for its intended manufacturing and marketing efforts,
it may become necessary for the Company to attempt to be merged with, or sold
in whole or in part to, another entity. There can be no assurance that such a
sale or merger would be available, but if it were, the
9
<PAGE>
proceeds to the Company or its stockholders from such a sale or merger could
be substantially less than the amount invested by stockholders in the Company,
resulting in significant losses to the stockholders on their investment in the
Company's securities.
LIMITED OPERATING HISTORY; HISTORY OF LOSSES. The Company has a limited
history of operations that, to date, has consisted primarily of research,
development and testing of its technologies and the commercialization of the
Sure-Closure System and the CLINICEL product line. With the exception of the
third quarter of 1994, when the gain on the sale of the Sure-Closure System
was realized, the Company has incurred significant net losses from its
inception. The Company experienced net losses of $2,797,000, $3,830,000 and
$7,666,000 for the years ended December 31, 1995, 1996 and 1997, respectively.
At March 31, 1998, the Company had an accumulated deficit of $29,494,000 which
has increased since that date. The Company continues to expend substantial
financial and other resources on (i) research, development and testing of its
polymer technology and proposed products utilizing this technology; (ii)
commercialization of the CLINICEL product line and other proposed products;
and (iii) general and administrative expenses. The Company expects to incur
additional losses as its research, development and preclinical studies and
clinical trials continue to expand. The Company's ability to achieve a
profitable level of operations is dependent on successfully completing the
development of its proposed products, obtaining required regulatory approvals,
and manufacturing and selling its proposed products. Accordingly, the extent
of future losses and the time required to achieve profitability, if ever, is
uncertain. There can be no assurance that the Company will achieve or sustain
a profitable level of operations.
NO ASSURANCE OF REGULATORY APPROVALS; POTENTIAL DELAYS. The Company's
products and proposed products will be subject to regulation by the FDA and
comparable agencies in foreign countries. The regulatory approval process
often takes a number of years and requires the expenditure of substantial
funds. In the United States, the FDA enforces, where applicable, development,
testing, labeling, manufacturing, registration, notification, clearance or
approval, marketing, distribution, recordkeeping and reporting requirements
for new medical devices. In addition, there can be no assurance that
government regulations applicable to the Company's products or the
interpretation of those regulations will not change and thereby prevent the
Company from marketing some or all of its products temporarily or permanently.
There can be no assurance that any proposed products that may be developed by
the Company will be able to satisfy the current requirements and regulations
of the FDA or comparable foreign agencies. There can be no assurance that the
Company's proposed products will ever obtain the regulatory clearance or
approval required for marketing.
Whether or not FDA approval has been obtained, approval of a medical device
by comparable regulatory authorities in other countries must be obtained prior
to marketing the product in those countries. The approval process varies by
country and the time required may be longer or shorter than that required for
FDA approval. Approval of a medical device for sale in one country does not
ensure approval in other countries. The results of Phase I or Phase II studies
are not necessarily indicative of the efficacy or safety of a medical device
candidate for human therapeutic use. There can be no assurance that clinical
testing will provide evidence of safety and efficacy in humans or that
regulatory approvals will be granted for any of the Company's proposed
products. Manufacturers of therapeutic products are required to obtain FDA
approval of their manufacturing facilities and processes, to adhere to
applicable standards for manufacturing practices and to engage in extensive
recordkeeping and reporting. Failures to obtain or delays in obtaining
regulatory approvals would adversely affect the manufacturing and marketing of
the Company's proposed products, the Company's financial position and the
Company's revenues or royalties. When and if approvals are granted, the
Company, the approved medical device, the manufacture of such medical device
and the facilities in which such medical device is manufactured are subject to
ongoing regulatory review. Subsequent discovery of previously unknown problems
may result in restriction on a product's use or withdrawal of the product from
the market. Adverse government regulation that might arise from future
legislative or administrative action, particularly as it relates to healthcare
reform and product pricing, cannot be predicted.
PATENTS AND PROPRIETARY RIGHTS; NO ASSURANCE OF ENFORCEABILITY OR
SIGNIFICANT COMPETITIVE ADVANTAGE. The Company's success will depend heavily
on its ability to obtain and retain patent protection for
10
<PAGE>
its polymer technology, Clinicel products and any proposed products, to
preserve its trade secrets and to operate without infringing the proprietary
rights of third parties. There can be no assurance that the claims in the
pending patent applications will issue as patents, that any issued patents
will provide the Company with significant competitive advantages, that
challenges will not be instituted against the validity or enforceability of
any patent owned by the Company, or, if instituted, that such challenges will
not be successful. The cost of litigation to uphold the validity and prevent
infringement of a patent can be substantial. Furthermore, there can be no
assurance that others will not independently develop similar or superior
technologies, duplicate the Company's technologies or design around the
patented aspects of the Company's technologies. The Company could incur
substantial costs in proceedings before the United States Patent and Trademark
Office, including interference proceedings. The proceedings could also result
in adverse decisions as to the patentability of the Company's licensed or
assigned inventions. Further, there can be no assurance that the Company will
not infringe upon prior or future patents owned by others, that the Company
will not need to acquire licenses under patents belonging to others for
technology potentially useful or necessary to the Company, or that such
licenses will be available to the Company, if at all, on terms acceptable to
the Company. Moreover, there can be no assurance that any patent issued to or
licensed by the Company will not be infringed by others. Lastly, there can be
no assurance that third parties will not bring suits against the Company for
patent infringement or for declaratory judgment to have the patents owned or
licensed by the Company declared invalid. While obtaining patents is deemed
important by the Company, patents are not considered essential to the success
of its business. However, if further patents do not issue from present or
future patent applications, the Company may be subject to greater competition.
The Company also relies on trade secrets and other unpatented proprietary
technology to protect its innovations. There can be no assurance that the
Company can meaningfully protect its rights in such unpatented technology, or
that others will not independently develop substantially equivalent or
superior products and processes or otherwise gain access to the Company's
technologies, that trade secrets will be established or that secrecy
obligations will be honored. To the extent that consultants, key employees,
third parties involved in the Company's projects or others independently
develop technological information, disputes may arise as to the proprietary
rights to such information, which may not be resolved in favor of the Company.
The Company seeks to protect its trade secrets and proprietary know-how, in
part, through confidentiality agreements with its employees, consultants,
advisors, collaborators and others. There can be no assurance that these
agreements will not be violated by the other parties, that the Company will
have adequate remedies for any breach, or that the Company's trade secrets
will not otherwise become known or be independently developed by competitors.
The Company has relationships with a number of consultants who are employed by
organizations other than the Company. These persons may have consulting,
employment or advisory arrangements with other entities that may conflict or
compete with their obligations to the Company. Consultants generally sign
agreements that provide for confidentiality of the Company's proprietary
information and results of studies. There can be no assurance, however, that
the Company will, in connection with every relationship, be able to maintain
the confidentiality of the Company's technology, dissemination of which could
have a material adverse effect on the Company. To the extent that the
Company's scientific consultants develop inventions or processes independently
that may be applicable to the Company's proposed products, disputes may arise
as to the ownership of the proprietary rights to such information. Such
inventions or processes will not necessarily become the property of the
Company, but may remain the property of such persons or their full-time
employers. The Company could be required to make payments to the owners of
such inventions or processes, either in the form of cash, equity or a
combination thereof. In addition, protracted and costly litigation may be
necessary to enforce and determine the scope and validity of the Company's
proprietary rights.
POTENTIAL DEPENDENCE ON REIMBURSEMENT. Successful commercialization of the
Company's products and proposed products may depend in part on the
availability of adequate reimbursement from third-party health care payors
such as Medicare, Medicaid and private insurance plans.
Significant uncertainty exists as to the reimbursement status of newly
approved health care products. There can be no assurance that adequate third-
party reimbursement will be available for the Company to establish and
maintain price levels sufficient for realization of an appropriate return on
its investment in developing new
11
<PAGE>
therapies. Government and other third-party payors are increasingly attempting
to contain health care costs by limiting both coverage and payment levels for
new therapeutic products approved for marketing by the FDA and by refusing, in
some cases, to provide any coverage for uses of approved products for disease
indications for which the FDA has not granted marketing approval. If adequate
coverage and payment levels are not provided by government and third-party
payors for the Company's proposed products, the market acceptance of these
products would be adversely affected. Failure of the Company's proposed
products to be adequately reimbursed by third-party payors could have a
material adverse effect on the Company.
UNCERTAIN MARKET ACCEPTANCE OF PROPOSED PRODUCTS. The Company's future
growth and profitability will depend, in large part, on the acceptance by the
medical community of the Company's products and proposed products. This
acceptance will be substantially dependent on educating the medical community
as to the full capabilities, distinctive characteristics, perceived benefits
and clinical efficacy of the Company's products and proposed products. There
can be no assurance that the Company's efforts or those of others will be
successful or that any of the Company's products and proposed products will
receive the necessary market acceptance. Failure of the Company's products and
proposed products to gain market acceptance would have a material adverse
effect on the Company.
RISK OF NOT OBTAINING ADDITIONAL MANUFACTURING FACILITIES AND EXPERIENCED
MANUFACTURING PERSONNEL AND/OR ESTABLISHING MANUFACTURING ARRANGEMENTS WITH
OTHERS. The Company believes it currently has contracted for sufficient
manufacturing capabilities to allow for production of its products and
proposed products in quantities sufficient to support its current commercial
needs and clinical programs. The Company intends to seek out contracts to
obtain additional manufacturing capabilities to allow for increased production
of its products and proposed products in quantities sufficient to support its
anticipated needs. To be successful, however, the Company must be capable of
manufacturing or contracting for the manufacture of its products in commercial
quantities, in compliance with regulatory requirements and at acceptable
costs. The Company may enter into additional contractual arrangements to
manufacture its proposed products at such time, if ever, that such products
are successfully developed. There can be no assurance that the Company will be
able to enter into any such arrangements on acceptable terms, or at all, or
that any manufacturer will be able to meet any demand for such products on a
timely basis. The Company may manufacture its proposed products directly at
such time, if ever, that such products are successfully developed. The Company
has no experience with the direct manufacture of these proposed products
although certain of the Company's officers have had experience in similar
activities for other companies. The manufacture of these proposed products is
complex and difficult, and will require the Company to attract and retain
experienced manufacturing personnel and to obtain the use of a manufacturing
facility in compliance with FDA and other regulatory requirements. There can
be no assurance that experienced personnel can be attracted to or retained by
the Company, or that the Company will be able to obtain the financing
necessary to manufacture these products directly.
DEPENDENCE UPON SUPPLIERS. The Company is dependent upon subcontractors to
manufacture and deliver certain components of its proposed products in a
timely and satisfactory manner. Failure to procure such components or any
interruption in the supply of such components could have a material adverse
effect on the Company.
RELIANCE ON ARRANGEMENTS WITH OTHERS; LIMITED MARKETING AND SALES
EXPERIENCE. The Company has limited experience in marketing and sales although
certain of the Company's officers have had experience in similar activities
for other companies. The Company may rely on joint venture, licensing or
collaborative arrangements for marketing and selling its products in certain
geographic markets. There can be no assurance that the Company will be
successful in establishing such arrangements, or that its co-venturer,
licensee or collaborator in such arrangements will be successful in marketing
and selling such products. These arrangements may result in the lack of
control by the Company over the marketing and selling of its products. The
Company may choose to market and sell such products directly and, to do so,
the Company would have to develop a specialized marketing and sales force with
technical expertise. There can be no assurance that the Company will be able
to build such a marketing or sales force, that the cost of establishing such a
marketing or sales force will
12
<PAGE>
not exceed any product revenues, or that the Company's direct sales and
marketing efforts will be successful. In addition, the Company will compete
with many other companies that currently have extensive and well-funded
marketing and sales operations.
RISK OF TERMINATION OF, OR LOSS OF RIGHTS TO, TECHNOLOGIES UNDER AGREEMENTS
WITH OTHERS. The Company has acquired the rights to its technologies pursuant
to agreements with research institutions. Such agreements contain provisions
requiring the Company, among other things, to develop, commercialize and/or
market products, to achieve minimum sales and/or income levels within certain
periods of time, to meet minimum funding requirements and to make royalty
payments in order to maintain the patents and other rights granted thereunder.
In addition, the patents and proprietary rights revert to the grantor on
certain dates and/or upon the occurrence of certain conditions. In the event
that certain patents and proprietary rights were to revert to the grantor, it
would have a material adverse effect on the Company.
DEPENDENCE UPON THIRD PARTIES FOR CLINICAL DEVELOPMENT OF PROPOSED PRODUCTS.
The Company may enter into strategic alliances for the clinical development of
certain of its proposed products. There can be no assurance that the Company
will be successful in obtaining satisfactory agreements with strategic
partners. In addition, there can be no assurance that the interests and
motivations of any strategic partner would be or remain consistent with those
of the Company or that such partner would successfully perform its
obligations.
COMPETITION AND TECHNOLOGICAL OBSOLESCENCE. The Company is engaged in
rapidly evolving and highly competitive fields. Competition from biotechnology
companies, medical device manufacturers, pharmaceutical and chemical companies
and other competitors is intense. Many of these companies have substantially
greater capital resources, research and development staffs, facilities and
experience in obtaining regulatory approvals than the Company, as well as
substantially more experience than the Company in the manufacturing, marketing
and sale of products. Academic institutions, hospitals, governmental agencies
and other public and private research organizations are also conducting
research and seeking patent protection and may develop competing products or
technologies on their own or through joint ventures. In addition, recently
developed technologies or technologies that may be developed in the future
are, or may be, the basis for competitive products. There can be no assurance
that the Company's competitors will not succeed in developing technologies and
products that are more effective and/or less costly than those being developed
by the Company, thereby rendering the Company's technologies not competitive
or obsolete. The Company's proposed products may become obsolete before the
Company can obtain approval to market them or before it can recoup related
research and development or commercialization expenses. Competitors may also
be more successful than the Company in production and marketing of competitive
products.
RISK OF USING HAZARDOUS MATERIALS. Medical and biopharmaceutical research
and development involves the controlled use of hazardous materials. The
Company is subject to federal, state and local laws and regulations governing
the use, manufacture, storage, handling and disposal of such materials and
certain waste products. Although the Company believes that all of its current
contractors comply and future contractors will comply with safety procedures
for handling and disposing of such materials under the standards prescribed by
federal, state and local regulations, the risk of accidental contamination or
injury from those materials cannot be completely eliminated. In the event of
such an accident, the Company could be held liable for any damages that result
and any such liability could exceed the resources of the Company. Although the
Company believes that it is in compliance in all material respects with
applicable environmental laws and regulations and currently does not expect to
make material capital expenditures for environment control facilities in the
near-term, there can be no assurance that the Company will not be required to
incur significant costs to comply with environmental laws and regulations, or
any assurance that the Company will not be materially adversely affected by
current or future environmental laws, rules, regulations or policies.
DEPENDENCE UPON KEY PERSONNEL AND CONSULTANTS. The Company is dependent upon
a limited number of key management, scientific and technical personnel. In
addition, the Company's future success will depend in part upon its ability to
attract and retain highly qualified personnel. The Company competes for such
personnel with other companies, academic institutions, government entities and
other organizations. There can be no
13
<PAGE>
assurance that the Company will be successful in hiring or retaining qualified
personnel. Loss of key personnel or the inability to hire or retain qualified
personnel could have a material adverse effect on the Company. In addition,
the Company relies upon consultants and advisors to assist the Company in
formulating its research and development strategies, testing and manufacturing
and marketing-related issues. All of the Company's consultants and advisors
are employed outside the Company and may have commitments or consulting or
advisory contracts with other entities.
RISK OF PRODUCT LIABILITY CLAIMS; INSURANCE. The Company's business exposes
it to potential liability risks that are inherent in the testing,
manufacturing and marketing of medical products. The use of the Company's
proposed products in clinical trials may expose the Company to product
liability claims and possible adverse publicity. These risks also exist with
respect to the Company's proposed products, if any, that receive regulatory
approval for commercial sales. The Company currently has limited product
liability insurance coverage for the use of its proposed products in clinical
trials and for the commercial sale of CLINICEL. However, there can be no
assurance that the Company will be able to obtain additional insurance
coverage at acceptable costs, if at all, or be able to maintain the current
level of insurance. Further, there can be no assurance that a product
liability claim would not materially adversely affect the Company. A product
liability or other judgment against the Company in excess of the Company's
insurance coverage could have a material adverse effect upon the Company.
RISKS INHERENT IN INTERNATIONAL SALES AND OPERATIONS. The Company intends to
sell its proposed products outside of the United States, as well as
domestically. A number of risks are inherent in international transactions.
International sales and operations may be limited or disrupted by the
imposition of governmental controls, regulation of medical devices and other
medical products, export license requirements, political instability, trade
restrictions, changes in tariffs, exchange rate fluctuations and difficulties
in managing international operations.
POSSIBLE NASDAQ DELISTING; LOW STOCK PRICE. The Common Stock is currently
traded on the Nasdaq National Market. For continued listing on the Nasdaq
National Market, companies with stock prices below $5.00 per share, among
other things, must have (i) net tangible assets of at least $4,000,000, (ii) a
minimum bid price of $1.00 per share, (iii) a public float of at least 750,000
shares, (iv) a market value of public float of at least $5,000,000 and (v)
adhere to certain corporate governance provisions. As of June 30, 1998, the
Company's net tangible assets are approximately $1,864,000, which is below the
$4,000,000 maintenance requirement for the Nasdaq National Market and is also
below the $2,000,000 maintenance requirement for the Nasdaq SmallCap Market.
Accordingly, if the Company is unable to remedy the deficiency through a
financing such as the Exercise Offer or other acceptable financing, the Common
Stock may be delisted from trading on Nasdaq and trading, if any, in the
Common Stock would thereafter be conducted in the non-Nasdaq over-the-counter
market. The effects of delisting include the limited release of the market
prices of the Company's securities and limited news coverage of the Company.
Delisting may restrict investors' interest in the Company's securities and
materially adversely affect the trading market and prices for such securities
and the Company's ability to issue additional securities or to secure
additional financing. In addition to the risk of volatile stock prices and
possible delisting, low price stocks are subject to the additional risks of
federal and state regulatory requirements and the potential loss of effective
trading markets. In particular, if the Common Stock were delisted from trading
on Nasdaq and the trading price of the Common Stock was less than $5.00 per
share, the Common Stock could be subject to Rule 15g-9 under the Exchange Act
which, among other things, requires that broker/dealers satisfy special sales
practice requirements, including making individualized written suitability
determinations and receiving purchasers' written consent, prior to any
transaction. If the Company's securities were also deemed penny stocks under
the Securities Enforcement and Penny Stock Reform Act of 1990, this would
require additional disclosure in connection with trades in the Company's
securities, including the delivery of a disclosure schedule explaining the
nature and risks of the penny stock market. Such requirements could severely
limit the liquidity of the Company's securities and the ability of purchasers
in the offering to sell their securities in the secondary market.
ANTI-TAKEOVER PROVISIONS. The Company's Restated Certificate of
Incorporation, as amended, authorizes the issuance of a maximum of 5,000,000
shares of preferred stock ("Preferred Stock") on terms that may be
14
<PAGE>
fixed by the Company's Board of Directors without further stockholder action.
The terms of any series of Preferred Stock could adversely affect the rights
of holders of the Common Stock. No Preferred Stock has been issued to date and
the Company has no current plans to issue Preferred Stock. The issuance of
Preferred Stock could make the possible takeover of the Company more difficult
or otherwise dilute the rights of holders of the Common Stock and the market
price of the Common Stock. In addition, the Company is subject to Delaware
General Corporation Law provisions that may have the effect of discouraging
persons from pursuing a non-negotiated takeover of the Company and preventing
certain changes of control.
IMMEDIATE AND SUBSTANTIAL DILUTION. Assuming an exercise price of $1.205 per
Warrant and the exercise of 100%, 75% and 50% of the Warrants (including the
Class B Warrants underlying the Class A Warrants), an exercising Holder will
experience immediate and substantial dilution of $0.38, $0.41 and $0.45 per
share, respectively or approximately 33%, 36% and 40%, respectively, from the
exercise price. See "Dilution."
ARBITRARY DETERMINATION OF TERMS OF EXERCISE OFFER. The exercise price of
the Warrants in the Exercise Offer was determined by the Company and is not
necessarily related to the Company's asset value, net worth or other criteria
of value, and should not be regarded as an indication of any future market
price of the Company's securities.
OUTSTANDING WARRANTS AND OPTIONS. In addition to the 4,768,059 shares of
Common Stock issuable upon exercise of Class A Warrants and Class B Warrants
(including Class B Warrants underlying Class A Warrants), the Company has
outstanding (i) options granted under the Plan to purchase up to an aggregate
of 1,075,000 shares of Common Stock, and (ii) options granted outside the Plan
to purchase up to an aggregate of 1,604,501 shares of Common Stock. In
connection with a public offering effected in May 1996, the Company sold to
the underwriter of that offering a warrant to purchase up to 200,000 shares of
Common Stock. The warrant is exercisable for five years commencing May 1998
and is currently exercisable at $7.95 per share. The foregoing options and
warrants may be exercised at a time when the Company might be able to obtain
additional equity capital on more favorable terms. In addition, to the extent
they are exercised, they will decrease the percentage of the Company owned by
investors in the offering. While these options and warrants are outstanding,
they may adversely affect the terms on which the Company could obtain
additional capital. The Company cannot predict the effect, if any, that market
sales of Common Stock, the exercise of options or warrants or the availability
of such Common Stock for sale will have on the market price prevailing from
time to time. In addition, if the exercise price of options or warrants are
adjusted downward, such options or warrants may be exercised sooner than
otherwise with a resulting increase in the number of shares of Common Stock
available for sale on the market.
POSSIBLE VOLATILITY OF STOCK PRICE. The stock market has from time to time
experienced significant price and volume fluctuations that are unrelated to
the operating performance of particular companies. In addition, the market
price of the Common Stock and the Warrants has been and the market price for
the Common Stock is likely to continue to be highly volatile. Factors such as
fluctuations in the Company's operating results, shortfalls in revenue or
earnings from levels expected by securities analysts, announcements of
technological innovations or new products by the Company or its competitors,
governmental regulations, developments with respect to patents or proprietary
rights, litigation, public concern as to the safety of products developed by
the Company or others and general market conditions may have a significant
adverse effect on the market price of the Common Stock in the future. Between
the date of the IPO and the date of this Exercise Offer/Prospectus, the Common
Stock has traded at per share prices between $.75 and $11.375, the Class A
Warrants have traded at prices between $.0625 and $5.25 and the Class B
Warrants have traded at prices between $.0625 and $2.75. There can be no
assurance that this high level of volatility will not persist with respect to
the Common Stock in the future. See "Price Range of Securities."
RISK OF NO DIVIDENDS. The Company has never declared or paid any cash
dividends on the Common Stock. There is a risk that the Company may never
declare or pay any dividends on the Common Stock.
CURRENT PROSPECTUS AND STATE REGISTRATION REQUIRED TO EXERCISE WARRANTS.
Warrantholders will only be able to exercise the Warrants if (i) a current
prospectus under the Securities Act relating to the securities
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<PAGE>
underlying the Warrants is then in effect and (ii) such securities are
qualified for sale or exempt from qualification under the applicable
securities laws of the states in which the various holders of Warrants reside.
This Exercise Offer/Prospectus is the prospectus required to be in effect.
Although the Company has undertaken to use its best efforts to maintain the
effectiveness of a current prospectus covering the securities underlying the
Warrants, there can be no assurance that the Company will be able to do so.
The value of the Warrants may be greatly reduced if a current prospectus
covering the securities issuable upon the exercise of the Warrants is not kept
effective or if such securities are not qualified, or exempt from
qualification, in the states in which the holders of Warrants reside.
USE OF PROCEEDS
Holders of Warrants are not obligated to exercise their Warrants and there
can be no assurance that holders of Warrants will choose to exercise all or
any of their Warrants. In the event that all of the Warrants are exercised,
75% are exercised, and 50% are exercised, the net proceeds to the Company upon
such exercises would be approximately $5,005,000, $3,718,000 and $2,430,000,
respectively, after deducting the Solicitation Fee and excluding other
expenses of the Exercise Offer. The Company intends to use the net proceeds
received upon the exercise of the Warrants, if any, for continued clinical
trials, research and development, working capital in support of the growth of
the CLINICEL product line, including funding of accounts receivable related
thereto and the purchase of inventory related thereto, and general corporate
purposes. Pending such uses, the net proceeds will be invested in investment
grade, interest-bearing securities.
The Company further anticipates a need for additional funding beyond the
proceeds of the Exercise Offer as early as January 1999, and may attempt to
procure such funds either in the form of debt or equity financing or both.
There can be no assurance that necessary financing will be obtained. See "Risk
Factors--Capital Needs; Uncertainty of Additional Financing."
TERMS OF THE EXERCISE OFFER
The Warrants are subject to warrant agreements (the "Warrant Agreements") by
and between the Company and American Stock Transfer & Trust Company, as
warrant agent. Blair is a party to one of the Warrant Agreements. Pursuant to
the terms of the Warrant Agreements, each Class A Warrant is currently
exercisable for 1.071474 shares of Common Stock and one Class B Warrant at an
exercise price of $8.40 per Class A Warrant, and each Class B Warrant is
currently exercisable for 1.071474 shares of Common Stock at an exercise price
of $12.60 per Class B Warrant. See "Description of Securities."
THE COMPANY IS HEREBY OFFERING, TO HOLDERS WHO EXERCISE THEIR WARRANTS
PURSUANT TO THE EXERCISE OFFER, TO REDUCE THE EXERCISE PRICES OF THE WARRANTS
TO $1.205 FOR EACH WARRANT SO EXERCISED, IF AND ONLY IF A HOLDER EXERCISES ITS
WARRANTS PRIOR TO THE EXPIRATION DATE (AS HEREINAFTER DEFINED).
The reduced exercise price of $1.205 per Warrant was selected by the Company
as the highest exercise price which would be expected to induce all or a
substantial portion of the Holders to exercise their Warrants in the Exercise
Offer. However, there can be no assurance that the reduction in exercise price
will be sufficient to induce Holders to exercise their Warrants.
Upon the terms and subject to the conditions of the Exercise Offer, the
Company will accept exercises for any and all Warrants that are validly
exercised in accordance with the terms of the Exercise Offer prior to the
Expiration Date (as hereinafter defined) and not withdrawn in accordance with
the procedures set forth under the caption "--Withdrawal Rights." As used in
the Exercise Offer, the term "Expiration Date" means 5:00 p.m., New York City
time, on September 21, 1998; provided, however, that if the Company, in its
sole discretion, has
16
<PAGE>
extended the period of time during which the Exercise Offer will remain open,
the term "Expiration Date" means the latest time and date on which the
Exercise Offer, as so extended, will expire.
The Company reserves the right, in its sole discretion, at any time and from
time to time, to extend the period of time during which the Exercise Offer is
open by giving oral or written notice of such extension to the Warrant Agent.
There can be no assurance that the Company will exercise its right to extend
the Exercise Offer. If the Company decides, in its sole discretion, to
increase or decrease the exercise price applicable in the Exercise Offer and,
at the time that notice of such increase or decrease is first published, sent
or given to holders of Warrants in the manner specified below, the Exercise
Offer is scheduled to expire at any time earlier than the tenth business day
from the date that such notice is first so published, sent or given, the
Exercise Offer will be extended until the expiration of such period of ten
business days.
The Company also expressly reserves the right to (i) delay the acceptance of
exercises of any Warrants not theretofore accepted for exercise in order to
comply in whole or in part with applicable law, (ii) terminate the Exercise
Offer and not accept for exercise any Warrants not theretofore accepted for
exercise upon the occurrence of any of the conditions specified under the
caption "--Certain Conditions of the Exercise Offer," and (iii) amend the
Exercise Offer in any respect at any time and from time to time.
Any extension, delay, termination or amendment will be followed as promptly
as practicable by public announcement thereof, such announcement in the case
of an extension to be issued no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date. For
purposes of the Exercise Offer, a "business day" means any day, other than a
Saturday, Sunday or Federal holiday, on which the principal office of the
Commission in Washington, D.C. is scheduled to be open for business and
consists of the time period from 12:01 a.m. through 12:00 midnight, New York
City time. Without limiting the manner in which the Company may choose to make
any public announcement, except as provided by applicable law, the Company
shall have no obligation to publish, advertise or otherwise communicate any
such public announcement other than by issuing a release to the Dow Jones News
Service.
The Company confirms that if it makes a material change in the terms of the
Exercise Offer or the information concerning the Exercise Offer, or if it
waives a material condition of the Exercise Offer, the Company will extend the
Exercise Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2)
under the Exchange Act, which require that the minimum period during which an
offer must remain open (to allow for adequate dissemination to Holders and
Holder response) following material changes in the terms of the Exercise Offer
or information concerning the Exercise Offer, other than a change in
percentage of securities exercisable or the exercise price applicable in the
Exercise Offer, will depend upon the facts and circumstances, including the
relative materiality of the terms or information. The Company confirms that
its reservation of the right to delay issuance to Holders of the securities in
respect of exercise of the Warrants which it has accepted for exercise is
limited by Rule l3e-4(f)(5) under the Exchange Act, which requires that an
issuer pay the consideration offered or return the exercised securities
promptly after the termination or withdrawal of the Exercise Offer.
ACCEPTANCE FOR PAYMENT; PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of the Exercise Offer
(including, if the Exercise Offer is extended or amended, the terms and
conditions of the Exercise Offer as so extended or amended), the Company will
accept for exercise any and all Warrants validly exercised prior to the
Expiration Date and not withdrawn, as soon as practicable after the Expiration
Date. In all cases, acceptance of exercises of Warrants pursuant to the
Exercise Offer will only be made, and the underlying securities will only be
issued, after timely receipt by the Warrant Agent of (i) certificates for such
Warrants or confirmation (a "Book-Entry Confirmation") of such Warrants in the
Warrant Agent's account at The Depository Trust Company ("DTC"), the Pacific
Securities Depository Trust Company ("PSDTC") or the Philadelphia Depository
Trust Company ("Philadep") (DTC, PSDTC and Philadep being sometimes
collectively referred to as the "Book-Entry Transfer Facilities" or
individually referred to as a "Book-Entry Transfer Facility") pursuant to the
procedure set forth under the
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<PAGE>
caption "Procedures for Exercising Warrants--Book-Entry Exercise"; provided
that the foregoing shall not be required with respect to exercises of Class B
Warrants underlying Class A Warrants; (ii) a properly completed and duly
executed Letter of Transmittal or manually signed facsimile thereof (with any
required signature guarantees) or, in the case of book-entry exercise, an
Agent's Message (as defined below), (iii) a certified or bank check payable to
"Life Medical Sciences, Inc." in the amount of $1.205 per Warrant exercised
and (iv) any other documents required by the Letter of Transmittal to American
Stock Transfer & Trust Company (the "Warrant Agent"). Separate Letters of
Transmittal or Agent's Messages are required for exercises of each of Class A
Warrants, Class B Warrants and Class B Warrants underlying Class A Warrants.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Warrant Agent and forming a part of
a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility's system exercising the Warrants which are the subject of
such Book-Entry Confirmation, that such participant has received and agrees to
be bound by the terms of the Letter of Transmittal, and that the Company may
enforce such agreement against such participant.
For purposes of the Exercise Offer, the Company shall be deemed to have
accepted for exercise Warrants, if and when the Company gives oral or written
notice to the Warrant Agent, as agent for the exercising Holders, of the
Company's acceptance for exercise of such Warrants pursuant to the Exercise
Offer. Subject to the terms and conditions of the Exercise Offer, issuance of
the underlying securities with respect to Warrants accepted for exercise
pursuant to the Exercise Offer will be made by the Warrant Agent, which will
act as agent for the exercising Holders for the purpose of receiving such
securities from the Company and transmitting such securities to exercising
Holders. If any exercised Warrants are not accepted for exercise for any
reason, or if certificates are submitted for more Warrants than are exercised,
then certificates for such Warrants not accepted for exercise or not exercised
will be returned (or, in the case of Warrants exercised by book-entry transfer
into the Warrant Agent's account at a Book-Entry Transfer Facility, such
Warrants will be credited to an account maintained at such Book-Entry Transfer
Facility), without expense to the exercising Holder, as soon as practicable
after the expiration or termination of the Exercise Offer and will be marked
cancelled.
If, prior to the Expiration Date, the Company shall increase or decrease the
exercise price applicable in the Exercise Offer, the Company will make
applicable the increased or decreased exercise price in respect of, all
Holders whose Warrants are accepted for exercise pursuant to the Exercise
Offer.
PROCEDURES FOR EXERCISING WARRANTS
VALID EXERCISE. For Warrants to be validly exercised pursuant to the
Exercise Offer, a properly completed and duly executed Letter of Transmittal
or manually signed facsimile thereof (with any required signature guarantees),
together with a certified or bank check payable to "Life Medical Sciences,
Inc." in the amount of $1.205 for each Warrant so exercised in the Exercise
Offer and any other documents required by the Letter of Transmittal, or,
solely in connection with a book-entry exercise of the Warrants, an Agent's
Message, must be received by the Warrant Agent prior to the Expiration Date at
its address set forth in "Transfer Agent and Warrant Agent." In addition,
either the certificates for such Warrants must be delivered to the Warrant
Agent along with the Letter of Transmittal, or such Warrants must be delivered
pursuant to the procedure for book-entry transfer set forth below and a Book-
Entry Confirmation of receipt of such Warrants must be received by the Warrant
Agent, in each case prior to the Expiration Date, provided that the foregoing
shall not be required with respect to exercises of Class B Warrants underlying
Class A Warrants. Holders who are unable to comply with the foregoing
procedures prior to the Expiration Date may exercise Warrants pursuant to the
guaranteed delivery procedures set forth below.
IN ORDER FOR AN EXERCISING HOLDER TO PARTICIPATE IN THE EXERCISE OFFER,
WARRANTS MUST BE VALIDLY EXERCISED PRIOR TO THE EXPIRATION DATE, WHICH IS
CURRENTLY 5:00 P.M., NEW YORK CITY TIME, ON SEPTEMBER 21, 1998.
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<PAGE>
BOOK-ENTRY EXERCISE. The Warrant Agent will establish accounts with respect
to the Warrants at each of the Book-Entry Transfer Facilities for purposes of
the Exercise Offer within two business days after the date of this Exercise
Offer/Prospectus, and any financial institution that is a participant in a
Book-Entry Transfer Facility system may make book-entry exercises of Warrants
by causing the Book-Entry Transfer Facility to exercise such Warrants in the
Warrant Agent's account at such Book-Entry Transfer Facility in accordance
with such Book-Entry Transfer Facility's procedures for such exercise.
However, although exercise of Warrants may be effected through book-entry at a
Book-Entry Transfer Facility, the Letter of Transmittal (or manually signed
facsimile thereof), properly completed and duly executed (with any required
signature guarantees), together with a certified or bank check payable to
"Life Medical Sciences, Inc." in the amount of $1.205 for each Warrant so
exercised in the Exercise Offer and any other required documents must, in any
case, be transmitted to and received by the Warrant Agent at its address set
forth in "Transfer Agent and Warrant Agent" prior to the Expiration Date, or
exercising Holders must comply with the guaranteed delivery procedures set
forth below. DELIVERY OF SUCH DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE WARRANT AGENT.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or by a
bank, credit union, savings association or other entity which is a member in
good standing of the Securities Transfer Agent's Medallion Program
(collectively, "Eligible Institutions") unless the Warrants exercised thereby
are exercised (i) by a registered Holder of such Warrants (which term shall
include any participant in a Book-Entry Transfer Facility whose name appears
on a security position listing as the owner) who has not completed the box
entitled "Special Issuance Instructions" on the Letter of Transmittal, or (ii)
for the account of an Eligible Institution. If the certificates are registered
in the name of a person other than the signer of the Letter of Transmittal, or
if payment is to be made, or Warrants not exercised or not accepted for
exercise are to be issued, to a person other than the registered Holder, then
the certificates must be endorsed or accompanied by appropriate transfer
powers, in either case signed exactly as the names of the registered Holder
appears on the certificates, and the signatures on the certificates or stock
powers must be guaranteed as aforesaid.
GUARANTEED DELIVERY. If a Holder desires to exercise Warrants pursuant to
the Exercise Offer and certificates for such Warrants are not immediately
available, or the procedure for book-entry transfer cannot be completed on a
timely basis, or time will not permit all required documents to reach the
Warrant Agent prior to the Expiration Date, such Warrants may nevertheless be
exercised if all of the following conditions are met:
(i) such exercise is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided herewith is delivered to the Warrant
Agent in the manner provided below and received by the Warrant Agent prior
to the Expiration Date; and
(iii) the certificates for all exercised Warrants in proper form for
exercise (or Book-Entry Confirmation of exercise of such Warrants in the
Warrant Agent's account at a Book-Entry Transfer Facility as described
above), together with a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof), a certified or bank
check payable to "Life Medical Sciences, Inc." in the amount of $1.205 for
each Warrant so exercised in the Exercise Offer and any other documents
required by the Letter of Transmittal (or, in the case of book-entry
exercise, an Agent's Message), are received by the Warrant Agent within
five New York Stock Exchange trading days after the date of execution of
the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by telegram, telex, facsimile transmission or mail, to the Warrant Agent and
must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery. In all cases, issuance of the underlying
securities in respect of Warrants accepted for exercise will be made only
after timely receipt by the Warrant Agent of (i) certificates for such
Warrants (or Book-Entry Confirmation of exercise of such Warrants in the
Warrant Agent's account at a
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<PAGE>
Book-Entry Transfer Facility as described above), (ii) a properly completed
and duly executed Letter of Transmittal or manually signed facsimile thereof
(with any required signature guarantees) or, in the case of book-entry
exercises, an Agent's Message, (iii) a certified or bank check payable to
"Life Medical Sciences, Inc." in the amount of $1.205 for each Warrant so
exercised in the Exercise Offer and (iv) any other documents required by the
Letter of Transmittal.
The method of delivery of all documents, including certificates for
Warrants, is at the election and risk of the exercising Holder. If delivery is
by mail, registered or certified mail with return receipt requested, properly
insured, is recommended and sufficient time should be allowed to ensure timely
delivery. The foregoing provisions relating to guaranteed delivery are not
applicable to exercises of Class B Warrants underlying Class A Warrants.
OTHER REQUIREMENTS. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for exercise of Warrants pursuant
to any of the procedures described above will be determined in the sole
discretion of the Company, whose determination shall be final and binding. The
Company reserves the absolute right to reject any or all exercises determined
by it not to be in proper form or the acceptance of which would, in the
opinion of the Company's counsel, be unlawful. The Company also reserves the
absolute right to waive any of the conditions of the Exercise Offer or any
defect or irregularity in any exercise with respect to any particular Warrants
of any particular Holder. The Company's interpretation of the terms and
conditions of the Exercise Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No exercise of Warrants will
be deemed to have been validly made until all defects and irregularities have
been cured or waived. Neither the Company or the Warrant Agent or any other
person will be under any duty to give notification of any defects or
irregularities in exercises nor will any of them incur any liability for
failure to give any such notification.
If, on or after the date hereof, the Company should split, combine or
otherwise change the Common Stock or Warrants, or shall disclose that it has
taken any such action or if there shall occur any antidilution adjustment
pursuant to the terms of the Warrants or other adjustment affecting the
exercise price or the number of shares of Common Stock obtainable upon
exercise of the Warrants, then, without prejudice to the Company's rights set
forth under the captions "Terms of the Exercise Offer" and "--Certain
Conditions of the Exercise Offer," the Company, in its sole discretion, may
make such adjustments in the exercise price, the amount and nature of the
securities issuable upon exercise thereof and other terms of the Exercise
Offer as it deems appropriate to reflect such split, combination or other
change.
WITHDRAWAL RIGHTS
Except as stated herein, exercises of Warrants made pursuant to the Exercise
Offer are irrevocable. Warrants exercised pursuant to the Exercise Offer may
be withdrawn at any time prior to the Expiration Date. If, for any reason, the
Company is delayed in its acceptance for exercise of any Warrants, or is
unable to accept Warrants for exercise pursuant to the Exercise Offer, then,
without prejudice to the Company's rights under the Exercise Offer, exercised
Warrants may be retained by the Warrant Agent on behalf of the Company and may
not be withdrawn, except to the extent that exercising Holders are entitled to
withdrawal rights as set forth herein.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Warrant Agent
at its address set forth in "Transfer Agent and Warrant Agent." Any such
notice of withdrawal must specify the name of the person who exercised the
Warrants, the name of the registered Holder(s), if different from the name of
the person who exercised the Warrants, the number of Warrants exercised and
the number of Warrants to be withdrawn. If certificates for Warrants to be
withdrawn have been delivered or otherwise identified to the Warrant Agent,
the serial numbers shown on the particular certificates evidencing the
Warrants to be withdrawn and a signed notice of withdrawal with the signature
guaranteed by an Eligible Institution (except in the case of Warrants
exercised by an Eligible Institution) must be submitted prior to the physical
release of the certificates for the Warrants to be withdrawn. If Warrants have
been exercised pursuant to the procedure for book-entry transfer described
under the caption "--Procedures for
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<PAGE>
Exercising Warrants--Book-Entry Exercise," the notice of withdrawal must
specify the name and number of the account at the applicable Book-Entry
Transfer Facility to be credited with the withdrawn Warrants.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined in the sole discretion of the
Company, whose determination shall be final and binding. Neither the Company
nor the Warrant Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal nor
will any of them incur any liability for failure to give any such
notification.
Any Warrants withdrawn will be deemed not validly exercised for purposes of
the Exercise Offer. However, withdrawn Warrants may be reexercised at any
subsequent time prior to the Expiration Date by following any of the
procedures described under the caption "--Procedures for Exercising Warrants."
CERTAIN CONDITIONS OF THE EXERCISE OFFER
Notwithstanding any other provision of the Exercise Offer, consummation of
the Exercise Offer would be subject to approval by stockholders of the Company
if such approval is required by Nasdaq in order to comply with applicable
corporate governance rules. In addition, the Company shall not be required to
accept for exercise any Warrants exercised, or may terminate the Exercise
Offer, or may delay the acceptance for exercise of Warrants pursuant to the
Exercise Offer, if at any time on or after September 21, 1998 and before the
acceptance for exercise of any such Warrants or the payment therefor, any one
or more of the following shall occur:
(a) there shall have occurred (i) any general suspension of, or general
limitation on prices for, or trading in, securities on the Nasdaq Stock
Market, (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or any limitation
(whether or not mandatory) by any governmental agency or authority on, or
any other event that adversely affects, the extension of credit by banks or
other financial institutions, (iii) a material change in United States or
any other currency exchange rates or a suspension of or limitation on the
markets therefor, (iv) a commencement of a war, armed hostilities or other
similar international calamity directly or indirectly involving the United
States, or, (v) in the case of any of the foregoing existing at the time of
the commencement of the Exercise Offer, a material acceleration or
worsening thereof; or
(b) any change (or development involving a prospective change) shall have
occurred or been threatened in the business, properties, assets, financial
condition, operations, results of operation or prospects of the Company
that is or may be materially adverse to the Company, or the Company shall
have become aware of any fact that is or may be materially adverse with
respect to the value of the Warrants; or
(c) there shall have been threatened or instituted or there shall be
pending any action, proceeding, order, decree or injunction by or before
any court, government or governmental agency or other regulatory or
administrative authority, domestic or foreign, that (i) challenges the
exercise of Warrants pursuant to the Exercise Offer or otherwise relates in
any manner to the Exercise Offer, (ii) otherwise could materially adversely
affect the business, properties, assets, stock ownership, liabilities,
financial condition, operations, results of operations or prospects of the
Company, or (iii) in the case of any of the foregoing existing at the time
of the commencement of the Exercise Offer, any development shall have
occurred that the Company, in its sole judgment, determines to be adverse;
or
(d) any action shall have been taken or any statute, rule, regulation or
order shall have been proposed, enacted, promulgated, enforced or deemed to
be applicable to the Exercise Offer by any court, government or
governmental agency or other regulatory or administrative authority,
domestic or foreign, which would or might prohibit, restrict or delay
consummation of the Exercise Offer or materially impair the contemplated
benefits to the Company of the Exercise Offer; or
(e) a tender or exchange offer with respect to some or all of the
Warrants and/or Common Stock, or a merger or acquisition proposal for the
Company, shall have been proposed, announced or made by any group or
person, or the Company shall enter into any agreement with respect to a
merger, other business
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<PAGE>
combination, disposition of assets other than in the ordinary course of
business or issuance of securities with any person;
which, in the sole judgment of the Company in any such case, and regardless
of the circumstances (including any action by the Company) giving rise to any
such condition, makes it inadvisable to proceed with the Exercise Offer or
with such acceptance for exercise.
All the foregoing conditions are for the sole benefit of the Company and may
be asserted by the Company regardless of the circumstances giving rise to such
condition (including any action or inaction by the Company) or may be waived
by the Company in whole or in part at any time and from time to time in its
sole discretion. The failure by the Company at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by the Company concerning the events
described herein will be final and binding.
FEES AND EXPENSES
The expenses of making the Exercise Offer to be incurred by the Company are
estimated to aggregate approximately $145,000.
In addition, upon any exercise of the Warrants, the Company may, under
certain conditions, become obligated to pay Blair a solicitation fee of 4% of
the aggregate Warrant exercise price, if (i) the market price of the Company's
Common Stock on the date the Warrants are exercised is greater than the then
exercise price of the Warrants; (ii) the exercise of the Warrants was
solicited by a member of the NASD as designated in writing on the Warrant
Certificate subscription form; (iii) the Warrants are not held in a
discretionary account; (iv) disclosure of compensation arrangements was made
both at the time of the offering and at the time of exercise of the Warrants;
and (v) the solicitation of exercise of the Warrant was not in violation of
Regulation M promulgated under the Exchange Act.
The Company will also reimburse brokerage houses and other custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses in
forwarding copies of this Exercise Offer/Prospectus to the beneficial owners
of Warrants held in their names or in forwarding exercise materials for their
customers.
TRANSFER AGENT AND WARRANT AGENT
American Stock Transfer & Trust Company, New York, New York, serves as
Transfer Agent for the shares of Common Stock and Warrant Agent for the
Warrants, and is acting as Warrant Agent in the Exercise Offer. The telephone
number of American Stock Transfer & Trust Company is 1-800-937-5449
(Reorganization Department). The address to which the Warrants, payments of
the exercise price of Warrants and Letters of Transmittal should be mailed or
delivered is: 40 Wall Street, 46th Floor, New York, New York 10005.
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PRICE RANGE OF SECURITIES
The Company's Common Stock, Class A Warrants and Class B Warrants have
traded separately on the Nasdaq Stock Market under the symbols CHAI, CHAIW and
CHAIZ, respectively, since September 1992. The following sets forth the
quarterly high and low sales price for the periods presented as reported by
the respective trading market.
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK WARRANTS WARRANTS
PRICE SALES SALES PRICE SALES PRICE
----------------- ----------------- -----------------
HIGH LOW HIGH LOW HIGH LOW
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Fiscal Year Ended
December 31, 1996......
Third Quarter......... $ 8 1/8 $ 6 $ 4 7/8 $ 3 $ 2 3/8 $ 1 3/8
Fourth Quarter........ 7 1/8 4 1/8 3 1/4 1 15/32 1 19/32 1
Fiscal Year Ended
December 31, 1997
First Quarter......... 7 3/16 3 1/4 3 1 3/8 1 5/16 5/8
Second Quarter........ 5 1/4 3 2 1/4 1 5/16 15/16 1/2
Third Quarter......... 5 1/8 3 1/8 2 15/16 1 1/4 1 3/8
Fourth Quarter........ 5 3/4 1 3/8 2 1/4 3/8 1 1/4
Fiscal Year Ending
December 31, 1998
First Quarter......... 2 1/32 1 1/8 5/8 3/16 1/4 1/16
Second Quarter........ 1 13/16 1 1/32 3/8 1/16 5/32 1/16
</TABLE>
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CAPITALIZATION
The following table sets forth the capitalization of the Company (i) as of
December 31, 1997, (ii) as of March 31, 1998, and (iii) pro forma as of March
31, 1998, to reflect the exercise of 100%, 75% and 50% of the Warrants
(including the Class B Warrants underlying the Class A Warrants) in the
Exercise Offer, and the application of the estimated net proceeds therefrom of
$5,005,000, $3,718,000, and $2,430,000, respectively. All share and dollar
amounts are expressed in thousands. This table should be read in conjunction
with the Financial Statements and the Notes thereto incorporated by reference
herein.
<TABLE>
<CAPTION>
ACTUAL
MARCH 31, PRO FORMA(2)(3) PRO FORMA(2)(4) PRO FORMA(2)(5)
1998 MARCH 31, 1998 MARCH 31, 1998 MARCH 31, 1998
--------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Stockholder's Equity:
Preferred stock, $.01
par value; shares
authorized--5,000;
none issued
Common Stock, $.001 par
value; shares
authorized--23,750;
issued and
outstanding--7,923(1);
12,691(3); 11,499(4)
and 10,307(5)......... $ 8 $ 13 $ 11 $ 10
Additional paid-in capi-
tal..................... 33,988 38,988 37,703 36,416
Accumulated deficit...... (29,494) (29,494) (29,494) (29,494)
-------- -------- -------- --------
Total shareholder's equi-
ty...................... $ 4,502 $ 9,507 $ 8,220 $ 6,932
======== ======== ======== ========
Net tangible book value
per share............... $ 0.57 $ 0.75 $ 0.71 $ 0.67
</TABLE>
- --------
(1) Excludes (i) 1,767,932 shares issuable upon the exercise of the 1,650,000
outstanding Class A Warrants, (ii) 1,232,195 shares issuable upon the
exercise of the 1,150,000 outstanding Class B Warrants, (iii) 1,767,932
shares issuable upon the exercise of the 1,650,000 Class B Warrants
underlying the Class A Warrants, (iv) 1,075,000 shares issuable upon
exercise of options which have been granted under the Plan, (v) 1,604,501
shares issuable upon exercise of options which have been granted outside
the Plan, and (vi) 200,000 shares issuable upon exercise of a warrant
granted to a former underwriter.
(2) Gives pro forma effect to the exercise of the Warrants in the Exercise
Offer net of (i) expenses of the offering estimated to be approximately
$145,000 and (ii) a fee which may become payable, under certain
conditions, to Blair equal to 4% of the aggregate Warrant price.
(3) Assumes exercise of 100% of the Warrants pursuant to the Exercise Offer.
(4) Assumes exercise of 75% of the Warrants pursuant to the Exercise Offer.
(5) Assumes exercise of 50% of the Warrants pursuant to the Exercise Offer.
24
<PAGE>
SUMMARY AND PRO FORMA FINANCIAL DATA
The summary and pro forma financial data set forth below are derived from,
and are qualified by reference to, the Financial Statements incorporated by
reference elsewhere in this Exercise Offer/Prospectus and should be read in
conjunction with those Financial Statements and the notes thereto. Except as
otherwise noted, all share and dollar amounts are expressed in thousands.
STATEMENT OF OPERATIONS DATA:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------ ----------------
1997 1996 1998 1997
----------- ----------- ------- -------
<S> <C> <C> <C> <C>
Revenues......................... $ 64 $ 155 $ 13 $ 9
Net (loss)....................... (7,666) (3,830) (1,663) (1,815)
Net(loss) per share--basic and
diluted......................... (0.97) (0.55) (0.21) (0.23)
Weighted average shares
outstanding..................... 7,919 6,976 7,923 7,915
</TABLE>
BALANCE SHEET DATA:
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA PRO FORMA
DECEMBER 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1998 1998(1)(2) 1998(1)(3) 1998(1)(4)
------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Working capital....... $ 5,975 $ 4,292 $ 9,297 $ 8,010 $ 6,722
Total assets.......... 7,786 6,175 11,180 9,893 8,605
Total liabilities..... 1,621 1,673 1,673 1,673 1,220
Accumulated deficit... (27,831) (29,494) (29,494) (29,494) (29,494)
Total stockholder's
equity............... 6,165 4,502 9,507 8,220 6,932
Book value per share.. 0.78 0.57 0.75 0.72 0.67
</TABLE>
- --------
(1) Gives pro forma effect of the exercise of Warrants in the Exercise Offer,
net of (i) expenses of the offering estimated to be approximately $145,000
and (ii) a fee which may, under certain conditions, become payable to
Blair equal to 4% of the aggregate Warrant exercise price.
(2) Assumes exercise of 100% of the Warrants pursuant to the Exercise Offer
(3)Assumes exercise of 75% of the Warrants pursuant to the Exercise Offer.
(4) Assumes exercise of 50% of the Warrants pursuant to the Exercise Officer.
DILUTION
The net tangible book value of the Company as of March 31, 1998 was
$4,502,000 or $.568 per share. Net tangible book value per share represents
the amount of total tangible assets less total liabilities of the Company,
divided by the number of shares of Common Stock outstanding. Assuming that
100%, 75% and 50% of the Warrants are exercised in the Exercise Offer, after
giving effect to the resulting sale of the 4,768,059, 3,576,044, or 2,384,030
shares of Common Stock, respectively (and after deduction of estimated
commissions and offering expenses), the pro forma net tangible book value of
the Company at March 31, 1998 would have been $9,552,000, $8,265,000, or
$6,977,000, respectively, or $.75, $.72, or $.67 per share, respectively,
based on a rounded per share offering price of $1.13. This represents an
immediate increase in such net tangible net book value of $.18, $.15, or $.11
per share, respectively, to existing stockholders and an immediate dilution of
$.38, $.41, or $.45 per share, respectively, to new investors purchasing
shares in this offering.
<TABLE>
<CAPTION>
PERCENTAGE OF
WARRANTS
EXERCISED IN THE
EXERCISE OFFER
-----------------
100% 75% 50%
----- ----- -----
<S> <C> <C> <C>
Assumed offering price ($1.125 per share)(1).................. $1.13 $1.13 $1.13
Net tangible book value before this offering.................. $0.57 $0.57 $0.57
Increase attributable to new investors........................ $0.18 $0.15 $0.11
Pro Forma net tangible book value after this offering......... $0.75 $0.72 $0.67
----- ----- -----
Dilution of net tangible book value to new investors.......... $0.38 $0.41 $0.45
===== ===== =====
</TABLE>
- --------
(1)For calculation purposes, the assumed offering price per share has been
rounded to $1.13.
25
<PAGE>
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company has authorized 23,750,000 shares of Common Stock. Immediately
prior to the Offering, there were 7,922,559 shares of Common Stock
outstanding. The holders of the Common Stock are entitled to one vote per
share with respect to all matters on which holders of the Common Stock are
entitled to vote.
Holders of the Common Stock have the right to dividends from funds legally
available therefor, when, as and if declared by the Board of Directors, are
entitled to share ratably in all of the assets of the Company available for
distribution to holders of shares of Common Stock and do not have preemptive,
subscription or conversion rights. There are no redemption or sinking fund
provisions for the benefit of the Common Stock in the Company's Restated
Certificate of Incorporation. All outstanding shares of Common Stock are, and
those shares of Common Stock offered hereby will be, validly issued, fully
paid and non-assessable.
WARRANTS
Warrants
The Company currently has 1,650,000 Class A Warrants outstanding and
1,150,000 Class B Warrants outstanding. Each Class A Warrant is currently
exercisable for 1.071474 shares of Common Stock and one Class B Warrant, and
each Class B Warrant is currently exercisable for 1.071474 shares of Common
Stock. For each Warrant exercised in the Exercise Offer the Company is
reducing the exercise price from $8.40 per Class A Warrant and $12.60 per
Class B Warrant to $1.205. The exercise price and the number of shares of
Common Stock underlying the Class A Warrants and Class B Warrants are subject
to further adjustment in accordance with their terms. Unless previously
redeemed, the Class A Warrants and Class B Warrants are exercisable at any
time until September 21, 1998, provided that at such time a current prospectus
relating to the underlying securities is then in effect and the underlying
securities are qualified for sale or exempt from qualification under
applicable state securities laws. The underlying securities are subject to
redemption as described below.
All of the Warrants are subject to redemption by the Company, upon 30 days'
written notice, at a price of $.05 per Warrant, if the average closing bid
price of the Common Stock for any 20 consecutive business days ending with the
date on which the notice of redemption is given shall have exceeded $12.60 per
share with respect to the Class A Warrants and $18.90 per share with respect
to the Class B Warrants, subject to adjustment. Holders of Warrants will
automatically forfeit their rights to purchase the shares of Common Stock
issuable upon exercise of such Warrants unless the Warrants are exercised
before the close of business on the business day immediately prior to the date
set for redemption. All of the outstanding Warrants of a class must be
redeemed if any of that class are redeemed. A notice of redemption shall be
mailed to each of the registered holders of the Warrants by first class,
postage prepaid, no earlier than the sixtieth nor later than the thirtieth day
before the date fixed for redemption. The notice of redemption shall specify
the redemption price, the date fixed for redemption, the place where the
Warrant certificates shall be delivered and the redemption price to be paid,
and the termination of the right to exercise the Warrants shall terminate at
5:00 p.m. (New York time) on the business day immediately preceding the date
fixed for redemption.
General
The Warrants contain provisions that protect the holders thereof against
dilution by adjustment of the exercise price in certain events, such as stock
dividends, stock splits, mergers, sale of substantially all of the Company's
assets, and for other extraordinary events.
The Company is not required to issue fractional shares of Common Stock, and
in lieu thereof will make a cash payment based upon the current market value
of such fractional shares. The Holder of the Warrants will not possess any
rights as a stockholder of the Company unless and until the Warrants are
exercised.
26
<PAGE>
PLAN OF DISTRIBUTION
The securities offered upon exercise of the Warrants are being offered
directly by the Company pursuant to the terms of the Warrants. No underwriter
is being utilized in connection with the Exercise Offer. Allen & Caron Inc. is
serving as Information Agent with respect to the Exercise Offer.
Pursuant to the terms of the agreements governing the Warrants, the Company
may become obligated, under certain conditions, to pay Blair a fee of 4% of
the Warrant exercise price, a portion of which may be reallowed to a
soliciting dealer who is a member of the National Association of Securities
Dealers, Inc. (the "NASD") for each Warrant exercised. Blair will not be
entitled to receive such compensation in any Warrant exercise transaction in
which (i) the market price of the Common Stock of the Company at the time of
exercise is lower than the exercise price of the Warrants; (ii) the Warrants
are held in any discretionary account; (iii) disclosure of compensation
arrangements is not made at the time of the original offering and at the time
of exercise; (iv) the exercise of the Warrants is unsolicited or solicited by
a person who is not a member of the NASD; or (v) the solicitation of exercise
of the Warrants was in violation of Regulation M promulgated under the
Exchange Act.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the securities
offered hereby have been passed upon for the Company by Graham & James LLP,
New York, New York. Irwin M. Rosenthal, a partner of Graham & James LLP, is a
stockholder and director of the Company and may be deemed to beneficially own
530,225 shares of Common Stock of the Company (including 100,000 shares
underlying currently exercisable options), of which 427,000 shares of Common
Stock are owned of record by a private company of which Mr. Rosenthal is an
officer, director and principal stockholder. Other attorneys associated with
Graham & James llp own less than one percent of the outstanding Common Stock
and Warrants.
EXPERTS
The financial statements of the Company included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, incorporated by
reference in this Exercise Offering/Prospectus, have been audited by Richard
A. Eisner & Company, LLP, independent auditors, as indicated in their report
with respect thereto, and are incorporated herein by reference in reliance
upon the report of said firm given upon their authority as experts in
accounting and auditing.
27
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFERING
OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THE EXERCISE
OFFER/PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY
UNDERWRITER. THIS EXERCISE OFFER/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF ANY OFFER TO BUY BY ANYONE ANY OF THE SECURITIES
COVERED BY THIS EXERCISE OFFER/PROSPECTUS IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
-------------------
TABLE OF CONTENTS
-------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Important.................................................................. 2
Available Information...................................................... 2
Documents Incorporated by Reference........................................ 3
Forward-Looking Information................................................ 4
Summary.................................................................... 5
The Company................................................................ 5
The Offering............................................................... 7
Risk Factors............................................................... 9
Use of Proceeds............................................................ 16
Terms of the Exercise Offer................................................ 16
Transfer Agent and Warrant Agent........................................... 22
Price Range of Securities.................................................. 23
Capitalization............................................................. 24
Summary and Pro Forma Financial Data....................................... 25
Dilution................................................................... 25
Description of Securities.................................................. 26
Plan of Distribution....................................................... 27
Legal Matters.............................................................. 27
Experts.................................................................... 27
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LIFE MEDICAL
SCIENCES, INC.
OFFER TO REDUCE THE EXERCISE PRICE
OF CLASS A WARRANTS AND CLASS B WARRANTS TO $1.205 PER WARRANT
FOR EXERCISES BEFORE 5:00 P.M. ON SEPTEMBER 21, 1998
ISSUANCE OF UP TO 4,768,059 SHARES
OF COMMON STOCK UNDERLYING CLASS A WARRANTS AND CLASS B WARRANTS (INCLUDING
CLASS B WARRANTS UNDERLYING CLASS A WARRANTS)
----------------
PROSPECTUS
----------------
, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
The following table sets forth the expenses expected to be incurred in
connection with the issuance and distribution of the securities being
registered.
<TABLE>
<S> <C>
Printing and Engraving........................................... $ 25,000
Legal Fees and Expenses.......................................... $ 60,000
Accounting Fees.................................................. $ 10,000
Information Agent Fees........................................... $ 45,000
Miscellaneous.................................................... $ 5,000
--------
Total........................................................ $145,000
========
</TABLE>
- --------
* Does not include a solicitation fee equal to 4% of the Warrant exercise
price which may become payable under certain conditions.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Section 145 of the Delaware General Corporation Law
(the "DGCL"), Article TENTH of the Registrant's Restated Certificate of
Incorporation, as amended (Exhibit 3.1 and 3.1(a)), Article VIII of the
Registrant's By-Laws (Exhibit 3.2) and the Indemnification Agreements entered
into with certain of the Registrant's directors and officers (Exhibit 10.5).
Section 145 of the DGCL generally provides that a corporation is empowered
to indemnify any person who is made a party to any threatened, pending or
completed action, suit or proceeding by reason of the fact that he is or was a
director, officer, employee or agent of the corporation or is or was serving,
at the request of the corporation, in any of such capacities of another
corporation or other enterprise, if such director, officer, employee or agent
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. This statute describes in detail the right of the Registrant to
indemnify any such person.
Article TENTH of the Restated Certificate of Incorporation of the Registrant
provides generally for mandatory indemnification of the directors and officers
of the Registrant to the fullest extent permitted under the DGCL and permits
indemnification for all other persons whom the Registrant is empowered to
indemnify under the DGCL.
Pursuant to Article VIII of the Registrant's By-Laws, the Registrant may
indemnify, to the fullest extent permitted by the DGCL, any person, including
officers and directors, with regard to any action or proceeding.
The Registrant has entered into an indemnification agreement with certain of
its directors and officers. Such agreement provides that the Registrant will
indemnify the indemnitee to the fullest extent permitted by applicable law
against expenses, including reasonable attorneys' fees, judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by him
in connection with any civil or criminal action or administrative proceeding
arising out of the performance of his duties as a director or officer of the
Registrant other than an action initiated by a director or officer. Such
indemnification is available if the indemnitee acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests
of the Registrant, and with respect to any criminal action, had no reasonable
cause to believe his conduct was unlawful.
Under such indemnification agreement, the entitlement of a director or
officer to indemnification is determined by a majority vote of a quorum of
disinterested directors, or if such quorum either is not obtainable
II-1
<PAGE>
or so directs, by independent counsel or by the stockholders or the
Registrant, as determined by such quorum of disinterested directors. Under
certain circumstances, a party to the indemnification agreement is
conclusively presumed to have met the applicable statutory standard of conduct
unless the Registrant's Board of Directors, stockholders or independent legal
counsel determine that the relevant standard has not been met. If a change of
control of the Registrant has occurred, the entitlement of such director or
officer to indemnification is determined by independent counsel selected by
such director or officer, unless such director or officer requests that either
the Board of Directors or the stockholders make such determination.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Registrant
pursuant to the foregoing provisions, the Registrant has been informed that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. See Item 17.
"Undertakings."
ITEM 16. EXHIBITS.
The following documents are filed as Exhibits to this Post-Effective
Amendment No. 1.
(a) Exhibits.
<TABLE>
<C> <S>
3.1 --Restated Certificate of Incorporation of Registrant, filed December
26, 1991, as amended.(1)
3.1(a) --Amendment to Restated Certificate of Incorporation, dated August 21,
1992.(1)
3.2 --By-Laws of Registrant.(1)
4.1 --Warrant Agreement dated September 22, 1992 by and among Registrant,
Blair and American Stock Transfer & Trust Company ("AST&T").(1)
4.2 --Warrant Agreement dated July 29, 1993 between Registrant and
AST&T.(2)
4.3 --Form of Amendment to Warrant Agreements between Registrant and
AST&T.*
5.1 --Opinion of Graham & James LLP regarding legality.*
10.1 --Amended and Restated 1992 Stock Option Plan of Registrant.(15)
10.2 --Agreement, dated June 14, 1991, between Registrant and Yissum
Research Development Company of the Hebrew University of Jerusalem
("Yissum").(1)
10.5 --Form of Indemnification Agreement entered into between Registrant
and certain officers and directors of Registrant.(3)
10.6 --Agreement, dated June 1991, between Registrant and the Technion
Research and Development Foundation, Ltd. (the "Technion") as
assigned by the Technion to Dimotech, Ltd.(1)
10.7 --Agreement, dated as of April 14, 1992, between Registrant and Mr.
Joel Gold.(1)
10.8 --Assignment of rights relating to a patent on wound dressing to
Registrant by Dimotech, Ltd.(4)
10.9 --Assignment of certain rights relating to the polymer technology to
Registrant by Yissum.(4)
10.10 --Supplemental Assignment of rights relating to the in-situ tissue
culturing technology to Registrant by the Technion.(5)
10.11 --Form of Non-Qualified Stock Option Agreement.(5)
10.12 --Form of Incentive Stock Option Agreement.(5)
10.13 --Asset Purchase Agreement between Registrant and MedChem Products,
Inc. dated as of July 29, 1994.(6)
10.14 --[Intentionally Omitted.]
10.15 --[Intentionally Omitted.]
10.16 --[Intentionally Omitted.]
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
10.19 --Agreement, dated as of February 3, 1994, between Registrant and
Dimotech, Ltd.(8)
10.20 --[Intentionally Omitted.]
10.21 --[Intentionally Omitted.]
10.22 --Agreement, dated as of February 1994, between Registrant and
Yissum.(8)
10.23 --[Intentionally Omitted.]
10.24 --Option Agreement, dated as of December 13, 1993, between Registrant
and Dimotech, Ltd.(8)
10.25 --Employment Agreement dated June 12, 1995 between Registrant and Eli
Pines, Ph.D.(9)
10.26 --[Intentionally Omitted.]
10.27 --Amendment No. 2 dated as of January 1, 1996 to the Agreement between
the Registrant and Yissum.(3)
10.28 --Agreement dated July 16, 1995 between the Registrant and Dimotech,
Ltd.(3)
10.29 --Amendment No. 2 dated February 11, 1996 to the Agreement between the
Registrant and Dimotech, Ltd.(3)
10.30 --Option Agreement dated March 21, 1995 between Registrant and Herbert
Moskowitz.(3)
10.31 --Option Agreement dated March 21, 1995 between Registrant and Irwin
Rosenthal.(3)
10.32 --Assignment of rights relating to a patent for treatment of Keloid
and Hypertrophic scars to Registrant from Dimotech, Ltd.(3)
10.35 --Warrant Agreement between Registrant and Wedbush Morgan Securities
("Wedbush").(14)
10.36 --Underwriting Agreement between Registrant and Wedbush.(14)
10.37 --Employment Agreement dated May 29, 1996 between Registrant and
Robert P. Hickey.(11)
10.38 --Employment Agreement dated May 30, 1996 between Registrant and Dr.
Herbert Moskowitz.(11)
10.39 --Lease Agreement dated August 13, 1996 between Registrant and Metro
Four Associates, LP, 8th Floor of 379 Thornall Street.(12)
10.41 --Option Agreement dated June 12, 1995 between Registrant and Eli
Pines, Ph.D.(13)
10.42 --[Intentionally Omitted.]
10.46 --[Intentionally Omitted.]
10.47 --[Intentionally Omitted.]
10.48 --Option Agreement dated August 15, 1996 between Registrant and Walter
R. Maupay.(13)
10.49 --Option Agreement dated March 5, 1997 between Registrant and Edward
A. Celano.(14)
10.50 --Amendment No. 3 dated as of October 1, 1996 to the Agreement between
the Registrant and Yissum.(16)
10.51 --Option Agreement dated June 3, 1997 between Registrant and Joel L.
Gold.(16)
10.52 --Option Agreement dated June 3, 1997 between Registrant and Coy
Eklund.(16)
10.53 --Option Agreement dated June 3, 1997 between Registrant and Herbert
Moskowitz.(16)
10.54 --Option Agreement dated June 3, 1997 between Registrant and Irwin M.
Rosenthal.(16)
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
10.55 --[Intentionally Omitted.]
10.56 --[Intentionally Omitted.]
10.57 --Option Agreement dated June 17, 1997 between Registrant and Robert
P. Hickey.(16)
10.58 --Option Agreement dated June 17, 1997 between Registrant and Eli
Pines.(16)
10.59 --Option Agreement dated June 17, 1997 between Registrant and Eli
Pines.(16)
10.60 --Option Agreement dated June 17, 1997 between Registrant and Robert
P. Hickey.(16)
10.61 --Option Agreement dated June 17, 1997 between Registrant and Robert
P. Hickey.(16)
10.62 --Option Agreement dated June 17, 1997 between Registrant and Eli
Pines.(16)
23.1 --Consent of Graham & James LLP (included in Exhibit 5.1).
23.2 --Consent of Richard A. Eisner & Company, LLP.*
24.1 --Power of Attorney (included on signature page hereto).*
99.1 --Letters of Transmittal and other documents.*
</TABLE>
- --------
(*) Filed herewith.
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (File No. 33-49008) declared effective on September 22, 1992.
(2) Incorporated by reference to Registrant's Registration Statement on Form
S-1 (File No. 33-64908) declared effective on July 29, 1993.
(3) Incorporated by reference to Registrant's Registration Statement on Form
S-1 (File No. 33-02588) declared effective on May 3, 1996.
(4) Incorporated by reference to the Registrant's report on Form 10-Q for the
quarter ended September 30, 1992.
(5) Incorporated by reference to the Registrant's report on Form 10-K for the
year ended December 31, 1993.
(6) Incorporated by reference to the Registrant's report on Form 8-K filed by
the Company on August 12, 1994.
(7) [Intentionally Omitted.]
(8) Incorporated by reference to the Registrant's report on Form 10-K for the
year ended December 31, 1994.
(9) Incorporated by reference to the Registrant's report on Form 10-Q for the
quarter ended June 30, 1995.
(10) [Intentionally Omitted.]
(11) Incorporated by reference to the Registrant's report on Form 10-Q for the
quarter ended June 30, 1996.
(12) Incorporated by reference to the Registrant's report on Form 10-Q for the
quarter ended September 30, 1996.
(13) Incorporated by reference to the Registrant's Registration Statement on
Form S-3 (File No. 333-19195) declared effective on January 3, 1997.
(14) Incorporated by reference to the Registrant's report on Form 10-K for the
year ended December 31, 1996.
(15) Incorporated by reference to the Registrant's report on Form 10-Q for the
quarter ended June 30, 1997.
(16) Incorporated by reference to the Registrant's report on Form 10-K for the
year ended December 31, 1997.
II-4
<PAGE>
(b) Financial Statement Schedules.
All schedules have been omitted because they are not required or not
material or because the required information is included in the financial
statements included elsewhere herein.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the Exchange
Act that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(b) (2) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 a Post-Effective Amendment to its
Registration Statements and has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Edison,
State of New Jersey, on July 29, 1998.
LIFE MEDICAL SCIENCES, INC.
(Registrant)
/s/ Robert P. Hickey
By: _________________________________
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below hereby severally constitutes and appoints Herbert Moskowitz and Robert
P. Hickey and each of them, his true and lawful attorneys-in-fact and agents,
each acting alone, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement on Form S-3 and all documents relating thereto, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, each acting alone full power and authority to do and perform
each and every act and thing necessary or advisable to be done in and about
the premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement, or amendment thereto, has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Robert P. Hickey July 29, 1998
- ------------------------------------
Robert P. Hickey President, Chief Executive
Officer and Director
(principal executive
officer)
/s/ Drew Karazin July 29, 1998
- ------------------------------------
Drew Karazin Vice President and Chief
Financial Officer
(principal financial and
accounting officer)
/s/ Herbert Moskowitz
- ------------------------------------
Herbert Moskowitz Director July 29, 1998
/s/ Walter Maupay July 29, 1998
- ------------------------------------
Walter Maupay Director
/s/ Joel L. Gold July 29, 1998
- ------------------------------------
Joel L. Gold Director
/s/ Irwin M. Rosenthal July 29, 1998
- ------------------------------------
Irwin M. Rosenthal Director
/s/ Edward Celano July 29, 1998
- ------------------------------------
Edward Celano Director
/s/ Coy Eklund July 29, 1998
- ------------------------------------
Coy Eklund Director
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- --------
<C> <S> <C>
3.1 --Restated Certificate of Incorporation of Registrant,
filed December 26, 1991, as amended.(1)
3.1(a) --Amendment to Restated Certificate of Incorporation,
dated August 21, 1992.(1)
3.2 --By-Laws of Registrant.(1)
4.1 --Warrant Agreement dated September 22, 1992 by and
among Registrant, Blair and American Stock Transfer &
Trust Company ("AST&T").(1)
4.2 --Warrant Agreement dated July 29, 1993 between
Registrant and AST&T.(2)
4.3 --Form of Amendment to Warrant Agreements between
Registrant and AST&T.*
5.1 --Opinion of Graham & James LLP regarding legality.*
10.1 --Amended and Restated 1992 Stock Option Plan of
Registrant.(15)
10.2 --Agreement, dated June 14, 1991, between Registrant
and Yissum Research Development Company of the Hebrew
University of Jerusalem ("Yissum").(1)
10.5 --Form of Indemnification Agreement entered into
between Registrant and certain officers and directors
of Registrant.(3)
10.6 --Agreement, dated June 1991, between Registrant and
the Technion Research and Development Foundation, Ltd.
(the "Technion") as assigned by the Technion to
Dimotech, Ltd.(1)
10.7 --Agreement, dated as of April 14, 1992, between
Registrant and Mr. Joel Gold.(1)
10.8 --Assignment of rights relating to a patent on wound
dressing to Registrant by Dimotech, Ltd.(4)
10.9 --Assignment of certain rights relating to the polymer
technology to Registrant by Yissum.(4)
10.10 --Supplemental Assignment of rights relating to the in-
situ tissue culturing technology to Registrant by the
Technion.(5)
10.11 --Form of Non-Qualified Stock Option Agreement.(5)
10.12 --Form of Incentive Stock Option Agreement.(5)
10.13 --Asset Purchase Agreement between Registrant and
MedChem Products, Inc. dated as of July 29, 1994.(6)
10.14 --[Intentionally Omitted.]
10.15 --[Intentionally Omitted.]
10.16 --[Intentionally Omitted.]
10.19 --Agreement, dated as of February 3, 1994, between
Registrant and Dimotech, Ltd.(8)
10.20 --[Intentionally Omitted.]
10.21 --[Intentionally Omitted.]
10.22 --Agreement, dated as of February 1994, between
Registrant and Yissum.(8)
10.23 --[Intentionally Omitted.]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- --------
<C> <S> <C>
10.24 --Option Agreement, dated as of December 13, 1993,
between Registrant and Dimotech, Ltd.(8)
10.25 --Employment Agreement dated June 12, 1995 between
Registrant and Eli Pines, Ph.D.(9)
10.26 --[Intentionally Omitted.]
10.27 --Amendment No. 2 dated as of January 1, 1996 to the
Agreement between the Registrant and Yissum.(3)
10.28 --Agreement dated July 16, 1995 between the Registrant
and Dimotech, Ltd.(3)
10.29 --Amendment No. 2 dated February 11, 1996 to the
Agreement between the Registrant and Dimotech, Ltd.(3)
10.30 --Option Agreement dated March 21, 1995 between
Registrant and Herbert Moskowitz.(3)
10.31 --Option Agreement dated March 21, 1995 between
Registrant and Irwin Rosenthal.(3)
10.32 --Assignment of rights relating to a patent for
treatment of Keloid and Hypertrophic scars to
Registrant from Dimotech, Ltd.(3)
10.35 --Warrant Agreement between Registrant and Wedbush
Morgan Securities ("Wedbush").(14)
10.36 --Underwriting Agreement between Registrant and
Wedbush.(14)
10.37 --Employment Agreement dated May 29, 1996 between
Registrant and Robert P. Hickey.(11)
10.38 --Employment Agreement dated May 30, 1996 between
Registrant and Dr. Herbert Moskowitz.(11)
10.39 --Lease Agreement dated August 13, 1996 between
Registrant and Metro Four Associates, LP, 8th Floor of
379 Thornall Street.(12)
10.41 --Option Agreement dated June 12, 1995 between
Registrant and Eli Pines, Ph.D.(13)(16)
10.42 --[Intentionally Omitted.]
10.46 --[Intentionally Omitted.]
10.47 --[Intentionally Omitted.]
10.48 --Option Agreement dated August 15, 1996 between
Registrant and Walter R. Maupay.(13)
10.49 --Option Agreement dated March 5, 1997 between
Registrant and Edward A. Celano.(14)
10.50 --Amendment No. 3 dated as of October 1, 1996 to the
Agreement between the Registrant and Yissum.(16)
10.51 --Option Agreement dated June 3, 1997 between
Registrant and Joel L. Gold.(16)
10.52 --Option Agreement dated June 3, 1997 between
Registrant and Coy Eklund.(16)
10.53 --Option Agreement dated June 3, 1997 between
Registrant and Herbert Moskowitz.(16)
10.54 --Option Agreement dated June 3, 1997 between
Registrant and Irwin M. Rosenthal.(16)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- --------
<C> <S> <C>
10.55 --[Intentionally Omitted.]
10.56 --[Intentionally Omitted.]
10.57 --Option Agreement dated June 17, 1997 between
Registrant and Robert P. Hickey.(16)
10.58 --Option Agreement dated June 17, 1997 between
Registrant and Eli Pines.(16)
10.59 --Option Agreement dated June 17, 1997 between
Registrant and Eli Pines.(16)
10.60 --Option Agreement dated June 17, 1997 between
Registrant and Robert P. Hickey.(16)
10.61 --Option Agreement dated June 17, 1997 between
Registrant and Robert P. Hickey.(16)
10.62 --Option Agreement dated June 17, 1997 between
Registrant and Eli Pines.(16)
23.1 --Consent of Graham & James LLP (included in Exhibit
5.1).
23.2 --Consent of Richard A. Eisner & Company, LLP.*
24.1 --Power of Attorney (included on signature page
hereto).*
99.1 --Letters of Transmittal and other documents.*
</TABLE>
- --------
(*) Filed herewith.
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (File No. 33-49008) declared effective on September 22, 1992.
(2) Incorporated by reference to Registrant's Registration Statement on Form
S-1 (File No. 33-64908) declared effective on July 29, 1993.
(3) Incorporated by reference to Registrant's Registration Statement on Form
S-1 (File No. 33-02588) declared effective on May 3, 1996.
(4) Incorporated by reference to the Registrant's report on Form 10-Q for the
quarter ended September 30, 1992.
(5) Incorporated by reference to the Registrant's report on Form 10-K for the
year ended December 31, 1993.
(6) Incorporated by reference to the Registrant's report on Form 8-K filed by
the Company on August 12, 1994.
(7) [Intentionally Omitted.]
(8) Incorporated by reference to the Registrant's report on Form 10-K for the
year ended December 31, 1994.
(9) Incorporated by reference to the Registrant's report on Form 10-Q for the
quarter ended June 30, 1995.
(10) [Intentionally Omitted.]
(11) Incorporated by reference to the Registrant's report on Form 10-Q for the
quarter ended June 30, 1996.
(12) Incorporated by reference to the Registrant's report on Form 10-Q for the
quarter ended September 30, 1996.
(13) Incorporated by reference to the Registrant's Registration Statement on
Form S-3 (File No. 333-19195) declared effective on January 3, 1997.
(14) Incorporated by reference to the Registrant's report on Form 10-K for the
year ended December 31, 1996.
(15) Incorporated by reference to the Registrant's report on Form 10-Q for the
quarter ended June 30, 1997.
(16) Incorporated by reference to the Registrant's report on Form 10-K for the
year ended December 31, 1997.
<PAGE>
EXHIBIT 4.3
AMENDMENT TO WARRANT AGREEMENTS
This AMENDMENT (this "Amendment") is an amendment to that certain Warrant
Agreement, dated as of September 22, 1992, by and among Life Medical Sciences,
Inc. (the "Company"), American Stock Transfer & Trust Company, as Warrant Agent
(the "Warrant Agent"), and D.H. Blair Investment Banking Corp. ("Blair") and to
that certain Warrant Agreement dated as of July 29, 1993 by and among the
Company and the Warrant Agent (collectively, such agreements shall be referred
to herein as the "Warrant Agreements"). Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Warrant Agreements.
W I T N E S S E T H:
- - - - - - - - - --
WHEREAS, the Warrant Agreements govern the terms of the Company's
outstanding Class A and Class B Warrants (collectively referred to, in addition
to the Class B Warrants underlying the Class A Warrants, herein as the
"Warrants"); and
WHEREAS, the Company intends to effectuate an exercise offer (the "Exercise
Offer"), pursuant to which the Company will reduce the exercise price of the
Class A Warrants from $8.40 per share of Common Stock to approximately $1.205
per Warrant and reduce the exercise price of the Class B Warrants from $12.60
per share of Common Stock to approximately $1.205 per Warrant for a certain
period of time ending at least 20 business days from commencement of the
Exercise Offer (the "Offer Expiration Date");
WHEREAS, the Company and the Warrant Agent deem the Exercise Offer to be
desirable and to not adversely affect the interests of the holders of Warrant
Certificates; and
WHEREAS, the Company and the Warrant Agent desire to enter into this
Amendment in order to amend the Warrant Agreements as required in order for the
Company to effectuate the Exercise Offer.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto hereby amend the Warrant Agreements as
follows:
SECTION 1. Amendment to Exercise Price of the Warrants. During the
-------------------------------------------
Exercise Offer, the exercise price of the Warrants shall be $1.205 per Warrant;
provided, however, that the Company reserves the right, in its sole discretion,
- -------- -------
to adjust such exercise price, but in no event shall such exercise price be
greater than the exercise price of the Warrants as in effect prior to the date
of the Exercise Offer.
SECTION 2. Amendment to Terms of Exercise. During the Exercise Offer,
------------------------------
Section 4(a) of each of the Warrant Agreements shall be amended in its entirety,
so that any Registered Holder desiring to exercise his Warrants during the
Exercise Offer shall only be entitled to do so in accordance with the terms of
the Exercise Offer, as set forth in the Exercise Offer/Prospectus and Letter of
Transmittal included as an exhibit thereto.
SECTION 3. No Other Modifications. Except as specifically provided in
----------------------
this Amendment and as otherwise necessary to make the terms of the Warrant
Agreements consistent with the amendments thereto effected hereby, the Warrant
Agreements shall not be changed in any respect and shall continue in full force
and effect in accordance with its terms (other than as modified hereby).
SECTION 4. Counterparts. This Amendment may be executed in several
------------
counterparts, which taken together shall constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of July ___, 1998.
LIFE MEDICAL SCIENCES, INC.
By:
Robert P. Hickey, Chief Executive Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
Authorized Officer
<PAGE>
EXHIBITS 5.1
July 30, 1998
Life Medical Sciences, Inc.
379 Thornall Street
Edison, New Jersey 08837
Ladies and Gentlemen:
Reference is made to Post-Effective Amendment No. 1 on Form S-3 (the
"Amendment") to the Registration Statements, on Form S-1, File Nos. 33-49008,
and 33-64908, filed by Life Medical Sciences, Inc. (the "Company") with the
Securities and Exchange Commission relating to (a) the issuance and sale by
the Company of an aggregate of 4,768,059 shares of its common stock, $.001 par
value per share (the "Common Stock"), issuable upon exercise of (i) 1,650,000
outstanding Redeemable Class A Warrants (the "Class A Warrants"), (ii) 1,650,000
Redeemable Class B Warrants (the "Class B Warrants") underlying the Class A
Warrants, and (iii) 1,150,000 outstanding Class B Warrants and (b) the offer
(the "Exercise Offer") by the Company to holders of all of its Class A Warrants
and Class B Warrants to reduce the exercise prices of such Warrants for a
certain period of time following the effective date of the Amendment. The Class
A Warrants and Class B Warrants (collectively, the "Warrants") were issued
pursuant to a warrant agreement, dated September 22, 1992, among the Company,
D.H. Blair Investment Banking Corp. and American Stock Transfer & Trust Company
("AST&T") a warrant agreement, dated July 29, 1993, between the Company and
AST&T, and an amendment to such warrant agreements, dated as of the date hereof,
between the Company and AST&T (collectively, the "Warrant Agreements").
As counsel to the Company, we have examined such corporate records,
documents, agreements and such matters of law as we have considered necessary or
appropriate for the purpose of this opinion. Upon the basis of such examination,
we advise you that in our opinion the Common Stock issuable upon exercise of the
Warrants, if and when paid for and issued upon exercise of the Warrants in
accordance with the terms of the Warrant Agreements, will be legally issued,
fully paid and nonassessable.
We are members of the New York Bar, and the opinion expressed herein is
limited to questions arising under the laws of the State of New York, the
General Corporation Law of the State of Delaware and the Federal law of the
United States, and we disclaim any opinion whatsoever with respect to matters
governed by the laws of any other jurisdiction.
We consent to the filing of this opinion as an exhibit to the Amendment and
to the references to this firm under the caption "Legal Matters" in the
Prospectus which is a part of the Amendment.
Very truly yours,
GRAHAM & JAMES LLP
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Post-Effective
Amendment No. 1 on Form S-3 to the Registration Statements on Form S-1
(Registration Nos. 33-49008 and 33-64908) of our report dated February 12, 1998
on our audit of the financial statements of Life Medical Sciences, Inc. for the
year ended December 31, 1997 included in the 1997 annual report on Form 10-K. We
also consent to the reference to our firm under the caption "Experts".
/s/ Richard A. Eisner & Company, LLP
New York, New York
July 29, 1998
<PAGE>
Exhibit 99.1
LETTER OF TRANSMITTAL
Relating To
Class A Warrants
(and Class B Warrants
Underlying Class A Warrants)
LIFE MEDICAL SCIENCES, INC.
OFFER TO REDUCE THE EXERCISE PRICE
OF CLASS A WARRANTS AND
CLASS B WARRANTS TO $1.205 PER WARRANT
FOR EXERCISES BEFORE 5:00 P.M. ON
SEPTEMBER 21, 1998
THE OFFER WILL EXPIRE ON SEPTEMBER 21, 1998, AT 5:00 P.M., NEW YORK CITY TIME,
UNLESS EXTENDED. WITHDRAWAL RIGHTS WILL ALSO EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON SEPTEMBER 21, 1998. IN ADDITION, THE CLASS A WARRANTS AND CLASS B
WARRANTS WILL CEASE TO BE EXERCISABLE ON SEPTEMBER 21, 1998. ON SUCH DATE, AT
5:00 P.M., NEW YORK CITY TIME, ALL CLASS A WARRANTS AND CLASS B WARRANTS NOT
EXERCISED PRIOR TO THAT TIME WILL EXPIRE AT SUCH TIME.
The Information Agent for the Offer is:
Allen & Caron Inc.
Telephone: 1 (800) 452-1346 (8:30 a.m. to 5:30 p.m. PDT)
Address: 3 Imperial Promenade
Suite 850
Santa Ana, California 92707
Attention: Lynn Johnson
The Warrant Agent for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
1-(800) 937-5449 (toll free)
<TABLE>
<S> <C>
By Mail or Hand Delivery: By Facsimile
(718) 236-2976
Reorganization Department Confirm Facsimile
40 Wall Street by Telephone:
46th Floor 1-(800) 937-5449 (toll free)
New York, NY 10005
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders (the "Holders") of
Class A Warrants (defined below) either if certificates for Class A Warrants are
to be forwarded herewith or, unless an Agent's Message (as defined in the
Exercise Offer/Prospectus, dated July ___,
<PAGE>
1998 and filed with the Securities and Exchange Commission (the "Exercise
Offer/Prospectus")) is utilized, if exercises are to be made by book entry
transfer to an account maintained by American Stock Transfer & Trust Company
(the "Warrant Agent") at the Depository Trust Company ("DTC"), Pacific
Securities Depository Trust Company ("PSDTC") or Philadelphia Depository Trust
Company ("PDTC") (each a "Book-Entry Transfer Facility" and collectively
referred to as the "Book-Entry Transfer Facilities"), pursuant to the procedures
set forth under the caption "Terms of the Exercise Offer Procedure for
Exercising Warrants-Book-Entry Exercise" in the Exercise Offer/Prospectus.
Holders who exercise Class A Warrants by book-entry transfer are referred to
herein as "Book-Entry Holders."
Holders of Class A Warrants whose certificates for such Class A Warrants
(the "Warrant Certificates") are not immediately available or who cannot deliver
their Warrant Certificates, together with a certified or bank check payable to
"Life Medical Sciences, Inc." in the amount of $1.205 per Class A Warrant
exercised in the Exercise Offer and all other required documents to the Warrant
Agent on or prior to the Expiration Date or who cannot complete the procedures
for book-entry transfer on a timely basis, must exercise their Class A Warrants
according to the guaranteed delivery procedures set forth under the caption
"Terms of the Exercise Offer-Procedures for Exercising Warrants-Guaranteed
Delivery" in the Exercise Offer/Prospectus. See Instruction 2. DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE
WARRANT AGENT.
NOTE: SIGNATURES MUST BE PROVIDED ON PAGE __. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
[ ] CHECK HERE IF CLASS A WARRANTS ARE BEING EXERCISED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE WARRANT AGENT WITH A BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Exercising Institution:
-------------------------------------------------
- --------------------------
Check Box of Book-Entry Transfer Facility:
[ ] The Depository Trust Company
[ ] Pacific Securities Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number: Transaction Code Number:
------------------ ----------------------
[ ] CHECK HERE IF CLASS A WARRANTS ARE BEING EXERCISED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE WARRANT AGENT AND COMPLETE THE
FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
------------------------------------------------
<PAGE>
Window Ticket Number (if any):
--------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-----------------------------
Name of Institution which Guaranteed Delivery:
----------------------------------
DESCRIPTION OF CLASS A WARRANTS (AND UNDERLYING CLASS B WARRANTS) EXERCISED
- --------------------------------------------------------------------------------
Name(s) and Address(es) of Class A Warrants (and
Registered Holder(s) Underlying Class B Warrants)
(Please fill in, if blank) Exercised
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Certificate Total Number of Number of Number of
Number(s)** Class A Warrants Class A Warrants Underlying Class B
Represented by Exercised*** Warrants) Exercised**
Certificate(s)**
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Total Warrants
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* If left blank, stock will be issued to name and address as they appear on
the warrant certificate or in the books of the Warrant Agent.
** Need not be completed by holders tendering book-entry transfer.
*** Unless otherwise indicated, the holder will be deemed to have exercised
the full number of Class A Warrants (and Underlying Class B Warrants)
represented by the tendered certificates. See Instruction 4.
[ ] Check here if inadequate space and enclose additional sheets, in accordance
with Instruction 3.
<PAGE>
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby exercises the Class A redeemable stock purchase
warrants (the "Class A Warrants"), and if applicable, the Class B Warrants
underlying the Class A Warrants (the "Underlying Class B Warrants")
(collectively, the "Warrants"), of Life Medical Sciences, Inc. a Delaware
corporation (the "Company"), as described on page 3 of this Letter of
Transmittal, at an exercise price of $1.205 per Warrant, upon the terms
and subject to the conditions set forth in the Exercise Offer/Prospectus, dated
_____________, 1998 (the "Exercise Offer/Prospectus"), receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which, together with the
Exercise Offer/Prospectus, constitutes the "Offer"). The undersigned understands
that upon exercise of each Class A Warrant the undersigned shall receive
1.071474 shares of the Company's common stock, par value $0.001 per share (the
"Common Stock") and one Underlying Class B Warrant, and that upon exercise of
each Underlying Class B Warrant the undersigned shall receive one share of
Common Stock.
Subject to, and effective upon, acceptance for exercise of the Class B
Warrants included herewith in accordance with the terms and subject to the
conditions of the Offer, the undersigned hereby (i) exercises and transfers to,
or upon the order of, the Company all right, title and interest in, and to all
the Warrants that are being exercised hereby, and (ii) constitutes and
irrevocably appoints the Warrant Agent the true and lawful agent, attorney-
in-fact and proxy of the undersigned to the full extent of the undersigned's
rights with respect to such Warrants with full power of substitution and
resubstitution (such power of attorney and proxy being deemed to be an
irrevocable power coupled with an interest), to (a) deliver Certificates for the
Class A Warrants (the "Warrant Certificates") and transfer ownership of such
Class A Warrants and the Underlying Class B Warrants, if applicable, on the
account books maintained by the Book-Entry Transfer Facilities, together with
all accompanying evidences of transfer and authenticity, to or upon the order of
the Company, upon issuance by the Warrant Agent, as the undersigned's agent, of
the applicable Underlying Stock, (b) present such Warrants for transfer, and
effect such transfer, on the books of the Company, and (c) receive all benefits
and otherwise exercise all rights of beneficial ownership of such Warrants, all
in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undesigned has full
power and authority to exercise, assign and transfer the Warrants exercised
hereby and that, when the same are accepted for exercise by the Company, the
Company will acquire good, marketable and unencumbered title thereto, free and
clear of all liens, restrictions, charges and encumbrances and the same will not
be subject to any adverse claim. The undersigned, upon request, will execute and
deliver any additional documents deemed by the Warrant Agent or the Company to
be necessary or desirable to complete the exercise, assignment and transfer of
the Warrants exercised hereby. In addition, if there shall occur any anti-
dilution adjustment pursuant to the terms of the Warrants, or other adjustment
affecting the exercise price or the number of shares of Common Stock obtainable
upon exercise of the Warrants, the Company, in its sole discretion, may make
such adjustments in the exercise price of the Warrants or the securities
issuable upon exercise thereof as it deems appropriate.
All authority herein conferred or herein agreed to be conferred shall not
be affected by, and shall survive, the death or incapacity of the undersigned
and any obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, legal
<PAGE>
representatives, successors and assigns of the undersigned. Except as stated in
the Exercise Offer/Prospectus, this exercise is irrevocable.
The undersigned understands that exercises of Warrants pursuant to any one
of the procedures described under the caption "Terms of the Exercise Offer-
Procedures for Exercising Warrants" in the Exercise Offer/Prospectus and in the
Instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Issuance Instructions,"
please issue the applicable Underlying Stock and/or return any Warrant
Certificates not exercised or accepted for exercise in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the applicable Underlying Stock and/or return any
Warrant Certificates not exercised or accepted for exercise (and accompanying
documents, as appropriate) to the undersigned at the address shown below the
undersigned's signature. In the event that both the "Special Issuance
Instructions" and the "Special Delivery Instructions" are completed, please
issue the applicable Underlying Stock and/or return any Warrant Certificates not
exercised or accepted for exercise in the name(s) of, and deliver said
applicable Underlying Stock and/or return certificates to, the person or persons
so indicated. Holders exercising Warrants by book-entry transfer may request
that any Warrants not accepted for exercise be returned by crediting such
account maintained at such Book-Entry Transfer Facility as such Holder may
designate by making an appropriate entry under "Special Issuance Instructions."
The undersigned recognizes that the Company has no obligation pursuant to the
"Special Issuance Instructions" to issue any applicable Underlying Stock in the
name of a different registered Holder if the Company does not accept for
exercise any of such Warrants.
<TABLE>
<CAPTION>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7)
<S> <C>
To be completed ONLY if Warrant Certificates not To be completed ONLY if Warrant Certificates not
exercised or not accepted for exercise and/or the exercised for exercise and/or the applicable
applicable Underlying Stock are to be issued in Underlying Stock are to be sent to someone other
the name of someone other than the undersigned, or than the undersigned, or to the undersigned other
if Warrants exercised by book-entry than that designated on the front cover.
transfer which are not accepted for exercise are
to be returned by credit to an account maintained
at a Book-Entry Transfer Facility other than that
designated on the front cover.
Issue Underlying Stock and/or certificates to: Mail Underlying Stock and/or certificates to:
Name: ______________________________ Name: __________________________
(PLEASE PRINT) (PLEASE PRINT)
Address: ___________________________ Address: _______________________________
____________________________________ _______________________________________
____________________________________ _______________________________________
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
(TAXPAYER IDENTIFICATION OR (TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NO.) SOCIAL SECURITY NO.)
- ------------------------------------------------------ ------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGN HERE
<S> <C>
X......................................................................................
X......................................................................................
SIGNATURE(S) OF OWNER(S)
Dated:..........................................................................., 1998
Name(s)................................................................................
.......................................................................................
(PLEASE PRINT)
Capacity (full title)..................................................................
Address................................................................................
.....................................................................................
(INCLUDE ZIP CODE)
Area Code and Telephone No.............................................................
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
certificate(s) for Class A Warrants or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary or
representative capacity, please set forth full title and see Instruction 5.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature...................................................................
Name...................................................................................
Title..................................................................................
Address................................................................................
Area Code and Telephone No.............................................................
Dated......................................................................... , 1998
</TABLE>
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Class A Warrants) of the Warrants exercised
hereby, unless such holder has completed the box entitled "Special Issuance
Instructions" on page 5 hereof, or (ii) if such Warrants are exercised for the
account of a firm that is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agent's Medallion Program (an "Eligible Institution"). In all other
cases, all signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Warrant Certificates are to be forwarded
herewith or, unless an Agent's Message (as defined in the Exercise
Offer/Prospectus) is utilized, if exercises of Warrants are to be made
pursuant to the procedures for exercise by book-entry set forth under the
caption "Terms of the Exercise Offer-Procedures for Exercising Warrants-Book-
Entry Exercise" in the Exercise Offer/Prospectus. Warrant Certificates or timely
confirmation (a "Book-Entry Confirmation") of a book-entry exercise of such
Warrants in the Warrant Agent's account at a Book-Entry Transfer Facility, as
well as a Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or an Agent's Message in
the case of a book-entry delivery, together with a certified or bank check
payable to "Life Medical Sciences, Inc." in the amount of $1.205 per Warrant
exercised in the Offer (including the Underlying Class B Warrants) and any other
documents required by the Letter of Transmittal, must be received by the Warrant
Agent at its address set forth herein prior to the Expiration Date. Holders
whose Warrant Certificates are not immediately available or who cannot deliver
their Warrant Certificates, together with a certified or bank check payable to
"Life Medical Sciences, Inc." in the amount of $1.205 per Warrant exercised in
the Offer and all other required documents to the Warrant Agent prior to the
Expiration Date or who cannot complete the procedures for delivery by book-entry
exercise on a timely basis may exercise their Warrants by properly completing
and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed
delivery procedures set forth under the caption "Terms of the Exercise
Offer-Procedures for Exercising Warrants-Guaranteed Delivery" in the Exercise
Offer/Prospectus. Pursuant to such procedure: (i) such exercise must be made by
or through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by the
Company, must be received by the Warrant Agent on or prior to the Expiration
Date; and (iii) the Warrant Certificates (or a Book-Entry Confirmation)
representing all exercised Class A Warrants with a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry delivery, an Agent's
Message), together with a certified or bank check payable to "Life Medical
Sciences, Inc." in the amount of $1.205 per Warrant exercised in the Offer
(including the Underlying Class B Warrants) and any other documents required by
the Letter of Transmittal, must be received by the Warrant Agent within five New
York Stock Exchange, Inc. ("NYSE") trading days after the date of execution of
such Notice of Guaranteed Delivery, as provided under the caption "Terms of the
Exercise Offer-Procedures for Exercising Warrants-Guaranteed Delivery" in the
Exercise Offer/Prospectus. If Warrant Certificates are forwarded separately to
the Warrant Agent, a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) must accompany each such delivery.
<PAGE>
The method of delivery of Warrant Certificates, the Letter of Transmittal
and all other required documents is at the option and sole risk of the
exercising Holder and the delivery will be deemed made only when actually
received by the Warrant Agent. If delivery is by mail, registered mail with
return receipt requested, properly insured, is recommended. In all cases,
sufficient time should be allowed to ensure timely delivery.
No alternative, conditional or contingent exercise will be accepted. All
exercising Holders, by execution of this Letter of Transmittal or facsimile
hereof, waive any right to receive any notice of the acceptance of their
Warrants for exercise.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
Warrant Certificate numbers and/or the number of Warrants and any other required
information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
4. PARTIAL EXERCISES. (Not applicable to Holders who exercise by
book-entry transfer.) If fewer than all Class A Warrants (and Underlying Class B
Warrants) evidenced by any certificate submitted are to be exercised, fill in
the number of Class A Warrants and Class B Warrants which are to be exercised in
the box entitled either "Number of Class A Warrants Exercised" or Number of
Class B Warrants Exercised," as appropriate. In such case, new certificate(s)
for the remainder of the Class A Warrants that were evidenced by the Holder's
old certificate(s) will be sent to such Holder, unless otherwise provided in the
appropriate box marked "Special Issuance Instructions" and/or "Special Delivery
Instructions" on this Letter of Transmittal, as soon as practicable after the
Expiration Date. All Class A Warrants and Underlying Class B Warrants
represented by Warrant Certificates delivered to the Warrant Agent will be
deemed to have been exercised unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL. If this Letter of Transmittal is
signed by the registered holder(s) of the Class A Warrants exercised hereby, the
signatures must correspond exactly with the name(s) as written on the face of
the Warrant Certificate(s), without alteration, enlargement or any change
whatsoever.
If any of the Class A Warrants exercised hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
If any exercised Class A Warrants are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of Warrant
Certificates.
If this Letter of Transmittal is signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and proper evidence satisfactory to the Company of their
authority so to act must be submitted along with this Letter of Transmittal.
When this Letter of Transmittal is signed by the registered owner(s) of the
Class A Warrants listed and transmitted hereby, no endorsements of Warrant
Certificates are required unless payment is to be made to, or certificates for
Class A Warrants not exercised or accepted for exercise are to be issued in the
name of, a person other than the registered owner(s). Signatures on such
Warrant Certificates must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Class A Warrants listed, the Warrant Certificates
must be endorsed or accompanied by
<PAGE>
appropriate transfer powers, in either case signed exactly as the name or names
of the registered owner(s) appear(s) on the Warrant Certificates. Signatures on
such Warrant Certificates must be guaranteed by an Eligible Institution.
6. TRANSFER TAXES. Except as set forth in this Instruction 6, the Company
will pay or cause to be paid any transfer taxes with respect to the transfer and
exercise of exercised Warrants pursuant to the Offer. If, however,
issuance of the applicable underlying stock is to be made to, or if certificates
for Class A Warrants not accepted for exercise are to be registered in the name
of, any person other than the registered holder, or if exercised Warrant
Certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any transfer taxes (whether
imposed on the registered holder or such person) payable on account of the
transfer to such person will be the obligation of the Holder, unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE WARRANT CERTIFICATES LISTED IN THIS
LETTER OF TRANSMITTAL.
7. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If the applicable
underlying stock is to be issued in the name of and/or certificates for
unexercised Class A Warrants are to be returned to a person other than the
signer of this Letter of Transmittal or if the applicable Underlying Stock is to
be sent and/or such certificates are to be returned to someone other than the
signer of this Letter of Transmittal or to an address other than that shown on
the front cover hereof, the appropriate boxes on this Letter of Transmittal
should be completed. Holders exercising Warrants by book-entry transfer
may request that Class A Warrants not accepted for exercise be credited to such
account maintained at such Book-Entry Transfer Facility as such Holder may
designate hereon. If no such instructions are given, such Warrants not
accepted for exercise will be returned by crediting the account at the Book-
Entry Transfer Facility designated above. See Instruction 1.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to the Warrant Agent at its address set forth below. Requests
for additional copies of the Exercise Offer/Prospectus and this Letter of
Transmittal may be directed to the Warrant Agent or to brokers, dealers,
commercial banks or trust companies.
9. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Class A Warrants has been lost, destroyed or stolen, the Holder
should promptly notify the Warrant Agent, Attention: Lost Securities Dept. The
Holder will then be instructed as to the steps that must be taken in order to
replace the certificate(s). This Letter of Transmittal and related documents
cannot be processed until the procedures for replacing lost or destroyed
certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY HEREOF) OR AN
AGENT'S MESSAGE TOGETHER WITH (i) WARRANT CERTIFICATES OR CONFIRMATION OF
BOOKENTRY TRANSFER, (ii) A CERTIFIED OR BANK CHECK PAYABLE TO "LIFE MEDICAL
SERVICES, INC." IN THE AMOUNT OF $1.025 PER WARRANT (INCLUDING UNDERLYING CLASS
B WARRANTS, EXERCISED IN THE OFFER, AND (iii) ALL OTHER REQUIRED DOCUMENTS MUST
BE RECEIVED BY THE WARRANT AGENT ON OR PRIOR TO THE EXPIRATION DATE.
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
exercised, will be accepted. The Letter of Transmittal, Warrant Certificates, a
certified or bank check payable to "Life Medical Sciences, Inc." in the amount
of $1.025 per Warrant (including Underlying Class B Warrants) exercised in the
Offer and any other required documents should be sent or delivered by each
Holder or his broker, dealer, commercial bank, trust company or other nominee to
the Warrant Agent as follows:
The Warrant Agent for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
1-(800) 937-5449 (toll free)
<TABLE>
<S> <C>
By Facsimile By Mail or Hand Delivery:
(718) 236-2976 Reorganization Department
40 Wall Street
46th Floor
New York, NY 10005
Confirm Facsimile
by Telephone:
1-(800) 937-5449 (toll free)
</TABLE>
Questions and requests for assistance may be directed to the Warrant Agent
at its address and telephone number listed above. Additional copies of the
Exercise Offer/Prospectus, this Letter of Transmittal and other offer materials
may be obtained from the Warrant Agent as set forth above, and will be furnished
promptly at the Company's expense. Each Holder may also contact his broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
EXERCISE OF CLASS A WARRANTS
OF
LIFE MEDICAL SCIENCES, INC.
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates representing
Class A Warrants are not immediately available or time will not permit all
required documents to reach American Stock Transfer & Trust Company (the
"Warrant Agent") on or prior to the Expiration Date (as defined in the Exercise
Offer/Prospectus (as defined below)), or the procedures for delivery by
bookentry exercise cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or sent by facsimile transmission
or mail to the Warrant Agent. See the caption "Terms of the Exercise Offer-
Procedures for Exercising Warrants-Guaranteed Delivery" in the Exercise
Offer/Prospectus.
The Warrant Agent for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
1-(800) 937-5449 (toll free)
BY MAIL OR HAND DELIVERY:
Reorganization Department
40 Wall Street
46th Floor
New York, NY 10005
BY FACSIMILE:
(718) 236-2976
Confirm Facsimile
by Telephone:
1-(800) 937-5449 (toll free)
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby exercises, upon the terms and subject to the
conditions set forth in the Exercise Offer/Prospectus, dated _______ __, 1998
(the "Exercise Offer/Prospectus"), and in the Letter of Transmittal, receipt of
each of which is hereby acknowledged (which together constitute the "Offer"),
the number of Class A Warrants (and underlying Class B Warrants) indicated below
pursuant to the guaranteed delivery procedures set forth under the caption
"Terms of the Exercise Offer-Procedures for Exercising Warrants-Guaranteed
Delivery" in the Exercise Offer/Prospectus.
<TABLE>
<CAPTION>
<S> <C>
Number of Class A Warrants:..................... Name(s) of Record Holder(s):.....................
Number of Underlying Class B Warrants:.......... Address(es):.....................................
Certificate No(s). (if available): .................................................
If Class A Warrants (and underlying Class B Warrants) Area Code and Telephone Number(s):
will be exercised by book-entry exercise, check one box.
[ ] The Depository Trust Company
[ ] Pacific Securities Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:........................................... Signature(s):.................................
Date:..................................................... ..............................................
</TABLE>
2
<PAGE>
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agent's Medallion Program, hereby (a) represents that the
exercise of Class A Warrants (including underlying Class B Warrants) effected
hereby complies with Rule 14e4 under the Securities Exchange Act of 1934, as
amended, and (b) guarantees to deliver to the Warrant Agent, at its address set
forth above, the certificate representing all exercised Class A Warrants, in
proper form for transfer, or a BookEntry Confirmation (as defined in the
Exercise Offer/Prospectus), together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or an Agent's Message (as defined in the Exercise Offer/Prospectus)
in the case of a bookentry delivery, a certified or bank check payable to "Life
Medical Sciences, Inc." in the amount of $1.205 per Warrant (including
underlying Class B Warrants) exercised in the Offer, and any other documents
required by the Letter of Transmittal within five New York Stock Exchange, Inc.
("NYSE") trading days after the date of execution of this Notice of Guaranteed
Delivery.
<TABLE>
<CAPTION>
<S> <C>
...............................
(Name of Firm)
.............................
(Authorized Signature)
.............................
(Name)
.............................
(Title)
.............................
(Address)
.............................
(Zip Code)
Dated:.................................................... ............................................
(Area Code and Telephone No.)
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR CLASS A WARRANTS WITH THIS NOTICE GUARANTEED
DELIVERY. CERTIFICATES FOR CLASS A WARRANTS SHOULD BE SENT WITH YOUR
LETTER OF TRANSMITTAL.
3
<PAGE>
LETTER OF TRANSMITTAL
Relating To
Class B Warrants
LIFE MEDICAL SCIENCES, INC.
OFFER TO REDUCE THE EXERCISE PRICE
OF CLASS A WARRANTS AND
CLASS B WARRANTS TO $1.205 PER WARRANT
FOR EXERCISES BEFORE 5:00 P.M. ON
SEPTEMBER 21, 1998
THE OFFER WILL EXPIRE ON SEPTEMBER 21, 1998, AT 5:00 P.M., NEW YORK CITY TIME,
UNLESS EXTENDED. WITHDRAWAL RIGHTS WILL ALSO EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON SEPTEMBER 21, 1998. IN ADDITION, THE CLASS A WARRANTS AND CLASS B
WARRANTS WILL CEASE TO BE EXERCISABLE ON SEPTEMBER 21, 1998. ON SUCH DATE, AT
5:00 P.M., NEW YORK CITY TIME, ALL CLASS A WARRANTS AND CLASS B WARRANTS NOT
EXERCISED PRIOR TO THAT TIME WILL EXPIRE AT SUCH TIME.
The Information Agent for the Offer is:
Allen & Caron Inc.
Telephone: 1 (800) 452-1346 (8:30 a.m. to 5:30 p.m. PDT)
Address: 3 Imperial Promenade
Suite 850
Santa Ana, California 92707
Attention: Lynn Johnson
The Warrant Agent for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
1-(800) 937-5449 (toll free)
<TABLE>
<S> <C>
By Mail or Hand Delivery: By Facsimile
(718) 236-2976
Reorganization Department Confirm Facsimile
40 Wall Street by Telephone:
46th Floor 1-(800) 937-5449 (toll free)
New York, NY 10005
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders (the "Holders") of
Class B Warrants (defined below) either if certificates for Class B Warrants are
to be forwarded herewith or, unless an Agent's Message (as defined in the
Exercise Offer/Prospectus, dated July ___,
<PAGE>
1998 and filed with the Securities and Exchange Commission (the "Exercise
Offer/Prospectus")) is utilized, if exercises are to be made by book-entry
transfer to an account maintained by American Stock Transfer & Trust Company
(the "Warrant Agent") at the Depository Trust Company ("DTC"), Pacific
Securities Depository Trust Company ("PSDTC") or Philadelphia Depository Trust
Company ("PDTC") (each a "Book-Entry Transfer Facility" and collectively
referred to as the "Book-Entry Transfer Facilities"), pursuant to the procedures
set forth under the caption "Terms of the Exercise Offer Procedure for
Exercising Warrants-Book-Entry Exercise" in the Exercise Offer/Prospectus.
Holders who exercise Class B Warrants by book-entry transfer are referred to
herein as "Book-Entry Holders."
Holders of Class B Warrants whose certificates for such Class B Warrants
(the "Warrant Certificates") are not immediately available or who cannot deliver
their Warrant Certificates, together with a certified or bank check payable to
"Life Medical Sciences, Inc." in the amount of $1.205 per Class B Warrant
exercised in the Exercise Offer and all other required documents to the Warrant
Agent on or prior to the Expiration Date or who cannot complete the procedures
for book-entry transfer on a timely basis, must exercise their Class B Warrants
according to the guaranteed delivery procedures set forth under the caption
"Terms of the Exercise Offer-Procedures for Exercising Warrants-Guaranteed
Delivery" in the Exercise Offer/Prospectus. See Instruction 2. DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE
WARRANT AGENT.
NOTE: SIGNATURES MUST BE PROVIDED ON PAGE __. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
[ ] CHECK HERE IF CLASS B WARRANTS ARE BEING EXERCISED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE WARRANT AGENT WITH A BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Exercising Institution:
-------------------------------------------------
- --------------------------
Check Box of Book-Entry Transfer Facility:
[ ] The Depository Trust Company
[ ] Pacific Securities Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number: Transaction Code Number:
------------------ ----------------------
[ ] CHECK HERE IF CLASS B WARRANTS ARE BEING EXERCISED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE WARRANT AGENT AND COMPLETE THE
FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
------------------------------------------------
<PAGE>
Window Ticket Number (if any):
--------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-----------------------------
Name of Institution which Guaranteed Delivery:
----------------------------------
DESCRIPTION OF CLASS B WARRANTS EXERCISED
- --------------------------------------------------------------------------------
Name(s) and Address(es) of Class B Warrants Exercised
Registered Holder(s)
(Please fill in, if blank)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Certificate Total Number of Number of
Number(s)** Warrants Warrants
Represented by Exercised***
Certificate(s)**
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
Total Warrants
- --------------------------------------------------------------------------------------------------
</TABLE>
* If left blank, stock will be issued to name and address as they appear on
the warrant certificate or in the books of the Warrant Agent.
** Need not be completed by holders tendering book-entry transfer.
*** Unless otherwise indicated, the holder will be deemed to have exercised
the full number of Warrants represented by the exercised certificates. See
Instruction 4.
[ ] Check here if inadequate space and enclose additional sheets, in accordance
with Instruction 3.
<PAGE>
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby exercises the Class B redeemable stock purchase
warrants (the "Class B Warrants") of Life Medical Sciences, Inc. a Delaware
corporation (the "Company"), as described on page 3 of this Letter of
Transmittal, at an exercise price of $1.205 per Class B Warrant, upon the terms
and subject to the conditions set forth in the Exercise Offer/Prospectus, dated
_____________, 1998 (the "Exercise Offer/Prospectus"), receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which, together with the
Exercise Offer/Prospectus, constitutes the "Offer"). The undersigned understands
that upon exercise of each such Class B Warrant the undersigned shall receive
1.071474 shares of the Company's common stock, par value $0.001 per share (the
"Common Stock").
Subject to, and effective upon, acceptance for exercise of the Class B
Warrants included herewith in accordance with the terms and subject to the
conditions of the Offer, the undersigned hereby (i) exercises and transfers to,
or upon the order of, the Company all right, title and interest in, and to all
the Class B Warrants that are being exercised hereby, and (ii) constitutes and
irrevocably appoints the Warrant Agent the true and lawful agent, attorney-
in-fact and proxy of the undersigned to the full extent of the undersigned's
rights with respect to such Class B Warrants with full power of substitution and
resubstitution (such power of attorney and proxy being deemed to be an
irrevocable power coupled with an interest), to (a) deliver Certificates for the
Class B Warrants (the "Warrant Certificates") and transfer ownership of such
Class B Warrants on the account books maintained by the Book-Entry Transfer
Facilities, together with all accompanying evidences of transfer and
authenticity, to or upon the order of the Company, upon issuance by the Warrant
Agent, as the undersigned's agent, of the applicable Underlying Stock, (b)
present such Class B Warrants for transfer, and effect such transfer, on the
books of the Company, and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Class B Warrants, all in accordance with
the terms of the Offer.
The undersigned hereby represents and warrants that the undesigned has full
power and authority to exercise, assign and transfer the Class B Warrants
exercised hereby and that, when the same are accepted for exercise by the
Company, the Company will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
the same will not be subject to any adverse claim. The undersigned, upon
request, will execute and deliver any additional documents deemed by the Warrant
Agent or the Company to be necessary or desirable to complete the exercise,
assignment and transfer of the Class B Warrants exercised hereby. In addition,
if there shall occur any anti-dilution adjustment pursuant to the terms of the
Class B Warrants, or other adjustment affecting the exercise price or the number
of shares of Common Stock obtainable upon exercise of the Class B Warrants, the
Company, in its sole discretion, may make such adjustments in the exercise price
of the Class B Warrants or the securities issuable upon exercise thereof as it
deems appropriate.
All authority herein conferred or herein agreed to be conferred shall not
be affected by, and shall survive, the death or incapacity of the undersigned
and any obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, legal
<PAGE>
representatives, successors and assigns of the undersigned. Except as stated in
the Exercise Offer/Prospectus, this exercise is irrevocable.
The undersigned understands that exercises of Class B Warrants pursuant to
any one of the procedures described under the caption "Terms of the Exercise
Offer -Procedures for Exercising Warrants" in the Exercise Offer/Prospectus and
in the Instructions hereto will constitute a binding agreement between the
undersigned and the Company upon the terms and subject to the conditions of the
Offer.
Unless otherwise indicated herein under "Special Issuance Instructions,"
please issue the applicable Underlying Stock and/or return any Warrant
Certificates not exercised or accepted for exercise in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the applicable Underlying Stock and/or return any
Warrant Certificates not exercised or accepted for exercise (and accompanying
documents, as appropriate) to the undersigned at the address shown below the
undersigned's signature. In the event that both the "Special Issuance
Instructions" and the "Special Delivery Instructions" are completed, please
issue the applicable Underlying Stock and/or return any Warrant Certificates not
exercised or accepted for exercise in the name(s) of, and deliver said
applicable Underlying Stock and/or return certificates to, the person or persons
so indicated. Holders exercising Class B Warrants by book-entry transfer may
request that any Class B Warrants not accepted for exercise be returned by
crediting such account maintained at such Book-Entry Transfer Facility as such
Holder may designate by making an appropriate entry under "Special Issuance
Instructions." The undersigned recognizes that the Company has no obligation
pursuant to the "Special Issuance Instructions" to issue any applicable
Underlying Stock in the name of a different registered Holder if the Company
does not accept for exercise any of such Class B Warrants.
<TABLE>
<CAPTION>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7)
<S> <C>
To be completed ONLY if Warrant Certificates not To be completed ONLY if Warrant Certificates not
exercised or not accepted for exercise and/or the exercised for exercise and/or the applicable
applicable Underlying Stock are to be issued in Underlying Stock are to be sent to someone other
the name of someone other than the undersigned, or than the undersigned, or to the undersigned other
if Class B Warrants exercised by bookentry than that designated on the front cover.
transfer which are not accepted for exercise are
to be returned by credit to an account maintained
at a BookEntry Transfer Facility other than that
designated on the front cover.
Issue Underlying Stock and/or certificates to: Mail Underlying Stock and/or certificates to:
Name: ______________________________ Name: __________________________
(PLEASE PRINT) (PLEASE PRINT)
Address: ___________________________ Address: _______________________________
____________________________________ _______________________________________
____________________________________ _______________________________________
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
(TAXPAYER IDENTIFICATION OR (TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NO.) SOCIAL SECURITY NO.)
- ------------------------------------------------------ ------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGN HERE
<S> <C>
X......................................................................................
X......................................................................................
SIGNATURE(S) OF OWNER(S)
Dated:..........................................................................., 1998
Name(s)................................................................................
.......................................................................................
(PLEASE PRINT)
Capacity (full title)..................................................................
Address................................................................................
.....................................................................................
(INCLUDE ZIP CODE)
Area Code and Telephone No.............................................................
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
certificate(s) for Class B Warrants or on a security position
listing or by person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other person
acting in a fiduciary or representative capacity, please set forth full title and see
Instruction 5.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature...................................................................
Name...................................................................................
Title..................................................................................
Address................................................................................
Area Code and Telephone No.............................................................
Dated......................................................................... , 1998
</TABLE>
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Class B Warrants) of the Class B Warrants
exercised hereby, unless such holder has completed the box entitled "Special
Issuance Instructions" on page 5 hereof, or (ii) if such Class B Warrants are
exercised for the account of a firm that is a bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing of
the Securities Transfer Agent's Medallion Program (an "Eligible Institution").
In all other cases, all signatures on this Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Warrant Certificates are to be forwarded
herewith or, unless an Agent's Message (as defined in the Exercise
Offer/Prospectus) is utilized, if exercises of Class B Warrants are to be made
pursuant to the procedures for exercise by book-entry set forth under the
caption "Terms of the Exercise Offer-Procedures for Exercising Warrants-Book-
Entry Exercise" in the Exercise Offer/Prospectus. Warrant Certificates or
timely confirmation (a "Book-Entry Confirmation") of a bookentry exercise of
such Class B Warrants in the Warrant Agent's account at a Book-Entry Transfer
Facility, as well as a Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message in the case of a book-entry delivery, together with a certified
or bank check payable to "Life Medical Sciences, Inc." in the amount of $1.205
per Class B Warrant exercised in the Offer and any other documents required by
the Letter of Transmittal, must be received by the Warrant Agent at its address
set forth herein prior to the Expiration Date. Holders whose Warrant
Certificates are not immediately available or who cannot deliver their Warrant
Certificates, together with a certified or bank check payable to "Life Medical
Sciences, Inc." in the amount of $1.205 per Class B Warrant exercised in the
Offer and all other required documents to the Warrant Agent prior to the
Expiration Date or who cannot complete the procedures for delivery by book-entry
exercise on a timely basis may exercise their Class B Warrants by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth under the caption "Terms of the
Exercise Offer-Procedures for Exercising Warrants-Guaranteed Delivery" in the
Exercise Offer/Prospectus. Pursuant to such procedure: (i) such exercise must
be made by or through an Eligible Institution; (ii) a properly completed and
duly executed Notice of Guaranteed Delivery, substantially in the form made
available by the Company, must be received by the Warrant Agent on or prior to
the Expiration Date; and (iii) the Warrant Certificates (or a Book-Entry
Confirmation) representing all exercised Class B Warrants with a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry delivery, an
Agent's Message), together with a certified or bank check payable to "Life
Medical Sciences, Inc." in the amount of $1.205 per Class B Warrant exercised in
the Offer and any other documents required by the Letter of Transmittal, must be
received by the Warrant Agent within five New York Stock Exchange, Inc. ("NYSE")
trading days after the date of execution of such Notice of Guaranteed Delivery,
as provided under the caption "Terms of the Exercise Offer-Procedures for
Exercising Warrants-Guaranteed Delivery" in the Exercise Offer/Prospectus. If
Warrant Certificates are forwarded separately to the Warrant Agent, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) must
accompany each such delivery.
<PAGE>
The method of delivery of Warrant Certificates, the Letter of Transmittal
and all other required documents is at the option and sole risk of the
exercising Holder and the delivery will be deemed made only when actually
received by the Warrant Agent. If delivery is by mail, registered mail with
return receipt requested, properly insured, is recommended. In all cases,
sufficient time should be allowed to ensure timely delivery.
No alternative, conditional or contingent exercise will be accepted. All
exercising Holders, by execution of this Letter of Transmittal or facsimile
hereof, waive any right to receive any notice of the acceptance of their Class B
Warrants for exercise.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
Warrant Certificate numbers and/or the number of Class B Warrants and any other
required information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
4. PARTIAL EXERCISES. (Not applicable to Holders who exercise by
book-entry transfer.) If fewer than all Class B Warrants evidenced by any
certificate submitted are to be exercised, fill in the number of Class B
Warrants which are to be exercised in the box entitled "Number of Class B
Warrants Exercised." In such case, new certificate(s) for the remainder of the
Class B Warrants that were evidenced by the Holder's old certificate(s) will be
sent to such Holder, unless otherwise provided in the appropriate box marked
"Special Issuance Instructions" and/or "Special Delivery Instructions" on this
Letter of Transmittal, as soon as practicable after the Expiration Date. All
Class B Warrants represented by Warrant Certificates delivered to the Warrant
Agent will be deemed to have been exercised unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL. If this Letter of Transmittal is
signed by the registered holder(s) of the Class B Warrants exercised hereby, the
signatures must correspond exactly with the name(s) as written on the face of
the Warrant Certificate(s), without alteration, enlargement or any change
whatsoever.
If any of the Class B Warrants exercised hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
If any exercised Class B Warrants are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of Warrant
Certificates.
If this Letter of Transmittal is signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and proper evidence satisfactory to the Company of their
authority so to act must be submitted along with this Letter of Transmittal.
When this Letter of Transmittal is signed by the registered owner(s) of the
Class B Warrants listed and transmitted hereby, no endorsements of Warrant
Certificates are required unless payment is to be made to, or certificates for
Class B Warrants not exercised or accepted for exercise are to be issued in the
name of, a person other than the registered owner(s). Signatures on such
Warrant Certificates must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Class B Warrants listed, the Warrant Certificates
must be endorsed or accompanied by
<PAGE>
appropriate transfer powers, in either case signed exactly as the name or names
of the registered owner(s) appear(s) on the Warrant Certificates. Signatures on
such Warrant Certificates must be guaranteed by an Eligible Institution.
6. TRANSFER TAXES. Except as set forth in this Instruction 6, the Company
will pay or cause to be paid any transfer taxes with respect to the transfer and
exercise of exercised Class B Warrants pursuant to the Offer. If, however,
issuance of the applicable Underlying Stock is to be made to, or if certificates
for Class B Warrants not accepted for exercise are to be registered in the name
of, any person other than the registered holder, or if exercised Warrant
Certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any transfer taxes (whether
imposed on the registered holder or such person) payable on account of the
transfer to such person will be the obligation of the Holder, unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE WARRANT CERTIFICATES LISTED IN THIS
LETTER OF TRANSMITTAL.
7. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If the applicable
Underlying Stock is to be issued in the name of and/or certificates for
unexercised Class B Warrants are to be returned to a person other than the
signer of this Letter of Transmittal or if the applicable Underlying Stock is to
be sent and/or such certificates are to be returned to someone other than the
signer of this Letter of Transmittal or to an address other than that shown on
the front cover hereof, the appropriate boxes on this Letter of Transmittal
should be completed. Holders exercising Class B Warrants by book-entry transfer
may request that Class B Warrants not accepted for exercise be credited to such
account maintained at such Book-Entry Transfer Facility as such Holder may
designate hereon. If no such instructions are given, such Class B Warrants not
accepted for exercise will be returned by crediting the account at the Book-
Entry Transfer Facility designated above. See Instruction 1.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to the Warrant Agent at its address set forth below. Requests
for additional copies of the Exercise Offer/Prospectus and this Letter of
Transmittal may be directed to the Warrant Agent or to brokers, dealers,
commercial banks or trust companies.
9. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Class B Warrants has been lost, destroyed or stolen, the Holder
should promptly notify the Warrant Agent, Attention: Lost Securities Dept. The
Holder will then be instructed as to the steps that must be taken in order to
replace the certificate(s). This Letter of Transmittal and related documents
cannot be processed until the procedures for replacing lost or destroyed
certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY HEREOF) OR AN
AGENT'S MESSAGE TOGETHER WITH (i) WARRANT CERTIFICATES OR CONFIRMATION OF
BOOKENTRY TRANSFER, (ii) A CERTIFIED OR BANK CHECK PAYABLE TO "LIFE MEDICAL
SERVICES, INC." IN THE AMOUNT OF $1.025 PER CLASS B WARRANT EXERCISED IN THE
OFFER, AND (iii) ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE WARRANT
AGENT ON OR PRIOR TO THE EXPIRATION DATE.
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
exercised, will be accepted. The Letter of Transmittal, Warrant Certificates, a
certified or bank check payable to "Life Medical Sciences, Inc." in the amount
of $1.025 per Class B Warrant exercised in the Offer and any other required
documents should be sent or delivered by each Holder or his broker, dealer,
commercial bank, trust company or other nominee to the Warrant Agent as follows:
The Warrant Agent for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
1-(800) 937-5449 (toll free)
<TABLE>
<S> <C>
By Facsimile By Mail or Hand Delivery:
(718) 236-2976 Reorganization Department
40 Wall Street
46th Floor
New York, NY 10005
Confirm Facsimile
by Telephone:
1-(800) 937-5449 (toll free)
</TABLE>
Questions and requests for assistance may be directed to the Warrant Agent
at its address and telephone number listed above. Additional copies of the
Exercise Offer/Prospectus, this Letter of Transmittal and other offer materials
may be obtained from the Warrant Agent as set forth above, and will be furnished
promptly at the Company's expense. Each Holder may also contact his broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
EXERCISE OF CLASS B WARRANTS
OF
LIFE MEDICAL SCIENCES, INC.
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates representing
Class B Warrants are not immediately available or time will not permit all
required documents to reach American Stock Transfer & Trust Company (the
"Warrant Agent") on or prior to the Expiration Date (as defined in the Exercise
Offer/Prospectus (as defined below)), or the procedures for delivery by
bookentry exercise cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or sent by facsimile transmission
or mail to the Warrant Agent. See the caption "Terms of the Exercise Offer-
Procedures for Exercising Warrants-Guaranteed Delivery" in the Exercise
Offer/Prospectus.
The Warrant Agent for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
1-(800) 937-5449 (toll free)
BY MAIL OR HAND DELIVERY:
Reorganization Department
40 Wall Street
46th Floor
New York, NY 10005
BY FACSIMILE:
(718) 236-2976
Confirm Facsimile
by Telephone:
1-(800) 937-5449 (toll free)
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby exercises, upon the terms and subject to the
conditions set forth in the Exercise Offer/Prospectus, dated _______ __, 1998
(the "Exercise Offer/Prospectus"), and in the Letter of Transmittal, receipt of
each of which is hereby acknowledged (which together constitute the "Offer"),
the number of Class B Warrants indicated below pursuant to the guaranteed
delivery procedures set forth under the caption "Terms of the Exercise Offer-
Procedures for Exercising Warrants-Guaranteed Delivery" in the Exercise
Offer/Prospectus.
<TABLE>
<CAPTION>
<S> <C>
Number of Class B Warrants:..................... Name(s) of Record Holder(s):.....................
Address(es):.....................................
Certificate No(s). (if available): .................................................
If Class B Warrants will be exercised by Area Code and Telephone Number(s):
book-entry exercise, check one box.
[ ] The Depository Trust Company
[ ] Pacific Securities Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:........................................... Signature(s):.................................
Date:..................................................... ..............................................
</TABLE>
2
<PAGE>
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agent's Medallion Program, hereby (a) represents that the
exercise of Class B Warrants effected hereby complies with Rule 14e4 under the
Securities Exchange Act of 1934, as amended, and (b) guarantees to deliver to
the Warrant Agent, at its address set forth above, the certificate representing
all exercised Class B Warrants, in proper form for transfer, or a BookEntry
Confirmation (as defined in the Exercise Offer/Prospectus), together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message (as
defined in the Exercise Offer/Prospectus) in the case of a bookentry delivery, a
certified or bank check payable to "Life Medical Sciences, Inc." in the amount
of $1.205 per Class B Warrant exercised in the Offer, and any other documents
required by the Letter of Transmittal within five New York Stock Exchange, Inc.
("NYSE") trading days after the date of execution of this Notice of Guaranteed
Delivery.
<TABLE>
<CAPTION>
<S> <C>
...............................
(Name of Firm)
.............................
(Authorized Signature)
.............................
(Name)
.............................
(Title)
.............................
(Address)
.............................
(Zip Code)
Dated:.................................................... ............................................
(Area Code and Telephone No.)
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR CLASS B WARRANTS WITH THIS NOTICE GUARANTEED
DELIVERY. CERTIFICATES FOR CLASS B WARRANTS SHOULD BE SENT WITH YOUR
LETTER OF TRANSMITTAL.
3
<PAGE>
LIFE MEDICAL SERVICES, INC.
OFFER TO REDUCE THE EXERCISE PRICE OF
CLASS A WARRANTS
AND CLASS B WARRANTS TO $1.205 PER WARRANT
FOR EXERCISES BEFORE 5:00 P.M. ON
SEPTEMBER 21, 1998
THE OFFER WILL EXPIRE ON SEPTEMBER 21, 1998, AT 5:00 P.M., NEW YORK CITY TIME,
UNLESS EXTENDED. WITHDRAWAL RIGHTS WILL ALSO EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON SEPTEMBER 21,1998. IN ADDITION, THE CLASS A WARRANTS AND CLASS B
WARRANTS WILL CEASE TO BE EXERCISABLE ON SEPTEMBER 21, 1998, AT 5:00 P.M., NEW
YORK CITY TIME. ALL CLASS A WARRANTS AND CLASS B WARRANTS NOT EXERCISED PRIOR TO
THAT TIME WILL BE EXPIRED AT THAT TIME.
____________, 1998
TO OUR CLIENTS:
Enclosed for your consideration are the Exercise Offer/Prospectus and the
blue Letter of Transmittal for Class A Warrants and yellow letter of Transmittal
for Class B Warrants, including warrants underlying the Class A Warrants (which
together constitute the "Offer") relating to the offer by Life Medical Sciences,
Inc., a Delaware corporation (the "Company"), to the holders (the "Holders") of
the Company's Class B Redeemable Stock Purchase Warrants (the "Class B
Warrants"; together with the Class A Warrants, the "Warrants") who exercise
their Class A Warrants or Class B Warrants pursuant to the Offer, to reduce the
exercise price of the Class A Warrants and Class B Warrants to $1.205 per
Warrant (from $8.40 and $12.60 for each Class A Warrant and Class B Warrant,
respectively) for each Class A Warrant and Class B Warrant so exercised, in each
case if and only if a Holder exercises his or her Class A Warrants and Class B
Warrants prior to 5:00 P.M., New York City Time, on September 21,1998, unless
such date is extended by the Company as described in the Exercise
Offer/Prospectus (such date, or such date as so extended, being referred to as
the "Expiration Date"), upon the terms and subject to the conditions set forth
in the Exercise Offer/Prospectus, dated July ___, 1998 (the "Exercise
Offer/Prospectus") and the related blue Letter of Transmittal for Class A
Warrants (including underlying Class B Warrants) and yellow Letter of
Transmittal for Class B Warrants. Holders whose certificates for such Warrants
(the "Warrant Certificates") are not immediately available or who cannot deliver
their Warrant Certificates and all other required documents to the Warrant Agent
on or prior to the Expiration Date, or who cannot complete the procedures for
bookentry exercise on a timely basis, must exercise their Class A Warrants
and/or Class B Warrants according to the guaranteed delivery procedures set
forth under the caption "Terms of the Exercise Offer-Procedures for Exercising
WarrantsGuaranteed Delivery" in the Exercise Offer/Prospectus.
WE ARE THE HOLDER OF RECORD OF CLASS A WARRANTS AND/OR CLASS B WARRANTS
HELD BY US FOR YOUR ACCOUNT. AN EXERCISE OF SUCH CLASS B WARRANTS CAN BE MADE
ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE
LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR
<PAGE>
YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO EXERCISE WARRANTS HELD BY US
FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
exercise on your behalf any or all Warrants held by us for your account pursuant
to the terms and conditions set forth in the Offer.
Please note the following:
1. The exercise price of the Class A Warrants is $1.205 per Class A
Warrant and the exercise price of the Class B Warrants is $1.205 per Class
B Warrant, in each case upon the terms and subject to the conditions set
forth in the Offer.
2. The Offer is being made for the exercise of any and all
Class A Warrants and Class B Warrants.
3. The Offer is subject to certain conditions. See "Terms of the
Exercise Offer-Certain Conditions of the Exercise Offer" in the Exercise
Offer/Prospectus.
4. Exercising Holders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter
of Transmittal, transfer taxes on the exercise of Warrants pursuant to the
Offer.
5. The Offer and withdrawal rights will expire at 5:00 p.m., New York
City time, on September 21,1998, unless the Offer is extended.
6. Exercise of Warrants pursuant to the Offer will in all cases be
accepted only after timely receipt by American Stock Transfer and Trust
Company (the "Warrant Agent") of (a) Warrant Certificates or timely
confirmation of the bookentry exercise of such Warrants into the account
maintained by the Warrant Agent at The Depository Trust Company, Pacific
Securities Depository Trust Company or Philadelphia Depository Trust
Company (collectively, the "BookEntry Transfer Facilities"), pursuant to
the procedures set forth under the caption "Terms of the Exercise
Offer-Procedures for Exercising Warrants-BookEntry Exercise" in the
Exercise Offer/Prospectus, (b) a Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message (as defined in the Exercise
Offer/Prospectus) in connection with a bookentry delivery, (c) a certified
or bank check payable to "Life Medical Sciences, Inc." in the amount of
$1.205 per Warrant exercised in the Offer, and (d) any other documents
required by the Letter of Transmittal. Accordingly, issuances of the
securities issuable upon exercise of the Warrants may not be made to all
exercising Holders at the same time depending upon when Warrant
Certificates or confirmations of bookentry transfer of such Warrants into
the Warrant Agent's account at the BookEntry Transfer Facility are actually
received by the Warrant Agent.
7. ALL CLASS A WARRANTS AND CLASS B WARRANTS NOT EXERCISED PRIOR TO
5:00 P.M. NEW YORK CITY TIME ON SEPTEMBER 21,1998, WILL EXPIRE AT THAT
TIME.
If you wish to have us exercise any or all of the Warrants held by us for
your account, please so instruct us by completing, executing, detaching and
returning to us the instruction form set forth on the back page of this letter.
If you authorize the exercise of your Warrants, all such Warrants will be
exercised unless otherwise specified on the next page of this letter. An
envelope to return your instructions to us is enclosed. Your instructions
should be forwarded to
<PAGE>
us in ample time to permit us to submit an exercise on your behalf prior to the
expiration of the Offer.
THE OFFER IS NOT BEING MADE TO (NOR WILL EXERCISES BE ACCEPTED FROM OR ON
BEHALF OF) HOLDERS OF WARRANTS RESIDING IN ANY JURISDICTION IN WHICH THE MAKING
OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES, BLUE SKY OR OTHER LAWS OF SUCH JURISDICTION. HOWEVER, THE COMPANY
MAY, IN ITS DISCRETION, TAKE SUCH ACTION AS IT MAY DEEM NECESSARY TO MAKE THE
OFFER IN ANY JURISDICTION AND EXTEND THE OFFER TO HOLDERS OF WARRANTS IN SUCH
JURISDICTION.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER
BY LIFE MEDICAL SERVICES, INC. TO REDUCE THE EXERCISE PRICES
OF CLASS A WARRANTS AND CLASS B WARRANTS TO $1.205 PER WARRANT
The undersigned acknowledge(s) receipt of the Exercise Offer/Prospectus,
dated ________ ___, 1998 (the "Exercise Offer/Prospectus") and the blue Letter
of Transmittal for the Class A Warrants (and underlying Class B Warrants) and
the yellow Letter of Transmittal for the Class B Warrants (which documents,
together with the Exercise Offer/Prospectus, constitutes the "Offer") in
connection with the offer by Life Medical Sciences, Inc., a Delaware corporation
(the "Company"), to the holders (the "Holders") of the Company's Class A
Redeemable Stock Purchase Warrants (the "Class A Warrants") Class B Redeemable
Stock Purchase Warrants (the "Class B Warrants"; together with the Class A
Warrants, the "Warrants") who exercise their Warrants pursuant to the Exercise
Offer, to reduce the exercise price of the Warrants to $1.205 (from $8.40 and
$12.60 for each Class A Warrant and Class B Warrant, respectively) for each
Class A Warrant and Class B Warrant so exercised, in each case if and only if a
Holder exercises his or her Warrants prior to 5:00 P.M., New York City Time, on
September 21,1998, unless such date is extended by the Company.
This will instruct you to exercise any or all Class A Warrants and Class B
Warrants which are held by you for the account of the undersigned, upon the
terms and subject to the conditions set forth in the Offer.
Number of Class A Warrants to Be
Exercised: ______________ Class A Warrants
Number of Underlying Class B Warrants to Be
Exercised: ______________ Class B Warrants
Number of Class B Warrants to Be
Exercised: ______________ Class B Warrants
Date:__________________________________
- --------------------------------------------------------------------------------
SIGN HERE
<TABLE>
<CAPTION>
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X............................................. ................................................
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Signatures Please print name(s)
and address(es) here
Dated.........................................
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LIFE MEDICAL SERVICES, INC.
OFFER TO REDUCE THE EXERCISE PRICE OF
CLASS A WARRANTS AND
CLASS B WARRANTS TO $1.205 PER WARRANT
FOR EXERCISES BEFORE 5:00 P.M. ON SEPTEMBER 21, 1998
THE OFFER WILL EXPIRE ON SEPTEMBER 21, 1996, AT 5:00 P.M., NEW YORK CITY TIME,
UNLESS EXTENDED. WITHDRAWAL RIGHTS WILL ALSO EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON SEPTEMBER 21, 1998. IN ADDITION, THE CLASS A WARRANTS AND CLASS B
WARRANTS WILL CEASE TO BE EXERCISABLE ON SEPTEMBER 21, 1998, AT 5:00 P.M., NEW
YORK CITY TIME. ALL CLASS A WARRANTS AND CLASS B WARRANTS NOT EXERCISED PRIOR TO
THAT TIME WILL EXPIRE AT THAT TIME.
___________ ___. 1998
TO BROKERS, DEALERS, COMMERCIAL BANKS,
Trust Companies and Other Nominees:
Life Medical Sciences, Inc., a Delaware corporation (the "Company"), is
offering, to the holders (the "Holders") of the Company's Class A Redeemable
Stock Purchase Warrants (the "Class A Warrants"; together with the Class A
Warrants, the "Warrants") Class B Redeemable Stock Purchase Warrants (the "Class
B Warrants") who exercise their Warrants pursuant to the Exercise Offer, to
reduce the exercise price of the Class A Warrants to $1.205 per Class A Warrant
and Class B Warrants to $1.205 per Class B Warrant (from $8.40 and $12.60 for
each Class A Warrant and Class B Warrant, respectively) for each Class A Warrant
and Class B Warrant so exercised, in each case if and only if a Holder exercises
his or her Warrants prior to 5:00 P.M., New York City Time, on September 21,
1998, unless such date is extended by the Company (such date, or such date as so
extended, being referred to as the "Expiration Date"), upon the terms and
subject to the conditions set forth in the Exercise Offer/Prospectus dated July
___, 1998 (the "Exercise Offer/Prospectus") and the related blue Letter of
Transmittal for Class A Warrants (and underlying Class B Warrants) and yellow
Letter of Transmittal for Class B Warrants. Holders whose certificates for such
Class A and Class B Warrants (the "Warrant Certificates") are not immediately
available or who cannot deliver their Warrant Certificates and all other
required documents to the Warrant Agent on or prior to the Expiration Date, or
who cannot complete the procedures for bookentry exercise on a timely basis,
must exercise their Warrants according to the guaranteed delivery procedures set
forth under the caption "Terms of the Exercise Offer and Warrant
RedemptionProcedures for Exercising WarrantsGuaranteed Delivery" in the Exercise
Offer/Prospectus.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Warrants registered in your name or in the name of
your nominee.
The Offer is subject to certain conditions. See "Terms of the Exercise
Offer-Certain Conditions of the Exercise Offer"' in the Exercise
Offer/Prospectus.
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Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Exercise Offer/Prospectus, dated July ___, 1998.
2. The blue Letter of Transmittal to exercise Class A Warrants (and
underlying Class B Warrants) for your use and for the information
of your clients. Facsimile copies of the blue Letter of
Transmittal may be used to exercise Class A Warrants.
3. The yellow Letter of Transmittal to exercise Class B Warrants for
your use and for the information of your clients. Facsimile
copies of the yellow Letter of Transmittal may be used to
exercise Class B Warrants
4. The green Notice of Guaranteed Delivery to be used to accept the
Offer if certificates for Warrants are not immediately available
or if such certificates, a certified or bank check payable to
"Life Medical Sciences, Inc." in the amount of $1.205 per Warrant
exercised in the Offer and all other required documents cannot be
delivered to American Stock Transfer & Trust Company (the
"Warrant Agent") by the Expiration Date or if the procedure for
bookentry exercise cannot be completed by the Expiration Date.
5. A printed form of the letter which may be sent to your clients
for whose accounts you hold Warrants registered in your name or
in the name of your nominee, with space provided for obtaining
such clients' instructions with regard to the Offer.
6. A return envelope addressed to the Warrant Agent.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON SEPTEMBER 21, 1998, UNLESS THE OFFER
IS EXTENDED. PLEASE ALSO NOTE THAT THE CLASS A WARRANTS AND CLASS B WARRANTS
WILL CEASE TO BE EXERCISABLE ON SEPTEMBER 21, 1998, AT 5:00 P.M., NEW YORK CITY
TIME, AND ALL CLASS A WARRANTS AND CLASS B WARRANTS NOT EXERCISED PRIOR TO THAT
TIME WILL EXPIRE AT THAT TIME.
In order to accept the Offer, a duly executed and properly completed Letter
of Transmittal and any required signature guarantees, or an Agent's Message (as
defined in the Exercise Offer/Prospectus) in connection with a bookentry
exercise of Class A Warrants or Class B Warrants, a certified or bank check
payable to "Life Medical Sciences, Inc." in the amount of $1.205 per Warrant
exercised in the Offer and any other required documents should be sent to the
Warrant Agent, and Warrant Certificates representing the exercised Warrants
should be delivered to the Warrant Agent, or such Warrants should be exercised
by bookentry in the Warrant Agent's account maintained at one of the BookEntry
Transfer Facilities (as described in the Exercise Offer/Prospectus), all in
accordance with the instructions set forth in the Letter of Transmittal and the
Exercise Offer/Prospectus.
If Holders wish to exercise, but it is impracticable for them to forward
their Warrant Certificates or other required documents on or prior to the
Expiration Date or to comply with the bookentry exercise procedures on a timely
basis, an exercise may be effected by following the
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guaranteed delivery procedures specified under the caption "Terms of the
Exercise Offer-Procedurs for Exercising Warrants-Guaranteed Delivery" in the
Exercise Offer/Prospectus.
The Company may, under certain conditions, become obligated to pay D.H.
Blair Investment Banking Corp. a warrant solicitation fee of 4% per Warrant
exercised in the Offer (subject to certain limitations). Further, the Company
will, upon request, reimburse you for customary clerical mailing expenses
incurred by you in forwarding any of the enclosed materials to your clients. The
Company will pay or cause to be paid any transfer taxes payable on the exercise
of Warrants, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed material may be obtained from, the
Information Agent, at its address and telephone number set forth in the Letter
of Transmittal.
Very truly yours,
LIFE MEDICAL SCIENCES, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE COMPANY OR THE WARRANT AGENT, OR ANY
AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY
STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE
OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
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