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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
(AS PERMITTED BY RULE 14A-6(E)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ALLIANCE PHARMACEUTICAL CORP.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
______________________________________________________________
(2) Aggregate number of securities to which transaction applies:
______________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
______________________________________________________________
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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ALLIANCE PHARMACEUTICAL CORP.
4660 LA JOLLA VILLAGE DRIVE, SUITE 825
SAN DIEGO, CALIFORNIA 92122
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NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 10, 2005
----------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Alliance Pharmaceutical Corp., a New York corporation (the
"Company" or the "Corporation"), will be held at 10:00 a.m., local time, on
Thursday, November 10, 2005, at the Embassy Suites Hotel, located at 4550 La
Jolla Village Drive, San Diego, California 92122, for the purpose of considering
and voting upon:
(a) the election of six directors to the Company's Board of
Directors (the "Board") to serve until our 2006 Annual Meeting of Stockholders
or until their successors have been duly elected and qualified; and
(b) the transaction of such other business as may properly
come before the meeting, or any postponement or adjournment thereof.
Stockholders of record at the close of business on September 30, 2005
(the "Record Date"), shall be entitled to notice of, and to vote at, the Annual
Meeting or any postponement or adjournment thereof; provided, however, that the
stock transfer books will remain open between the Record Date and the date of
the Annual Meeting.
Representation of at least a majority in voting interest of the common
stock of the Company either in person or by proxy is required to constitute a
quorum for purposes of voting on the proposal set forth above. Accordingly, it
is important that your shares be represented at the Annual Meeting. WHETHER OR
NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. Your proxy may be revoked
at any time prior to the time it is voted at the Annual Meeting.
Please read the accompanying proxy material carefully. Your vote is
important and the Company appreciates your cooperation in considering and acting
on the matters presented.
By Order of the Board of Directors,
DUANE J. ROTH, Chairman
Dated: San Diego, California
October 10, 2005
2
ALLIANCE PHARMACEUTICAL CORP.
4660 LA JOLLA VILLAGE DRIVE, SUITE 825
SAN DIEGO, CALIFORNIA 92122
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PROXY STATEMENT
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GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Alliance Pharmaceutical Corp. (the
"Company" or the "Corporation") to be voted at the Annual Meeting of
stockholders to be held on Thursday, November 10, 2005, at 10:00 a.m., local
time, at the Embassy Suites Hotel, located at 4550 La Jolla Village Drive, San
Diego, California 92122, and at any adjournment or adjournments thereof (the
"Annual Meeting") for the purposes set forth in the accompanying Notice of the
Annual Meeting of Stockholders.
The mailing address of the principal executive offices of the
Corporation is 4660 La Jolla Village Drive, Suite 825, San Diego, California
92122 (telephone number 858-410-5200). The enclosed proxy and this proxy
statement are being first sent to stockholders of the Corporation on or about
October 11, 2005. The Corporation's 2005 Annual Report to Stockholders, which
includes the Corporation's Annual Report for the year ended June 30, 2005 on
Form 10-KSB, is being mailed to stockholders concurrently with this Proxy
Statement. The 2005 Annual Report to Stockholders is not to be regarded as proxy
soliciting material or as a communication by means of which any solicitation of
proxies is to be made.
VOTING RIGHTS AND SOLICITATION
The Board of Directors has fixed the close of business on September 30,
2005 as the record date for the determination of stockholders of the Corporation
entitled to receive notice of, and vote at, the Annual Meeting. At the close of
business on the record date, an aggregate of 34,829,827 shares of common stock,
par value $.01 per share, of the Corporation (the "Common Stock") were issued
and outstanding and entitled to one vote on each matter to be voted upon at the
Annual Meeting.
All votes will be tabulated by the inspector of election appointed for
the Annual Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Broker non-votes are not counted for the
purpose of determining the presence or absence of a quorum.
The holders of a majority in voting interest of the common stock
outstanding and entitled to vote at the Annual Meeting will constitute a quorum
for the transaction of business at the Annual Meeting.
In voting with regard to the proposal to elect directors, stockholders
may vote in favor of all the nominees, withhold their votes as to all nominees
or withhold their votes as to a specific nominee. The vote required by the
proposal to elect directors is governed by New York law and is a plurality of
the votes cast by the holders of shares entitled to vote, provided a quorum is
present. As a result, in accordance with New York law, votes that are withheld
and broker non-votes will not be counted and will have no effect on the voting
for election of directors.
PROXIES IN THE FORM ENCLOSED ARE SOLICITED BY, OR ON BEHALF OF, THE
BOARD OF DIRECTORS OF THE CORPORATION. STOCKHOLDERS ARE URGED TO SIGN THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY. THE PERSONS NAMED IN THE PROXY HAVE
BEEN DESIGNATED AS PROXIES BY THE BOARD OF DIRECTORS. Shares represented by
properly executed proxies received by the Corporation will be voted at the
Annual Meeting in the manner specified therein or, if no specification is made,
FOR the election of the directors, as described in this proxy statement.
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Any proxy given by a stockholder pursuant to this solicitation may be
revoked by the stockholder at any time before it is exercised, by written
notification delivered to the Secretary of the Corporation, by voting in person
at the Annual Meeting, or by executing another proxy bearing a later date.
Proxies will be solicited by mail. They may also be solicited by
officers and regular employees of the Corporation personally, by telephone or
otherwise, but such persons will not be specifically compensated for such
services. Banks, brokers, nominees, and other custodians and fiduciaries will be
reimbursed for their reasonable out-of-pocket expenses in forwarding soliciting
material to their principals, the beneficial owners of common stock. The costs
of soliciting proxies will be borne by the Corporation.
It is expected that the following business will be considered at the
Annual Meeting and action taken thereon:
PROPOSAL 1. ELECTION OF DIRECTORS
Six directors are to be elected at the Annual Meeting to hold office
until the next annual meeting of stockholders and until the election and
qualification of their respective successors. The Board of Directors, upon
recommendation of the Corporation's President and Chief Executive Officer, has
nominated Pedro Cuatrecasas, M.D., Carroll O. Johnson, Stephen M. McGrath, Jean
G. Riess, Ph.D., Duane J. Roth, and Theodore D. Roth, all of whom are currently
directors of the Corporation.
Unless otherwise specified in the accompanying proxy, the shares voted
pursuant thereto will be cast for these nominees. If, for any reason, any of the
nominees should be unable to accept nomination or election, it is intended that
such proxy will be voted for the election, in his place, of a substituted
nominee who would be recommended by management. Management, however, has no
reason to believe that any nominee will be unable to serve as a director.
Set forth below is certain information with respect to each nominee as
of October 10, 2005:
NOMINEES FOR ELECTION AS DIRECTORS
- ----------------------------------
Name Position Age
- ----------------------- ----------------------------------------------- ---
Duane J. Roth Chairman, President and Chief Executive Officer 55
Pedro Cuatrecasas, M.D. Director 69
Carroll O. Johnson Director 72
Stephen M. McGrath Director 70
Jean G. Riess, Ph.D. Director 69
Theodore D. Roth Director 54
BIOGRAPHICAL INFORMATION REGARDING DIRECTORS
- --------------------------------------------
DUANE J. ROTH. Mr. Roth has served as a director of the Corporation
since 1985. He has served as Chief Executive Officer of the Corporation since
1985 and as Chairman since October 1989. Prior to joining the Corporation, Mr.
Roth served as President of Analytab Products, Inc., an American Home Products
company (now Wyeth) involved in manufacturing and marketing medical diagnostics,
pharmaceuticals and devices. For the previous ten years, he was employed in
various sales, marketing and general management capacities with Ortho Diagnostic
Systems, Inc., a Johnson & Johnson company, which is a manufacturer of
diagnostic and pharmaceutical products. Mr. Roth's brother, Theodore D. Roth, is
a director of the Corporation.
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PEDRO CUATRECASAS, M.D. Dr. Cuatrecasas was elected as a director of
the Corporation in August 1996. He has over 20 years of experience in the
pharmaceutical industry. Dr. Cuatrecasas retired from the positions of Vice
President of Warner-Lambert Company and President, Parke-Davis Pharmaceutical
Research on December 31, 1996, positions he had held since 1989. During the
previous four years, he had been Senior Vice President of Research and
Development and Director of Glaxo, Inc. For the prior ten years, he was Vice
President of Research, Development and Medical and Director of Burroughs
Wellcome Company. Dr. Cuatrecasas is a member of the National Academy of
Sciences and the Institute of Medicine. He is currently an independent
consultant in pharmaceutical research, an Adjunct Professor in Medicine and
Pharmacology at the University of California in San Diego. He received his M.D.
from Washington University School of Medicine.
CARROLL O. JOHNSON. Mr. Johnson has served as a director of the
Corporation since 1989. In 2004, he retired as President of Research Management,
Inc. ("RMI"), an independent contract research organization that provided
services to the pharmaceutical industry. Previously, he served for 25 years in
various research, sales and marketing positions with several pharmaceutical
companies, including Pharmacia Laboratories, Inc., where he created a national
sales force that introduced three major products.
STEPHEN M. MCGRATH. Mr. McGrath has served as a director of the
Corporation since 1989. In May 1998, he retired as Executive Vice President of
CIBC World Markets, Inc. and as the Director of its Corporate Finance
Department. For the eleven years prior to his employment by CIBC Oppenheimer in
1983, he held various executive positions with Warner-Lambert Company. Before
joining Warner-Lambert, Mr. McGrath was Controller and Assistant Treasurer of
Sterling Drug, Inc. and a certified public accountant for Price Waterhouse & Co.
JEAN G. RIESS, PH.D. Professor Riess has served as a director of the
Corporation since 1989. Until his retirement in 1996, he had been the Director
of Laboratoire de Chimie Moleculaire at the University of Nice for over 20
years. He has been an active researcher since receiving a Ph.D. from the
University of Strasbourg, with numerous patents and over 300 publications. For
more than 20 years, Dr. Riess has focused on chemistry related to
perfluorochemical emulsions for medical application. He has directed research in
synthesis of tailored perfluorochemicals, in emulsion technology, in synthesis
of fluorinated surfactants, in the physical chemistry of emulsion stabilization
and in surfactant self-aggregation.
THEODORE D. ROTH. Mr. Roth has served as a director of the Corporation
since 1998. He has been a Managing Director of Roth Capital Partners, LLC, an
investment-banking firm, since 2003. For more than 15 years prior, Mr. Roth was
employed by the Corporation, most recently serving as President and Chief
Operating Officer. He received his J.D. from Washburn University and an LL.M. in
Corporate and Commercial Law from the University of Missouri in Kansas City. He
is the brother of Duane J. Roth, the Chairman and Chief Executive Officer of the
Corporation.
COMPENSATION OF DIRECTORS
- -------------------------
Directors of the Corporation do not receive cash compensation for
attendance at Board of Directors' meetings or committee meetings. Non-qualified
stock options are awarded to non-employee directors pursuant to the Formula
Stock Option Plan for Non-Employee Directors of the Corporation (the "Directors'
Formula Option Plan"). Options under the Directors' Formula Option Plan are
granted under and subject to our 1991 Stock Option Plan, 2000 Stock Option Plan
and 2001 Stock Option Plan. The options have a term of ten years from the date
of grant and are exercisable at a price per share equal to the fair market value
of a share of common stock on the date of grant. Each non-employee director (i)
upon his initial election, shall automatically be granted an option to acquire
5,000 shares of common stock which shall be exercisable in four installments of
1,250 shares each with the first installment being at his initial election and
the remaining installments becoming exercisable on the date of each annual
meeting of the Board of Directors thereafter that such person is a director,
until fully exercisable, and (ii) upon the third annual meeting following his
initial election and each annual meeting thereafter that such person remains a
non-employee director, shall automatically be granted an option to acquire 1,500
shares of common stock. Except as otherwise described above, all options are
immediately exercisable in full on the date of grant.
On January 12, 2005, each director of the Corporation who was not an
employee of the Corporation received a one-time grant of an option to purchase
50,000 shares of the Corporation's common stock at an exercise price of $0.29
per share.
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COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
- -------------------------------------------------
During the fiscal year ended June 30, 2005, there were four regular and
five special meetings of the Board of Directors. In addition, during the fiscal
year ended June 30, 2005, each Board member attended 75% or more of the
aggregate meetings of the Board and of the committees on which he served, held
during the period for which he was a director or committee member, respectively.
The Corporation also encourages all members of the Board to attend the
Corporation's annual meeting of stockholders each year. Five members of the
Board attended the Corporation's 2004 Annual Meeting.
Stockholders may communicate with members of the Corporation's Board by
mail addressed to the full Board, a specific member of the Board or to a
particular committee of the Board at 4660 La Jolla Village Drive, Suite 825, San
Diego, CA 92122.
The Board has also established an Executive Committee, a Compensation
Committee, an Audit Committee and a Nominating Committee.
EXECUTIVE COMMITTEE
The Executive Committee was established to act when the full Board of
Directors is unavailable. It has all the authority of the Board between meetings
of the entire Board as to matters, which have not been specifically delegated to
other committees of the Board, except the authority that by law cannot be
delegated by the Board of Directors. The members of the Executive Committee are
Dr. Cuatrecasas and Mr. D. Roth.
COMPENSATION COMMITTEE
The Compensation Committee advises and makes recommendations to the
Board of Directors regarding matters relating to the compensation of directors,
officers and senior management. The members of the Compensation Committee are
Dr. Cuatrecasas and Messrs. Johnson and McGrath.
AUDIT COMMITTEE
The Audit Committee advises and makes recommendations to the Board
concerning our internal controls, our independent auditors and other matters
relating to our financial activities and reporting. The Audit Committee is
composed of Messrs. Johnson and McGrath. Our audit committee financial expert is
Mr. McGrath. All members of the Audit Committee are independent (as that term is
used in Item 7(d)(3) of Schedule 14A under the Securities Exchange Act of 1934,
as amended and as defined in Rule 4200(a)(15) of the National Association of
Securities Dealers (the "NASD") listing standards). The Audit Committee has
adopted a written Audit Committee Charter, which requires that the Corporation's
Audit Committee be comprised of three (3) members. Therefore, the Corporation is
actively searching for an alternative independent director who is willing to
serve on this committee.
NOMINATING COMMITTEE
The Nominating Committee interviews, evaluates, nominates and
recommends individuals for membership on the Corporation's Board of Directors
and committees thereof. The Nominating Committee is composed of Dr. Riess and
Mr. Johnson. All members of the Nominating Committee are independent of
management (as independence is defined in the NASD listing standards). The
Nominating Committee has not adopted a written Nominating Committee Charter.
When considering a potential candidate for membership on the
Corporation's Board of Directors, the Nominating Committee considers relevant
business and industry experience and demonstrated character and judgment. There
are no differences in the manner in which the Nominating Committee evaluates a
candidate that is recommended for nomination for membership on the Corporation's
Board of Directors by a stockholder. The Nominating Committee has not received
any recommendations from any of the Corporation's stockholders in connection
with the Annual Meeting.
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The Nominating Committee will consider shareholder nominations for
directors submitted in accordance with the following procedure: A notice
relating to the nomination must be timely given in writing to the Secretary of
the Corporation prior to the meeting. To be timely, the notice must be delivered
within the time permitted for submission of a stockholder proposal as described
under "Future Proposals by Stockholders." Such notice must be accompanied by the
nominee's written consent, contain information relating to the business,
experience and background of the nominee, and contain information with respect
to the nominating stockholder and persons acting in concert with the nominating
stockholder.
RECOMMENDATION OF THE BOARD
---------------------------
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION OF
EACH OF THE NOMINEES IDENTIFIED ABOVE.
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AUDIT COMMITTEE REPORT
The Audit Committee oversees the Corporation's financial reporting
process on behalf of the Board of Directors. Management has the primary
responsibility for the financial statements and the reporting process, including
the systems of internal controls. In fulfilling its oversight responsibilities,
the Audit Committee reviewed the audited financial statements in the
Corporation's Annual Report on Form 10-KSB for the year ended June 30, 2005 with
management, including a discussion of the quality, not just the acceptability,
of the accounting principles, the reasonableness of significant judgments and
the clarity of disclosures in the financial statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of the Corporation's
audited financial statements with accounting principles generally accepted in
the United States of America, their judgments as to the quality, not just the
acceptability, of the Corporation's accounting principles and any other matters
as are required to be discussed with the Audit Committee under the standards of
the Public Company Accounting Oversight Board (United States). In addition, the
Audit Committee has discussed with the independent auditors the auditors'
independence from management and the Corporation, including the matters in the
written disclosures required by the Independence Standards Board. The Audit
Committee received from Corbin & Company, LLP written disclosure and the letter
regarding its independence as required by Independence Standards Board Standard
No. 1. The Audit Committee also discussed with the independent auditors the
matters required by the Statement on Auditing Standards No. 61 and considered
the compatibility of non-audit services with the auditor's independence.
The Audit Committee discussed with the independent auditors the overall
scope and plans for their audit. The Audit Committee meets with the independent
auditors, with and without management present, to discuss the results of their
examinations, their evaluations of internal controls and the overall quality of
the Corporation's financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved,
that the audited financial statements be included in the Annual Report on Form
10-KSB for the year ended June 30, 2005 for filing with the Securities and
Exchange Commission (the "SEC").
Stephen M. McGrath, Audit Committee Chairman
Carroll O. Johnson, Audit Committee Member
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RELATIONSHIP WITH INDEPENDENT AUDITORS
Ernst & Young LLP served as independent auditors for the Corporation
for the first half of fiscal year ended June 30, 2005. Corbin & Company, LLP
served as independent auditors for the Corporation for the last half of fiscal
year ended June 30, 2005. The following table sets forth the aggregate fees
billed by Ernst & Young LLP and Corbin & Company, LLP for services performed
during the fiscal years ended June 30, 2005 and 2004, respectively:
2005 2004
-------- -------
AUDIT FEES $ 84,003 $87,268
AUDIT-RELATED FEES 750 1,965
TAX FEES 30,500 -
ALL OTHER FEES 29,070 -
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$144,323 $89,233
======== =======
Audit-related fees included accounting consultations. All other fees
included fees incurred related to the filing of Form SB-2 and the audits of the
Company's 401(k) Plan for the years ended December 31, 2002, 2003 and 2004.
The Audit Committee believes that all services rendered to the
Corporation by Ernst & Young LLP and Corbin & Company, LLP were compatible with
maintaining Ernst & Young's and Corbin & Company's independence.
The Corporation has not retained Corbin & Company, LLP to perform
services in connection with (a) operating or supervising the operation of the
Corporation's financial information system or managing the Corporation's local
area network, or (b) designing or implementing a hardware or software system
that aggregates source data underlying the financial statements or generates
information that is significant to the Corporation's financial statements taken
as a whole.
Representatives of Corbin & Company, LLP are expected to be present at
the Annual Meeting, will have the opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Dr. Jean Riess was engaged by the Corporation to assist in the
discussions with Beijing Double-Crane Pharmaceutical Co., Ltd. and to present at
the International Symposium on Blood Substitutes. During fiscal 2005, the
Corporation paid him $16,000 in compensation.
Roth Capital Partners, LLC ("Roth Capital") has provided financial
advisory services to the Corporation from time to time. In June 2004, Roth
Capital functioned as the placement agent in connection with the sale of
31,427,137 shares of common stock and warrants to purchase 23,570,357, resulting
in gross proceeds to the Corporation of approximately $11 million. Roth Capital
received $768,000 as a fee for its services in connection with this transaction
and a warrant to purchase 1,571,357 shares of the Corporation's common stock.
Byron Roth, Chairman and majority owner of Roth Capital, is the brother of Duane
J. Roth. Theodore D. Roth is the brother of Duane J. Roth and is employed by
Roth Capital.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Corporation's directors,
executive officers and holders of more than 10% of a registered class of the
Corporation's equity securities to file with the SEC initial reports of
ownership and reports of changes in ownership of common stock and other equity
securities of the Corporation. Directors, executive officers and greater than
10% shareholders are required by SEC regulation to furnish the Corporation with
copies of all Section 16(a) reports they file. Based solely on its review of the
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copies of such forms received by it, or written representation from certain
reporting persons that no Form 5s were required for those persons, the
Corporation believes that all reporting requirements under Section 16(a) for the
2005 fiscal year were met in a timely manner by its directors, executive
officers and greater than 10% beneficial owners.
MANAGEMENT
The following sets forth the names, ages and positions of the
Corporation's executive officers as of October 10, 2005:
Name Position Age
- ---------------- ------------------------------------ ---
Duane J. Roth Chairman and Chief Executive Officer 55
Edward C. Hall Chief Financial Officer 64
John E. Wurst General Counsel and Secretary 39
BIOGRAPHICAL INFORMATION
- ------------------------
DUANE J. ROTH. Mr. Roth has been Chairman of the Corporation since
October 1989 and Chief Executive Officer since 1985. See "Election of Directors"
for additional biographical information on Mr. Roth.
JOHN E. WURST. Mr. Wurst has served as the Corporation's Secretary and
General Counsel since March 2004. He has been an employee of the Corporation
since 1999. Mr. Wurst received his J.D. from Creighton University School of Law
and an LL.M. in Intellectual Property from the George Washington University
School of Law.
EDWARD C. HALL. Mr. Hall has been the Corporation's Chief Financial
Officer since August 2004, on a part-time basis. Mr. Hall has held senior
financial executive positions with both public and privately held life sciences
and technology companies for over 25 years. Prior to his appointment as our
Chief Financial Officer, he served as Vice President and Chief Financial Officer
of Chromagen, Inc, a private biotech tools company that develops proteomic and
genomic assays for use in drug discovery. Prior to that Mr. Hall was Vice
President, Finance and Chief Financial Officer of Cytel Corporation, a public
biotech company and developer of anti-inflammatory drugs. Prior to that, Mr.
Hall was Vice President, Finance and Chief Financial Officer of Medical Device
Technologies, a public medical device company. Mr. Hall is a Partner of Tatum
CFO Partners, LLP.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding the
beneficial ownership of the Corporation's common stock as of September 15, 2005
by: (i) each person (or group of affiliated persons) known by the Corporation to
be the beneficial owner of more than 5% of the outstanding shares of the
Corporation's common stock; (ii) each of the Corporation's directors; (iii) the
Corporation's executive officers serving as of June 30, 2005 whose salaries plus
bonus for fiscal 2005 exceeded $100,000 (the "Named Executive Officers"); and
(iv) all of the Corporation's directors and the executive officers as a group.
AMOUNT AND NATURE OF BENEFICIAL PERCENTAGE OF CLASS
NAME AND ADDRESS (1) OWNERSHIP (2) BENEFICIALLY OWNED
---------------------------------------- ---------------------------------- -----------------------------
EXECUTIVE OFFICERS AND DIRECTORS:
Duane J. Roth 1,282,628 (4) 3.56%
Pedro Cuatrecasas, M.D. 111,600 (5) *
Carroll O. Johnson 98,500 (6) *
Stephen M. McGrath 1,077,908 (7) 3.05%
Jean G. Riess, Ph.D. 133,447 (8) *
Theodore D. Roth 254,800 (9) *
John E. Wurst 104,805 (10) *
All directors and executive officers 3,068,688 8.26%
as a group (8 persons)
5% STOCKHOLDERS:
MicroCapital Fund LP 3,865,500 (11) 9.99%
MicroCapital Fund Ltd. 3,052,000 (12) 8.06%
Biomedical Value Fund, L.P. 3,865,500 (13) 9.99%
Biomedical Offshore Value Fund, Ltd. 3,488,000 (14) 9.10%
MedCap Partners, L.P. 3,865,500 (15) 9.99%
Xmark Fund, L.P. 3,655,424 (16) 9.99%
Xmark Fund, Ltd. 3,655,424 (17) 9.99%
Brown Simpson Partners I, Ltd. 3,865,500 (18) 9.99%
Technology Gateway Partnership, L.P. 3,865,500 (19) 9.99%
Special Situations Private Equity 4,533,300 (20) 11.52%
Fund, L.P.
Roth Capital Partners, LLC 3,007,356 (21) 8.03%
* Indicates ownership of less than 1% of outstanding shares.
- -------------------
(1) The address of each of the executive officers, directors and nominees
for director is c/o Alliance Pharmaceutical Corp., 4660 La Jolla
Village Drive, Suite 825, San Diego, California 92122.
(2) Each person listed or included in the group has sole voting power and
sole investment power with respect to the shares owned by such person,
except as indicated below.
(3) Shares subject to options and warrants currently exercisable or
exercisable within 60 days after September 15, 2005 are deemed
outstanding for determining the number of shares beneficially owned and
for computing the percentage ownership of the person holding such
options, but are not deemed outstanding.
(4) Consists of (i) 86,742 shares owned by Mr. D. Roth, (ii) 180,400 shares
subject to options granted by the Company under its 1991 Stock Option
Plan (the "1991 Plan"), (iii) 235,250 shares subject to options granted
by the Company under its 2000 Stock Option Plan (the "2000 Plan"), (iv)
750,000 shares subject to options granted by the Company under its 2001
Stock Option Plan (the "2001 Plan"), (v) 28,571 shares subject to
warrants, and (vi) 1,665 shares owned by Mr. Roth's spouse.
(5) Consists of (i) 14,600 shares owned by Dr. Cuatrecasas, (ii) 20,000
shares subject to options granted by the Company under the 1991 Plan,
(iii) 39,500 shares subject to options granted by the Company under the
2000 Plan, and (iv) 37,500 shares subject to options granted by the
Company under the 2001 Plan.
(6) Consists of (i) 5,000 shares owned by Mr. Johnson, (ii) 16,500 shares
subject to options granted by the Company under the 1991 Plan, (iii)
39,500 shares subject to options granted by the Company under the 2000
Plan, and (iv) 37,500 shares subject to options granted by the Company
under the 2001 Plan.
11
(7) Consists of (i) 612,301 shares owned by Mr. McGrath, (ii) 368,107
shares subject to warrants, (iii) 20,500 shares subject to options
granted by the Company under the 1991 Plan, (iv) 39,500 shares subject
to options granted by the Company under the 2000 Plan, and (v) 37,500
shares subject to options granted by the Company under the 2001 Plan.
(8) Consists of (i) 15,947 shares owned by Dr. Riess, (ii) 40,500 shares
subject to options granted by the Company under the 1991 Plan, (iii)
39,500 shares subject to options granted by the Company under the 2000
Plan, and (iv) 37,500 shares subject to options granted by the Company
under the 2001 Plan.
(9) Consists of (i) 4,900 shares owned by Mr. T. Roth (ii) 184,400 shares
subject to options granted by the Company under the 1991 Plan, (iii)
28,000 shares subject to options granted by the Company under the 2000
Plan, and (iv) 37,500 shares subject to options granted by the Company
under the 2001 Plan.
(10) Consists of (i) 16,055 shares subject to options granted by the Company
under the 1991 Plan, and (ii) 88,750 shares subject to options granted
by the Company under the 2001 Plan.
(11) Consists of 3,865,500 shares of common stock issuable upon conversion
of a note. The stockholder has contractually agreed to restrict its
ability to convert such that the number of shares of our common stock
held by it does not exceed 9.99% of our outstanding shares of common
stock. This restriction may be waived by the stockholder at its
election upon 61 days' prior notice to us and in certain other
circumstances. If the stockholder waived this restriction, the number
of shares of our common stock beneficially owned by it would be
5,232,000.
(12) Consists of 3,052,000 shares of common stock issuable upon conversion
of a note.
(13) Consists of 3,865,500 shares of common stock issuable upon conversion
of a note. The stockholder has contractually agreed to restrict its
ability to convert such that the number of shares of our common stock
held by it does not exceed 9.99% of our outstanding shares of common
stock. This restriction may be waived by the stockholder at its
election upon 61 days' prior notice to us and in certain other
circumstances. If the stockholder waived this restriction, the number
of shares of our common stock beneficially owned by it would be
5,232,000.
(14) Consists of 3,488,000 shares of common stock issuable upon conversion
of a note.
(15) Consists of 3,865,500 shares of common stock issuable upon conversion
of a note. The stockholder has contractually agreed to restrict its
ability to convert such that the number of shares of our common stock
held by it does not exceed 9.99% of our outstanding shares of common
stock. This restriction may be waived by the stockholder at its
election upon 61 days' prior notice to us and in certain other
circumstances. If the stockholder waived this restriction, the number
of shares of our common stock beneficially owned by it would be
6,540,000.
(16) Includes (i) 1,759,500 shares of common stock issuable upon conversion
of a note held by Xmark Fund, L.P. ("Xmark LP"); and (ii) 1,760,500
shares of common stock issuable upon conversion of a note held by Xmark
Fund, Ltd. ("Xmark Ltd."). Xmark Asset Management, LLC ("XAM"), serves
as investment manager for each of Xmark LP and Xmark Ltd, as well as
various other private investment funds. Mitchell D. Kaye, whose
business address is c/o Xmark Asset Management, LLC 152 West 57th
Street, 21st Floor, New York, New York 10019, is the Manager of XAM,
and as such, Mr. Kaye possesses the power to vote and direct the
disposition of all securities held by Xmark LP and Xmark Ltd. The
stockholder has contractually agreed to restrict its ability to convert
such that the number of shares of our common stock held by it does not
exceed 9.99% of our outstanding shares of common stock. This
restriction may be waived by the stockholder at its election upon 61
days' prior notice to us and in certain other circumstances. If the
stockholder waived this restriction, the number of shares of our common
stock beneficially owned by it would be 5,839,424. Each of Xmark LP and
Xmark Ltd. disclaims beneficial ownership over the 5,500,000 shares of
common stock beneficially owned by Brown Simpson Partners I, Ltd., over
which XAM also serves as investment manager.
(17) Includes (i) 1,760,500 shares of common stock issuable upon conversion
of a note held by Xmark Ltd.; and (ii) 1,759,500 shares of common stock
issuable upon conversion of a note held by Xmark LP. XAM serves as
investment manager for each of Xmark LP and Xmark Ltd, as well as
various other private investment funds. Mitchell D. Kaye, whose
business address is c/o Xmark Asset Management, LLC 152 West 57th
Street, 21st Floor, New York, New York 10019, is the Manager of XAM,
and as such, Mr. Kaye possesses the power to vote and direct the
disposition of all securities held by Xmark LP and Xmark Ltd. The
stockholder has contractually agreed to restrict its ability to convert
such that the number of shares of our common stock held by it does not
exceed 9.99% of our outstanding shares of common stock. This
restriction may be waived by the stockholder at its election upon 61
days' prior notice to us and in certain other circumstances. If the
stockholder waived this restriction, the number of shares of our common
stock beneficially owned by it would be 5,839,424. Each of Xmark LP and
Xmark Ltd. disclaims beneficial ownership over the 5,500,000 shares of
common stock beneficially owned by Brown Simpson Partners I, Ltd., over
which XAM also serves as investment manager.
12
(18) Includes (i) 3,865,500 shares of common stock issuable upon exercise of
warrants held by Brown Simpson Partners I, Ltd. XAM serves as
investment manager for Brown Simpson Partners I, Ltd., as well as
various other private investment funds. Mitchell D. Kaye, whose
business address is c/o Xmark Asset Management, LLC 152 West 57th
Street, 21st Floor, New York, New York 10019, is the Manager of XAM,
and as such, Mr. Kaye possesses the power to vote and direct the
disposition of all securities held by Brown Simpson Partners I, Ltd.
Brown Simpson Partners I, Ltd. disclaims beneficial ownership over the
5,839,424 shares of common stock beneficially owned by Xmark LP and
Xmark Ltd., over which XAM also serves as investment manager. The
stockholder has contractually agreed to restrict its ability to
exercise warrants such that the number of shares of our common stock
held by it does not exceed 9.99% of our outstanding shares of common
stock. This restriction may be waived by the stockholder at its
election upon 61 days' prior notice to us and in certain other
circumstances. If the stockholder waived this restriction, the number
of shares of our common stock beneficially owned by it would be
5,500,000.
(19) Includes 1,088,400 shares of common stock issuable upon conversion of a
note. The stockholder has contractually agreed to restrict its ability
to convert such that the number of shares of our common stock held by
it does not exceed 9.99% of our outstanding shares of common stock.
This restriction may be waived by the stockholder at its election upon
61 days' prior notice to us and in certain other circumstances. If the
stockholder waived this restriction, the number of shares of our common
stock beneficially owned by it would be 4,680,000.
(20) Includes 4,349,100 shares of common stock issuable upon conversion of a
note.
(21) Includes 2,594,397 shares of common stock issuable upon exercise of
warrants and 13,695 shares of common stock and 10,000 shares of common
stock issuable upon exercise of warrants held by Gordon Roth, Chief
Operating Officer of Roth Capital Partners, LLC ("Roth Capital"). Roth
Capital has served as placement agent for several of our equity
financings. Duane Roth, our Chairman and Chief Executive Officer, is
the brother of Byron Roth, Chairman and majority owner of Roth Capital,
Gordon Roth and Theodore Roth. Theodore Roth, Managing Director,
Corporate Finance of Roth Capital was our President and Chief Operating
Officer until December 31, 2002, and he is currently one of our
directors.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding the
compensation earned during the last three fiscal years by the Named Executive
Officers:
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------- --------------
SECURITIES
UNDERLYING
OPTIONS/SARS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (A) (#) COMPENSATION
- ------------------------------------ --------- ----------- ------------ -------------- --------------
Duane J. Roth 2005 $188,000 $- 1,000,000 $74,000 (b)
Chairman and Chief Executive 2004 $228,460 $- 180,000 $-
Officer 2003 $118,370 $- - $-
John E. Wurst 2005 $173,000 $- 100,000 $-
Secretary and General Counsel 2004 $165,600 $- 75,000 $-
- --------------------
(a) The Board of Directors has determined that, as in fiscal year 2003 and
2004, there will be no executive bonuses for fiscal year 2005.
(b) Consists of $74,000 in vacation pay that had accrued in favor of Mr. D.
Roth and that was paid out to Mr. D. Roth in accordance with the
Company's policies for full-time employees who transition to part-time
and become ineligible for company benefits.
EMPLOYMENT AGREEMENTS
- ---------------------
None
OPTION GRANTS IN THE LAST FISCAL YEAR
- -------------------------------------
The following table provides information concerning individual grants
of stock options during fiscal 2005 to the Named Executive Officers. The
exercise prices in each case equal the last reported sales price per share of
the Corporation's common stock as reported by the Over-the-Counter Bulletin
Board on the date of grant. The percentage of total options granted to the
Corporation's employees in the last fiscal year is based on options to purchase
an aggregate of 1,617,500 shares of common stock granted under the Corporation's
option plans to all of our employees in fiscal 2005:
13
NUMBER OF SHARES OF PERCENT OF TOTAL
COMMON STOCK OPTIONS GRANTED EXERCISE
UNDERLYING OPTIONS TO EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED (#) LAST FISCAL YEAR ($/SH) DATE
- ----------------------- ------------------- ----------------- -------- -----------
Duane J. Roth 1,000,000 62% $0.29 1/12/2015
John E. Wurst 100,000 6% $0.29 1/12/2015
FISCAL YEAR END OPTION VALUES
- -----------------------------
The Corporation has granted options to its executive officers under its
1983 Incentive Stock Option Plan (which plan expired on October 1, 1993), its
1983 Non-Qualified Stock Option Program (which plan expired on February 25,
1999), its 1991 Stock Option Plan (which plan expired on November 7, 2001), its
2000 Stock Option Plan and its 2001 Stock Option Plan.
No options were exercised by any of the Named Executive Officers during
the 2005 fiscal year. In addition, no stock appreciation rights were exercised
by any of the Named Executive Officers during the 2005 fiscal year.
The following table sets forth the number of shares of the
Corporation's common stock subject to exercisable and unexercisable stock
options that the Named Executive Officers held at June 30, 2005:
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
NAME UNEXERCISED OPTIONS AT FISCAL YEAR END OPTIONS AT FISCAL YEAR END
- ----------------------- ------------------------------------- -------------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
Duane J. Roth 915,650 517,150 $- $-
John E. Wurst 84,180 116,020 $1,125 $1,125
OTHER BUSINESS
Management knows of no other matters that may be presented to the
Annual Meeting. However, if any other matter properly comes before the Annual
Meeting, it is intended that proxies in the accompanying form will be voted in
accordance with the judgment of the persons named therein.
FUTURE PROPOSALS BY SHAREHOLDERS
Any proposal which a shareholder of the Corporation wishes to have
included in the proxy statement and proxy relating to the Corporation's 2006
Annual Meeting, pursuant to the provisions of Rule 14a-8 under the Securities
Exchange Act of 1934, must be received by the Corporation at its executive
offices no later than August 25, 2006, and must otherwise comply with the
requirements of Rule 14a-8. Stockholder proposals submitted outside the
processes of Rule 14a-8 will also be considered untimely if submitted after
August 25, 2006. The address of the Corporation's executive office is 4660 La
Jolla Village Drive, Suite 825, San Diego, California 92122.
ANNUAL REPORT ON FORM 10-KSB
A complete copy of the Corporation's Annual Report on Form 10-KSB for
the year ended June 30, 2005 is included in the Corporation's 2005 Annual Report
to Stockholders. A copy of the Corporation's 2005 Annual Report to Stockholders
has been mailed to all stockholders along with this Proxy Statement.
Stockholders may obtain additional copies of the Corporation's Annual Report on
Form 10-KSB and the exhibits thereto, without charge, by writing to the
Corporation, 4660 La Jolla Village Drive, Suite 825, San Diego, California
92122, Attention: Corporate Communications.
It is important that your shares be represented at the meeting,
regardless of the number of shares that you hold. YOU ARE, THEREFORE, URGED TO
EXECUTE PROMPTLY AND RETURN THE ACCOMPANYING PROXY IN THE ENVELOPE THAT HAS BEEN
ENCLOSED FOR YOUR CONVENIENCE. Shareholders who are present at the Annual
Meeting may revoke their proxies and vote in person or, if they prefer, may
abstain from voting in person and allow their proxies to be voted.
By Order of the Board of Directors,
Duane J. Roth, Chairman
Date: October 10, 2005
San Diego, California
14
VOTE BY INTERNET - WWW.PROXYVOTE.COM
ALLIANCE PHARMACEUTICAL CORP. Use the Internet to transmit your voting instructions and
4660 LA JOLLA VILLAGE DRIVE, SUITE 825 for electronic delivery of information up until 11:59
SAN DIEGO, CA 92122 P.M. Eastern Time the day before the cut-off date or
meeting date. Have your proxy card in hand when you
access the web site.
VOTE BY PHONE - 1-800-690-6903 Use any touch-tone
telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before the cut-off date
or meeting date. Have your proxy card in hand when you
call and then follow the simple instructions the Vote
Voice provides you.
VOTE BY MAIL - Mark, sign and date your proxy card and
return it in the postage-paid envelope we've provided or
return to Alliance Pharmaceutical Corp., c/o ADP, 51
Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE KEEP THIS PORTION FOR YOUR RECORDS
OR BLACK INK AS FOLLOWS:
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
ALLIANCE PHARMACEUTICAL CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
PROPOSAL 1. ELECTION OF DIRECTORS: To elect the six (6) nominees for Director listed below.
01) Dr. Pedro Cuatrecasas 05) Duane J. Roth FOR WITHHOLD FOR ALL To withhold authority to
02) Carroll O. Johnson 06) Theodore D. Roth ALL ALL EXCEPT vote for any individual
03) Stephen M. McGrath |_| |_| |_| nominee, mark "For All
04) Dr. Jean G. Riess Except" and write the
nominee's number on the
line below.
_________________________
2. OTHER MATTERS: A majority of the Directors will determine how to vote this proxy with respect to any other
matters which may properly come before the meeting or any adjournment thereof.
3. PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
Your signature should appear the same as your name appears hereon. If signing as attorney, executor,
administrator, trustee or guardian, please indicate the capacity in which signing. When signing as joint
tenants, all parties to the joint tenancy must sign. When the proxy is given by a corporation, it should be
signed by an authorized officer.
For address changes, please check this box |_|
and write them on the back where indicated
Receipt of the Notice of Annual Meeting and
of the Proxy Statement and Annual Report to
Stockholders of the Corporation is hereby
acknowledged.
_________________________________________________________ ___________________________________________________
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
====================================================================================================================
__________________________________________________________________________________________
====================================================================================================================
ALLIANCE PHARMACEUTICAL CORP.
Annual Meeting of Stockholders to be held November 10, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking any proxy heretofore given, hereby appoints Carroll O. Johnson, Stephen M. McGrath and
Duane J. Roth, and each of them the proxies of the undersigned with full power of substitution, with respect to all
of the shares of stock of ALLIANCE PHARMACEUTICAL CORP., a New York corporation (the "Corporation"), which the
undersigned is entitled to vote at the Corporation's Annual Meeting of Stockholders to be held at 10:00 a.m., San
Diego time, on Thursday, November 10, 2005, and at any adjournment thereof.
P
R
O THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1
X
Y
__________________________________________________________________________________________________________
Address Change:
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
(If you noted any Address Changes above, please mark corresponding box on the reverse side.)
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE REVERSE SIDE)