ALFACELL CORPORATION
225 BELLEVILLE AVENUE
BLOOMFIELD, NEW JERSEY 07003
(201) 748-8082
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 11, 1995
To our Stockholders:
You are hereby notified that the annual meeting of stockholders (the
"Annual Meeting") of Alfacell Corporation, a Delaware corporation ("Alfacell"
or the "Company") will be held at the Ramada Plaza-Suite Hotel, 350 Route 3
West, Mill Creek Drive, Secaucus, New Jersey 07094 on Monday, December 11, 1995
at 10:00 a.m. local time, for the following purposes:
1. To elect six directors (Proposal No. 1);
2. To ratify the selection of KPMG Peat Marwick LLP, independent
certified public accountants, to audit the financial statements
of the Company for the fiscal year ending July 31, 1996
(Proposal No. 2); and
3. To transact such other matters as may properly come before the
Annual Meeting or any adjournment thereof.
Only holders of record of the Company's Common Stock, par value
$.001 per share, at the close of business on October 27, 1995 are entitled to
notice of and to vote at the Annual Meeting.
Alfacell hopes that as many stockholders as possible will personally
attend the Annual Meeting. Whether or not you plan to attend the Annual
Meeting, please complete the enclosed proxy card and sign, date and return it
promptly so that your shares will be represented. Sending in your proxy will
not prevent you from voting in person at the Annual Meeting.
By order of the board of directors,
/s/Gail E. Fraser, Secretary
Gail E. Fraser, Secretary
Bloomfield, New Jersey
November 17, 1995
<PAGE>
ALFACELL CORPORATION
____________
PROXY STATEMENT
____________
This Proxy Statement is furnished in connection with the
solicitation of proxies for use at the annual meeting of stockholders (the
"Annual Meeting") of Alfacell Corporation ("Alfacell" or the "Company") to be
held on Monday, December 11, 1995 and at any adjournment thereof. THE
ACCOMPANYING PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY AND IS
REVOCABLE BY THE STOCKHOLDER ANY TIME BEFORE IT IS VOTED. For more information
concerning the procedure for revoking the proxy see "General." This Proxy
Statement was first mailed to stockholders of the Company on or about November
17, 1995, accompanied by the Company's Annual Report to Stockholders for the
fiscal year ended July 31, 1995. The principal executive offices of the
Company are located at 225 Belleville Avenue, Bloomfield, New Jersey 07003,
telephone (201) 748-8082.
OUTSTANDING SHARES AND VOTING RIGHTS
Only holders of the Company's common stock, par value $.001 per
share (the "Common Stock" or "Common Shares"), at the close of business on
October 27, 1995 (the "Record Date") are entitled to receive notice of and vote
at the Annual Meeting. As of the Record Date, the number and class of stock
that was outstanding and will be entitled to vote at the meeting was 11,579,563
Common Shares. Each Common Share is entitled to one vote on all matters.
Although the Company is authorized to issue shares of its preferred stock,
$.001 par value, no such shares of preferred stock have been issued and,
accordingly, other than the Common Stock, no class of securities will be
entitled to vote at the Annual Meeting. There are no cumulative voting rights.
To be elected, a director must receive a plurality of the votes of
the Common Shares present in person or represented by proxy at the Annual
Meeting and entitled to vote on the election of directors. The affirmative
vote of at least a majority of the Common Shares, present in person or
represented by proxy at the Annual Meeting and entitled to vote thereon,
whether or not a quorum is present when the vote is taken, is necessary for
approval of Proposal No. 2. A quorum is representation in person or by proxy
at the Annual Meeting of at least a majority of the Common Shares outstanding
as of the Record Date.
Pursuant to Delaware General Corporation Law, only votes cast "For"
a matter constitute affirmative votes. Proxy cards which are voted by marking
"Withheld" or "Abstain" on a particular matter are counted as present for
quorum purposes and for purposes of determining the outcome of such matter, but
since they are not cast "For" a particular matter, they will have the same
effect as negative votes or votes "Against" a particular matter. If a validly
executed proxy card is not marked to indicate a vote on a particular matter and
the proxy granted thereby is not revoked before it is voted, it will be voted
"For" such matter. Where brokers are prohibited from exercising discretionary
authority for beneficial owners who have not provided voting instructions
(commonly referred to as "broker nonvotes"), such broker non-votes will be
treated as shares that are present for purposes of determining the presence of
a quorum, but will be treated as not present for purposes of determining the
outcome of any matter as to which the broker does not have authority to vote.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The current provisions of the Company's By-Laws authorize six
directors as constituting the full board of directors. The board is currently
composed of six directors. Proxies cannot be voted for a greater number of
persons than the number of nominees named. Directors are elected to serve
until the next annual meeting of stockholders and until their successors are
elected and qualified.
The nominees for election to the office of director, and certain
information with respect to their ages and backgrounds, are set forth below.
It is the intention of the persons named in the accompanying proxy card, unless
otherwise instructed, to vote to elect the nominees named herein as directors.
If any nominee declines to serve or becomes unavailable for any reason, or if a
vacancy should occur before the election (although management knows of no
reason to anticipate that this will occur), the proxies may be voted for such
substitute nominees as management may designate.
<TABLE>
<CAPTION>
NOMINEES FOR ELECTION TO THE NOMINEE AGE DIRECTOR SINCE
OFFICE OF DIRECTOR
AT THE ANNUAL MEETING
<S> <C> <C> <C>
POSITION WITH THE COMPANY Kuslima 49 1981
Shogen
President, Chief Executive Gail E. 37 1995
Officer and Director Fraser
Vice President, Finance, Stanislaw M. 51 1986
Chief Financial Officer and Mikulski,
Director M.D.
Executive Vice President, Medical Alan 70 1986
Director and Director Bell{(1)(2)}
Director Robert R. 55 1994
Henry{(1)(2)}
Director Allen 60 1982
Siegel{(1)}
Director
</TABLE>
{(1)} Member of Compensation Committee
{(2)} Member of Audit Committee
BUSINESS EXPERIENCE OF NOMINEES
KUSLIMA SHOGEN, has served the Company as President and Chief
Executive Officer since September 1986 and as a director since its inception.
Ms. Shogen also served as the Company's Chief Financial Officer from September
1986 through July 14, 1994. Ms. Shogen formed the Company in 1981 to pursue
research which she initiated as a biology student in the University Honors
Program at Fairleigh Dickinson University ("F.D.U."). She was Executive Vice
President of the Company from 1984 until 1986 when she became President. Prior
to organizing the Company, Ms. Shogen was founder and President from 1976 to
1981 of a biomedical research consortium specializing in GLP (Good Laboratory
Practices) and animal toxicology. During that time, she was also a consultant
for Lever Brothers Research Group. Ms. Shogen has received numerous awards for
achievements in biology, including Sigma Xi first prize from the Scientific
Research Society of North America in 1974 and first prize at the Eastern
College Science Conferences competition for most outstanding research paper in
biology in each of 1972, 1973, and 1974. Ms. Shogen received her B.S. in 1974
and M.S. in 1976 (both magna cum laude) from F.D.U. and was the first teaching
fellow from F.D.U.'s Rutherford campus. Among other honors, she was a Phi
Beta Kappa graduate. Ms. Shogen continued graduate studies until 1978. She
devotes her full-time to the Company.
GAIL E. FRASER, became the company's Chief Financial Officer on July
15, 1994 and became a director in April 1995. From August 1993 to July 1994,
Ms. Fraser served as a consultant to the Company and was the Company's
business, financial and accounting advisor. From April 1989 to February 1993,
Ms. Fraser was Vice President, Finance and Chief Financial Officer of Enzon,
Inc., a biopharmaceutical company located in Piscataway, New Jersey. From 1982
to 1989, Ms. Fraser served as Vice President, Finance and Controller for Sidmak
Laboratories, Inc., a generic drug manufacturer located in East Hanover, New
Jersey. She received a B.S. in accounting from Kean College of New Jersey and
an M.B.A. from the Wharton School of the University of Pennsylvania in 1993.
Ms. Fraser is a certified public accountant and devotes her full-time to the
Company.
STANISLAW M. MIKULSKI, M.D. F.A.C.P., has served the Company as
Executive Vice President and Medical Director since 1987 and as a director
since 1986. Previously, Dr. Mikulski was Special Assistant to the Chief,
Investigational Drug Branch, National Cancer Institute ("NCI"), and Coordinator
for Immunotherapy Trials in Cancer for the Division of Cancer Treatment,
following his post-doctoral studies at the University of California, Los
Angeles in human tumor immunology. Prior to joining the Company, Dr. Mikulski
maintained a medical practice in medical oncology for over eight years. He is
a diplomate of the American Board of Internal Medicine and Medical Oncology, as
well as a fellow of the American College of Physicians and a member of the
American Society of Clinical Oncology. Dr. Mikulski is a clinical assistant
professor of medicine at the University of Medicine and Dentistry of New
Jersey. He received his M.D., cum laude, in 1967 from the Medical School of
Warsaw, Warsaw, Poland. Dr. Mikulski devotes his full-time to the Company.
ALAN BELL, has been a director of the Company since 1986. He
founded the international public relations agency, Bell and Stanton, in 1956
and served as its Chairman until 1976. From 1976 to 1983 he was Vice-Chairman
of Manning Selvage & Lee, Inc., a major public relations firm. In 1983 he
established a new firm, Alan W. Bell Co., Inc. He specializes in financial
public relations and in economic and tourism development counselling.
ROBERT R. HENRY, has been a director of the Company since March
1994. Mr. Henry served as Partner and Managing Director of Morgan Stanley &
Co. Inc. ("Morgan Stanley") from 1977 through 1989. Since 1989 he has been
President of Robert R. Henry & Co., Inc., a financial advisory firm. Mr. Henry
continues to serve as an Advisory Director for Morgan Stanley.
ALLEN SIEGEL, D.D.S., has been a director of the Company since 1982.
He was a dentist in private practice from 1961 until his retirement from active
practice in August 1989. He received a D.D.S. in 1959 from the University of
Buffalo.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR MMS. SHOGEN AND FRASER,
AND MESSRS. MIKULSKI, SIEGEL, BELL AND HENRY AS DIRECTORS (PROPOSAL NO. 1 ON
THE PROXY CARD).
SCIENTIFIC ADVISORY BOARD
The Company's scientific advisory board is composed of scientists
and doctors whom management of the Company believes can contribute to the
proper development of its anti-tumor agent. The individuals selected are
highly respected in the national and international fields of oncology and drug
development. The advisory board is made up of the following individuals.
JOHN J. COSTANZI, M.D., has served as a principal investigator in
the Onconase clinical trials program since its inception. He
is currently in the practice of oncology and hematology in Austin, Texas. He
formerly served as Medical Director of the Thompson Cancer Survival Center in
Knoxville, Tennessee, and as professor of medicine and director of the cancer
center for the University of Texas Medical Branch in Galveston. Dr. Costanzi
is board certified in medical oncology and internal medicine and has
participated in many professional and community organizations including the
Southwest Oncology Group, American Cancer Society, and American Association for
Cancer Research. Dr. Costanzi has authored over 140 papers, books and chapters
of books in the area of clinical oncology. He received his M.D. in 1961 from
Georgetown University School of Medicine, Washington, D.C. He completed his
post-graduate training at Walter Reed General Hospital, Washington, D.C. and
Wilford Hall Medical Center, San Antonio, Texas. Dr. Costanzi has received
numerous awards in the field of oncology. He is a frequent lecturer and
visiting professor throughout the United States and abroad. He also serves as
a Brigadier General in the United States Air Force Reserve Medical Corp.
ZBIGNIEW DARZYNKIEWICZ, M.D., PH.D., is the director of the Cancer
Research Institute at the New York Medical College and a professor of medicine
at New York Medical College. Formerly, Dr. Darzynkiewicz was a professor of
cell biology and genetics at Cornell University Medical School, a member of
Sloan-Kettering Institute for Cancer Research, the head of the Experimental
Cell Research Laboratory, and a director of the Flow Cytometry Core Facility
Network. In addition, Dr. Darzynkiewicz is an editor of The Cell Proliferation
and Cytometry Journals, past president of The Cell Kinetics Society and past
president of the International Society for Analytical Cytology. Dr.
Darzynkiewicz's research concentrates on cell biology with particular focus on
cancer cell growth and the regulatory mechanisms associated with cell growth
and progression through the cell cycle. He has developed several techniques
that have world-wide application, to analyze metabolic parameters of the cell
related to the cell cycle kinetics, cell sensitivity to anti-tumor drugs and
apoptosis. Most recently, he received a grant from NASA to develop new
technologies for cell staining and analysis applicable to the micro-gravity
conditions of Space Station Freedom. Dr. Darzynkiewicz has authored over 300
original publications and over 50 chapters and reviews in books devoted to the
subject of cell growth, the regulation of the cell cycle and apoptosis. Dr.
Darzynkiewicz received his M.D. in 1960 and Ph.D. in 1966 from the Medical
School of Warsaw, Warsaw, Poland. He completed his post-graduate studies at
the State University of New York at Buffalo and the Medical Nobel Institute of
Karolinska Institute, Stockholm, Sweden. Since 1974, he has been associated
with the Sloan-Kettering Institute for Cancer Research, and since 1990, he has
been with New York Medical College, Elmsford, New York.
MICHAEL C. LOWE, PH.D., has been a principal of The Weinberg Group
Inc. since 1988 and specializes in assisting clients with applications to the
Food and Drug Administration for human trials of new agents and in gaining
marketing approvals. He has demonstrated expertise in the areas of
pharmacology, toxicology, morphology and pathology for chemotherapeutic agents.
Prior to joining The Weinberg Group, Dr. Lowe was a corporate vice president
and director of toxicology for ICF/Clement, a health scientist administrator at
the National Institutes of Health ("NIH"), the acting chief of the toxicology
branch at the NCI and head of the pathopharmacology section of the intramural
laboratory of chemical pharmacology at the NCI. There, he oversaw the
pre-clinical toxicology studies of oncolytic drugs emerging from the drug
development program of the NCI, and made risk assessments of the drugs prior to
Phase I trials. Before joining the NIH he was on the faculty of the department
of pathology at the University of Washington. Dr. Lowe received a B.S. in
Zoology from Washington State University, a M.S. and a Ph.D. in Pharmacology
from the University of Washington and postdoctoral training in experimental
pathology at the University of Washington. In addition to serving on the
Scientific Advisory Board, Dr. Lowe is an advisor to the board of directors.
DAVID N. MESCHES, M.D., is professor and chairman of the Department
of Family Medicine at New York Medical College and has held these positions for
the past 16 years. He is the Chief Executive Officer of the Mid-Hudson Family
Health Services Institute, a not-for-profit health care and education
corporation responsible for the primary care of patients and training of
medical students and family practice residents. The original Onconase Phase I
(daily schedule) clinical trials were initiated and completed under the
direction of Dr. Mesches. Dr. Mesches graduated from the University of Buffalo
School of Medicine in 1960. Following his internship at Mount Sinai Hospital
in Detroit, Michigan, he served as a Captain in the United States Air Force.
ABRAHAM MITTELMAN, M.D., is associate professor of medicine and
director of experimental oncology at New York Medical College in Valhalla, New
York. Dr. Mittelman graduated from the Autonomous University of Guadalajara in
1977. Following his residency at Downstate Medical Center, he became an
instructor in medicine at New York - Cornell Medical Center as well as a fellow
in Oncology at Memorial Sloan-Kettering from 1981 through 1983. Dr. Mittelman
is an oncologist and hematologist who has been the principal investigator of
numerous cancer trials. Dr. Mittelman has published over 130 papers on a
variety of oncologic topics. He is a member of the New York State Society of
Hematologists and Oncologists.
DIRECTORS' COMPENSATION
Members of the Company's board of directors receive no cash
compensation in consideration for their serving on the board of directors.
In November 1993 and January 1994, the board of directors and the
stockholders, respectively, approved the Company's 1993 Stock Option Plan (the
"Plan") which, among other things, provides for automatic grants of options
("Automatic Grants") under a formula (the "Formula") to non-employee directors
("Independent Directors") on an annual basis.
The Formula provides that (i) on each December 31st each Independent
(non-employee) Director receives automatically an option to purchase 15,000
shares of the Company's Common Stock (the "Regular Grant"); and (ii) on the
date of each Independent Director's initial election to the board of directors,
pursuant to a vote of the board, such newly elected Independent Director
automatically receives an option to purchase such Independent Director's pro
rata share of the Regular Grant which equals the product of 1,250 multiplied by
the number of whole months remaining in the calendar year (the "Pro Rata
Grant"). Each option granted pursuant to a Regular Grant and a Pro Rata Grant
vests and becomes exercisable on the December 30th following the date of grant.
Notwithstanding the foregoing, an option will not become exercisable as to any
shares unless such Independent Director has served continuously on the board
during the year preceding the date on which such options are scheduled to vest
and become exercisable, or from the date such Independent Director joined the
board until the date on which such options are scheduled to vest and become
exercisable; PROVIDED, HOWEVER, that if an Independent Director does not
fulfill such continuous service requirement due to such Independent Director's
death or disability all options held by such Independent Director nonetheless
vest and become exercisable as described herein. An option granted pursuant to
the Formula remains exercisable for a period of five years after the date the
option first becomes exercisable.
During the fiscal year ended July 31, 1995, the following directors
were granted the options listed below pursuant to the Formula under the Plan in
consideration for serving on the board of directors. The exercise prices of
the options granted to directors in fiscal 1995 are equal to the fair market
value of the Common Stock on the date of grant.
<TABLE>
<CAPTION>
NAME NUMBER OF OPTIONS EXERCISE PRICE EXPIRATION DATE
<S> <C> <C> <C>
Allen Siegel{(1)} 15,000 $2.27 12/31/00
Alan Bell{(2)} 15,000 $2.27 12/31/00
Robert R. Henry 15,000 $2.27 12/31/00
</TABLE>
______________________
{(1) }On April 17, 1995 the Company extended the exercise period until
July 31, 1995 of an option to purchase 100,000 shares held by Dr.
Siegel and an option to purchase 30,000 shares held by Dr. Siegel's
wife. The exercise price for these options was reduced from $5.00
to $2.65, the then current market price. On July 31, 1995 the
exercise period for these options was extended until July 31, 1996
and the exercise price was increased to $2.68, the then current
market price. All optionholders with options expiring on July 31,
1995 had the exercise period of their options extended until July
31, 1996. These options were not granted under the Plan.
{(2) }On April 17, 1995 the Company extended the exercise period until
July 31, 1995 of an option to purchase 50,000 shares held by Mr.
Bell and an option to purchase 20,000 shares held by Mr. Bell's
wife. The exercise price for these options was reduced from $5.00
to $2.65, the then current market price. On July 31, 1995 the
exercise period for these options was extended until July 31, 1996
and the exercise price was increased to $2.68, the then current
market price. All optionholders with options expiring on July 31,
1995 had the exercise period of their options extended until July
31, 1996. These options were not granted under the Plan.
REPORTING OF SECURITIES TRANSACTIONS
Ownership of and transactions in the Company's stock by executive
officers and directors of the Company and owners of 10% or more of the
Company's outstanding Common Stock are required to be reported to the
Securities and Exchange Commission pursuant to Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). During the fiscal year
ended July 31, 1995 the following persons inadvertently did not file a Form 4
in a timely manner: Dr. Siegel and Mr. Bell to report the extension of the
exercise period of options granted to them; Mr. Henry to report the purchase of
shares of the Company's Common Stock and warrants to purchase Common Stock in a
private placement conducted by the Company; and Ms. Shogen to report the sale
of shares of Common Stock.
INFORMATION CONCERNING BOARD AND COMMITTEE MEETINGS
AND COMMITTEES OF THE BOARD
Eight meetings of the Company's board of directors were held
during the fiscal year ended July 31, 1995. As of July 31, 1995 there were two
standing committees of the Company's board of directors, a Compensation
Committee and an Audit Committee. The Compensation Committee is comprised of
Alan Bell, Robert R. Henry and Allen Siegel. The primary functions of the
Compensation Committee are to administer the Company's 1993 Stock Option Plan,
determine the compensation of the Company's officers and senior management and
review compensation policy for all of the Company's employees. The Compensation
Committee met one time during the fiscal year ended July 31, 1995. All of the
decisions regarding executive compensation were made by the Compensation
Committee during the fiscal year ended July 31, 1995. The Audit Committee is
comprised of Alan Bell and Robert R. Henry. The primary functions of the Audit
Committee are to meet with the Company's independent auditors to discuss and
review audit procedures and issues, meet with management on matters concerning
the Company's financial condition, internal controls and year-end audit, and
report to the board on such matters. The Audit Committee met one time during
the fiscal year ended July 31, 1995. Except for Dr. Siegel, no incumbent
director attended fewer than 75% of the aggregate of the total number of
meetings of the board of directors and the total number of meetings held by all
committees of the board on which such director served, held during the period
in such fiscal year during which such director served as a director or
committee member.
<PAGE>
SUMMARY COMPENSATION TABLE
The following table provides a summary of cash and non-cash
compensation for each of the last three fiscal years ended July 31, 1995, 1994
and 1993 with respect to Alfacell's Chief Executive Officer and the only two
other executive officers of the Company (the "Named Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM
COMPENSATION
<S> <C> <C> <C> <C> <C> <C>
NAME AND YEAR SALARY($) BONUS($) OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION COMPENSATION($){(1)} SECURITIES COMPENSATION ($)
UNDERLYING
OPTIONS/
SARS(#)
Kuslima Shogen 1995 $150,000 - 0 - - 0 - - 0 -{(3)} - 0 -
President and Chief 1994 150,000 - 0 - - 0 - 1,306,529{(2)} - 0 -
Executive 1993 158,333 - 0 - - 0 - 1,100,000 - 0 -
Officer{(2)}
Gail E. Fraser{(4)} 1995 $121,163 - 0 - - 0 - - 0 -{(3)} - 0 -
Vice President, 1994 8,333 - 0 - - 0 - 475,000{(5)} - 0 -
Finance and Chief 1993 - 0 - - 0 - - 0 - - 0 - - 0 -
Financial Officer
Stanislaw M. Mikulski{(6)} 1995 $130,000 - 0 - - 0 - - 0 -{(3)} - 0 -
Executive Vice 1994 130,000 - 0 - - 0 - 431,409{(6)} - 0 -
President 1993 135,833 - 0 - - 0 - 350,000 - 0 -
and Medical Director
</TABLE>
(1) Excludes perquisites and other personal benefits that in the
aggregate do not exceed 10% of the Named Officers' total annual
salary and bonus.
(2) Ms. Shogen resigned from her position as the Company's Chief
Financial Officer in July 1994. No salary was paid to Ms. Shogen in
fiscal 1995, 1994 or 1993 and these salary amounts were accrued on
the Company's financial statements as obligations owed to Ms Shogen.
In consideration for her services to the Company through January 31,
1994 and Ms. Shogen's agreement to release the Company from its
obligation to pay her $1,624,151 in accrued salary on the Company's
balance sheet as of January 31, 1994, in March 1994 the Company
granted Ms. Shogen options to purchase 841,529 shares of the
Company's Common Stock at an exercise price of $3.20 per share.
(3) No options were granted to the Named Officers during the fiscal year
ended July 31, 1995.
(4) Ms. Fraser became an employee of the Company on July 15, 1994.
$96,163 of Ms. Fraser's salary in fiscal 1995 was paid to Ms.
Fraser. That portion of Ms. Fraser's salary which was not paid to
her was accrued on the Company's financial statements as obligations
owed to Ms. Fraser.
(5) Prior to Ms. Fraser joining the Company, Ms. Fraser received under a
consulting agreement an option to purchase 50,000 and 75,000 shares
of the Company's Common Stock at an exercise price of $3.22 and
$5.00, respectively. On July 15, 1994, Ms. Fraser was granted
options to purchase 350,000 shares of Common Stock under the Plan at
an exercise price of $4.11 per share.
(6) No salary was paid to Dr. Mikulski in fiscal 1994 or 1993. $5,000
of Dr. Mikulski's salary in fiscal 1995 was paid to Dr. Mikulski.
Those portions of Dr. Mikulski's salaries which were not paid to him
were accrued on the Company's financial statements as obligations
owed to Dr. Mikulski. In consideration for his services to the
Company and Dr. Mikulski's agreement to release the Company from its
obligation to pay him $639,619 in accrued salary on the Company's
balance sheet as of January 31, 1994, in March 1994 the Company
granted Dr. Mikulski options to purchase 331,409 shares of the
Company's Common Stock at an exercise price of $3.20 per share.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth the information with respect to the
Named Officers concerning the exercise of options during the fiscal year ended
July 31, 1995 and unexercised options held as of July 31, 1995.
<TABLE>
<CAPTION>
Number of Unexercised Options at Value of Unexercised Name Shares Acquired on
Fiscal In-the-Money Options Exercise (#)
Year-End (#) at Fiscal Year-End($){(1)}
<S> <C> <C> <C> <C> <C> <C>
Value Realized ($) Exercisable Unexercisable Exercisable Unexercisable Kuslima Shogen None
None 1,005,548 1,180,659 $0 $0 Gail E. Fraser None
None 195,000 280,000 $0 $0 Stanislaw M. None
Mikulski
None 402,564 278,845 $0 $0
</TABLE>
(1) The exercise price of the unexercised options is greater than the
market value of the Common Stock on July 31, 1995 and thus the
unexercised options had no value as of that date.
EMPLOYMENT AGREEMENTS
Ms. Shogen continues in the employ of the Company; however, her one-
year employment agreement with the Company terminated on June 30, 1995. Under
the agreement, Ms. Shogen was entitled to receive an annual salary of
approximately $150,000. The agreement also required Ms. Shogen to maintain the
confidentiality of Company information and acknowledged that Ms. Shogen
previously entered into an assignment and non-disclosure agreement with respect
to present and future proprietary methods, inventions, productions, drugs,
compounds, know-how and discoveries in processes, whether developed by her, the
Company or a Company affiliate. Upon expiration of this agreement, the board
of directors approved an annual salary of $150,000 for Ms. Shogen for a period
of one year. It is anticipated that negotiations with respect to a new
agreement will commence in the near future.
Ms. Gail E. Fraser commenced her employment with the Company as its
Vice President, Finance and Chief Financial Officer on July 15, 1994. Ms.
Fraser's one-year employment agreement with the Company terminated on July 14,
1995. Under the agreement, Ms. Fraser was entitled to receive an annual salary
of $100,000 and pursuant to a determination by the Compensation Committee,
subsequently received an additional $25,000 for the fiscal year ended July 31,
1995. The agreement also required Ms. Fraser to maintain the confidentiality
of Company information and assign to the Company all tangible and intangible
property, including, but not limited to inventions, developments or discoveries
conceived, made or discovered by Ms. Fraser solely or in collaboration with
others during the term of Ms. Fraser's employment with the Company. The
agreement also provided that during the term of the agreement and for two years
thereafter, Ms. Fraser is prohibited from directly or indirectly becoming
interested in or associated with an entity engaged to a significant degree in
any technology or area of business in which the Company was involved to a
significant degree during the term of the agreement. Upon expiration of this
agreement, the board of directors approved an annual salary of $130,000 for Ms.
Fraser for a period of one year. It is anticipated that negotiations with
respect to a new agreement will commence in the near future. On July 15, 1994,
Ms. Fraser was granted options to purchase 350,000 shares of Common Stock under
the Plan at an exercise price of $4.11 per share. These options vest as to 20%
of such shares each year during the five year period commencing July 15, 1995.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information concerning stock
ownership of each person who is the direct or indirect beneficial owner of five
percent or more of the Company's outstanding Common Stock and of each director
and each Named Officer and all directors and executive officers as a group as
of November 10, 1995. Except as otherwise noted, each person has sole voting
and investment power with respect to the shares shown as beneficially owned.
<TABLE>
<CAPTION>
DIRECTORS, OFFICERS OR NUMBER OF SHARES{(2)} PERCENTAGE OF COMMON
5% Stockholders{(1)} Stock Outstanding{(3)}
<S> <C> <C>
Kuslima Shogen 2,348,548{(4)} 18.7%
Stanislaw Mikulski 763,814{(5)} 6.4%
Allen Siegel 315,262{(6)} 2.7%
Alan Bell 120,929{(7)} 1.0%
Robert R. Henry 246,250{(8)} 2.1%
Gail E. Fraser 195,000{(9)} 1.7%
All officers and directors as 3,989,803{(10)} 29.3%
a group (six persons)
</TABLE>
(1) The address of all officers and directors listed above is in the
care of the Company.
(2) All shares listed are Common Stock. Except as discussed below, none
of these shares are subject to rights to acquire beneficial
ownership, as specified in Rule 13d-3(d)(1) under the Exchange Act,
and the beneficial owner has sole voting and investment power,
subject to community property laws where applicable.
(3) The percentage of stock outstanding for each stockholder is
calculated by dividing (i) the number of shares of Common Stock
deemed to be beneficially held by such stockholder as of November
10, 1995 by (ii) the sum of (A) the number of shares of Common Stock
outstanding as of November 10, 1995 plus (B) the number of shares
issuable upon exercise of options or warrants held by such
stockholder which were exercisable as of November 10, 1995 or which
will become exercisable within 60 days after November 10, 1995.
(4) Includes 1,005,548 shares subject to options which were exercisable
as of November 10, 1995 or which will become exercisable within 60
days after November 10, 1995.
(5) Includes 402,564 shares subject to options which were exercisable as
of November 10, 1995 or which will become exercisable within 60 days
after November 10, 1995.
(6) Includes 130,000 shares subject to options which were exercisable as
of November 10, 1995 or which will become exercisable within 60 days
after November 10, 1995 owned by Dr. Siegel, 40,485 shares owned by
Dr. Siegel's wife, who was an employee of the Company and 50,000
shares subject to options which were exercisable as of November 10,
1995 or will become exercisable within 60 days of November 10, 1995
owned by Dr. Siegel's wife. Dr. Siegel disclaims beneficial
ownership as to the shares owned by his wife.
(7) Includes 80,000 shares subject to options which were exercisable as
of November 10, 1995 or which will become exercisable within 60 days
after November 10, 1995 owned by Mr. Bell, 20,000 shares subject to
options which were exercisable as of November 10, 1995 or which will
become exercisable within 60 days of November 10, 1995 owned by Mr.
Bell's wife, 20,429 shares owned jointly by Mr. and Mrs. Bell and
500 shares owned by Mrs. Bell. Mr. Bell disclaims beneficial
ownership as to the shares owned by his wife.
(8) Includes 26,250 shares subject to options which were exercisable as
of November 10, 1995 or which will become exercisable within 60 days
after November 10, 1995 and 60,000 shares underlying warrants which
were exercisable as of November 10, 1995 or which will become
exercisable within 60 days of November 10, 1995.
(9) Includes 195,000 shares underlying options which were exercisable as
of November 10, 1995 or which will become exercisable within 60 days
after November 10, 1995.
(10) Includes all shares owned beneficially by the directors and the
executive officers named in the table.
CERTAIN TRANSACTIONS
Effective May 31, 1993, the Company restructured a pre-existing bank
note (the "Note") to include the principal balance of $1,300,000, accrued
interest of $349,072, and legal fees of $50,000 into a new term loan of
$1,699,072 (the "Term Loan"). Interest is to be computed at a rate of seven
and one-half percent (7.5%) per annum. The Term Loan is secured by
substantially all of the assets of the Company. Ms. Shogen has personally
guaranteed the Note and has pledged certain collateral, including a substantial
portion of the shares of Common Stock of the Company owned by her and certain
options. Substantially all of the obligations owed by the Company to Ms.
Shogen are subordinated to the Note. In order to satisfy the Company's
obligations to the bank, Ms. Shogen, from time to time, pursuant to a pledge
agreement ("Pledge Agreement"), has sold portions of the shares of Common Stock
pledged to the bank. Through February 28, 1994, the monthly payments of
interest and principal under the Term Loan had been paid primarily pursuant to
this procedure, and, subsequent to such time, have been paid directly by the
Company. The Term Loan agreement prohibits the issuance of any shares, or
right to purchase any shares of the Company's stock if the result of such
issuance would be to decrease the ratio of the market value of Ms. Shogen's
pledged stock to the aggregate outstanding debt of the Company and herself to
the bank, below 1:1. In June 1994, the Term Loan agreement and the related
Pledge Agreement were amended to provide for, among other things, the issuance
to Ms. Shogen, and subsequent pledge to the bank, of the options discussed
below. Based upon the average of the closing bid and asked prices on November
10, 1995 the shares of the Company's Common Stock pledged by Ms. Shogen to
secure the Term Loan were valued at $6,001,531 (excluding the value of shares
of Common Stock underlying certain options pledged to the bank) and the
aggregate outstanding debt of the Company and Ms. Shogen to the bank as of
November 10, 1995 was $2,249,148. In connection with the Term Loan, Ms. Shogen
also assigned to the bank her right to payment of up to $200,000 of outstanding
debt owed to her by the Company as a result of advances made by her to the
Company.
From time to time Kuslima Shogen has advanced sums of money to the
Company in the form of unsecured obligations payable on demand (the "demand
loans"). Ms. Shogen has at various times converted portions of the demand
loans into convertible debentures. At July 31, 1993, (i) the Company owed Ms.
Shogen $14,000 for loans which were previously demand loans, but which were
subordinated to the Company's bank debt in connection with the restructuring of
such debt and consequently, reclassified as long-term debt, and (ii) Ms. Shogen
owned convertible debentures in the aggregate principal amount of $1,575,000.
During the fiscal year ended July 31, 1994, Ms. Shogen converted the
outstanding debentures held by her with an aggregate face value of $1,575,000
into 400,000 shares of the Company's Common Stock at the stated conversion
rates ranging from $2.75 to $6.00 per share. In March 1994, an aggregate of
$931,197 of advances and interest owed by the Company to Ms. Shogen was
converted by Ms. Shogen into options to purchase an aggregate of 482,485 shares
of the Company's Common Stock at an exercise price of $3.20 per share. In March
1994, in consideration for her services to the Company and Ms. Shogen's
agreement to release the Company from its obligation to pay her $1,624,151 in
accrued salary on the Company's balance sheet as of January 31, 1994 (which
salary had been accruing since 1986), the Company granted Ms. Shogen options to
purchase 841,529 shares of the Company's Common Stock at an exercise price of
$3.20 per share. In June 1994, the Company, with its bank's consent,
reinstituted certain advances of $198,417 from Ms. Shogen as long term debt
that was previously converted into 102,807 of options on March 30, 1994. Such
options were returned to the Company and cancelled. The Company's bank has
consented to allow repayment of such advances under certain conditions. As of
July 31, 1994, the Company owed Ms. Shogen an aggregate of $203,723 in demand
loans and accrued interest on the demand loans owed to Ms. Shogen.
During the fiscal year ended July 31, 1995 the Company, with its
bank's consent, repaid $80,067 of the principal amount on the demand loans. At
July 31, 1995, the Company owed Ms. Shogen an aggregate of $138,638 in demand
loans and accrued interest on the demand loans.
In March 1994, in consideration for his services to the Company and
Dr. Mikulski's agreement to release the Company from its obligation to pay him
$639,619 in accrued salary on the Company's balance sheet as of January 31,
1994, the Company granted Dr. Mikulski options to purchase 331,409 shares of
the Company's Common Stock at an exercise price of $3.20 per share.
On July 23, 1991, the board of directors authorized the Company to
pay to Kuslima Shogen an amount equal to 15% of any gross royalties which may
be paid to the Company from any license(s) with respect to the Company's
principal product, Onconase, or any other products derived from amphibian
source extract, produced either as a natural, synthesized, and/or genetically
engineered drug for which the Company owns or is co-owner of the patent, or
acquires such rights in the future, for a period not to exceed the life of the
patents. If the Company manufactures and markets the drugs by itself, then the
Company will pay an amount equal to 5% of gross sales from any products sold
during the life of the patents.
On November 11, 1993, the Company entered into a consulting
agreement (the "Tartan Consulting Agreement") with The Tartan Group ("Tartan"),
an independent consulting firm of which Ms. Gail E. Fraser, the Company's Vice
President, Finance and Chief Financial Officer, is an officer and principal
stockholder. The Tartan Consulting Agreement was effective as of August 1,
1993 and terminated by agreement of both parties on April 30, 1994. Pursuant
to the Tartan Consulting Agreement Ms. Fraser performed administrative,
financial and accounting services for the Company. Pursuant to the Tartan
Consulting Agreement, the Company granted indemnification to Ms. Fraser with
respect to any and all claims, damages or costs which arise out of her
performance of consulting services to the Company. Tartan received a
consulting fee of $45,000.
On May 1, 1994, upon the termination of the Tartan Consulting
Agreement, Ms. Fraser entered into a consulting agreement (the "Fraser
Consulting Agreement") with the Company which terminated by its terms on June
30, 1994. Under the Fraser Consulting Agreement, Ms. Fraser received $15,000
and (i) an option to purchase 50,000 shares of the Company's Common Stock at an
exercise price of $3.22 per share at any time during the period commencing on
May 1, 1994 and terminating on November 10, 1997 and (ii) an option to purchase
75,000 shares of the Company's Common Stock at an exercise price of $5.00 per
share at any time during the four year period commencing on November 11, 1994
and terminating on November 10, 1998 at 5.00 p.m. local time. Pursuant to the
Fraser Consulting Agreement, the Company granted indemnification to Ms. Fraser
with respect to any and all claims, damages or costs which arise out of her
performance of consulting services to the Company.
In private placements completed by the Company in March 1994,
September 1994 and September 1995, Robert R. Henry purchased an aggregate of
160,000 shares of Common Stock and warrants to purchase 60,000 shares of Common
Stock on the same terms and conditions as the other participants in such
private placements.
PROPOSAL NO. 2 - RATIFICATION OF AUDITORS
On September 27, 1995, the board of directors approved the retention
of KPMG Peat Marwick LLP ("KPMG"), independent certified public accountants, to
audit the consolidated financial statements of the Company for the fiscal year
ending July 31, 1996. KPMG served as auditor of the financial statements of
the Company for the fiscal years ended July 31, 1995, 1994 and 1993.
Representatives of KPMG are expected to be present at the Annual Meeting and
will have the opportunity to make a statement should they desire to do so.
Such representatives are also expected to be available to respond to questions.
On October 21, 1993 the Company retained KPMG, independent certified
public accountants, to audit the financial statements of the Company for the
fiscal year ended July 31, 1993 and dismissed Armus, Harrison & Co. ("Armus"),
which had audited the Company's financial statements for the fiscal years ended
July 31, 1987 through July 31, 1992. This decision was based on the Company's
belief that it would be beneficial to the Company to have a national accounting
firm audit its financial statements. Armus' report for each of the years ended
July 31, 1992 and 1991 indicated uncertainties as to the Company's ability to
continue as a going concern. Armus' report for each of the years ended July
31, 1992 and 1991 did not contain an adverse opinion or a disclaimer of opinion
and was not qualified or modified as to audit scope or accounting principles.
During the fiscal years ended July 31, 1992 and 1991 and the subsequent interim
periods immediately preceding the change in accountants, there were no
disagreements with Armus on any matter of accounting principles or practice,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of Armus would have caused
them to make reference to the subject matter of the disagreement in connection
with their reports on the Company's financial statements.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
SELECTION OF KPMG PEAT MARWICK LLP, INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS,
TO AUDIT THE FINANCIAL STATEMENTS OF THE COMPANY FOR THE FISCAL YEAR ENDING
JULY 31, 1996 (PROPOSAL NO. 2 ON THE PROXY CARD).
ANNUAL REPORT TO STOCKHOLDERS
The Company's Annual Report to Stockholders for the fiscal year
ended July 31, 1995 accompanies this Proxy Statement.
STOCKHOLDERS' PROPOSAL
IT IS ANTICIPATED THAT THE COMPANY'S FISCAL 1996 ANNUAL MEETING OF
STOCKHOLDERS WILL BE HELD ON OR ABOUT DECEMBER 11, 1996. STOCKHOLDERS WHO
INTEND TO PRESENT PROPOSALS AT SUCH ANNUAL MEETING OF STOCKHOLDERS MUST SUBMIT
THEIR PROPOSALS TO THE SECRETARY OF THE COMPANY ON OR BEFORE JULY 20, 1996.
GENERAL
The cost of soliciting proxies will be borne by the Company. In
addition to the use of mails, proxies may be solicited by personal interview,
telephone and telegraph, and by directors, officers and regular employees of
the Company, without special compensation therefor. The Company expects to
reimburse banks, brokers and other persons for their reasonable out-of-pocket
expenses in handling proxy materials for beneficial owners of the Company's
Common Stock.
Unless contrary instructions are indicated on the proxy card, all
Common Shares represented by valid proxies received pursuant to this
solicitation (and not revoked before they are voted) will be voted FOR the
election of the nominees for directors named herein and FOR Proposal No. 2.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by
filing with the Secretary of the Company written notice of revocation bearing a
later date than the proxy, by duly executing a subsequent proxy relating to the
same Common Shares or by attending the Annual Meeting and voting in person.
Attendance at the Annual Meeting will not in and of itself constitute
revocation of a proxy unless the stockholder votes his or her Common Shares in
person at the Annual Meeting. Any notice revoking a proxy should be sent to
the Company, at 225 Belleville Avenue, Bloomfield, New Jersey 07003 Attention:
Gail E. Fraser, Secretary.
The board of directors knows of no business other than that set
forth above to be transacted at the meeting, but if other matters requiring a
vote of the stockholders arise, the persons designated as proxies will vote the
Common Shares represented by the proxies in accordance with their judgment on
such matters. If a stockholder specifies a different choice on the proxy, his
or her Common Shares will be voted in accordance with the specification so
made.
Please complete, sign and date the enclosed proxy card, which is
revocable as described herein, and mail it promptly in the enclosed
postage-paid envelope.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO
FILL IN, SIGN AND RETURN THE ACCOMPANYING PROXY CARD, NO MATTER HOW LARGE OR
SMALL YOUR HOLDINGS MAY BE.
By order of the board of directors,
/S/ GAIL E. FRASER, SECRETARY
Gail E. Fraser, Secretary
Bloomfield, New Jersey
November 17, 1995
<PAGE>
ALFACELL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 11, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Kuslima Shogen and Gail E. Fraser and each of them, as proxies, with full power
of substitution in each of them, are hereby authorized to represent and to
vote, as designated below and on the reverse side, on all proposals and in the
discretion of the proxies on such other matters as may properly come before the
annual meeting of stockholders of Alfacell Corporation to be held on December
11, 1995 or any adjournment(s), postponement(s), or other delay(s) thereof (the
"Annual Meeting"), all shares of stock of Alfacell Corporation (the "Company")
to which the undersigned is entitled to vote at the Annual Meeting.
UNLESS OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1 AND 2 AND
WILL BE VOTED IN THE DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING. THE BOARD OF DIRECTORS RECOMMENDS
THAT STOCKHOLDERS VOTE "FOR" PROPOSALS 1 AND 2.
(1) Election of the following nominees as Directors to serve in such
capacities until their successors are duly elected and qualified:
KUSLIMA SHOGEN
GAIL E. FRASER
ROBERT R. HENRY
STANISLAW M. MIKULSKI
ALLEN SIEGEL
ALAN BELL
(Authority to vote for any nominee(s) may be withheld by lining through the
name(s) of any such nominee(s).)
/ / FOR / / WITHHOLD AUTHORITY FOR ALL
(2) Ratification of the selection of KPMG Peat Marwick LLP, independent
certified public accountants, to audit the financial statements of the
Company for the fiscal year ending July 31, 1996.
/ / FOR / / AGAINST / / ABSTAIN
(Please sign exactly as name appears below, date and return. If shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.)
Date:________________________________
Sign Here:___________________________
_____________________________________
Signature (if held jointly)
_____________________________________
Capacity (Title or Authority,
i.e. Executor, Trustee)
PLEASE SIGN, DATE AND MAIL YOUR
PROXY TODAY
/ / Please check this box if you expect to attend the Annual Meeting in
person.
