<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
Xytronyx, Inc.
----------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2) or
Item 22(a)(2) of Schedule A
[ ] $500 per each party to the controvery pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 of 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:
________________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________________
[ ] 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: ______________________________________________
(2) Form, Schedule or Registration Statement No.:_________________________
(3) Filing Party:_________________________________________________________
(4) Date Filed:___________________________________________________________
<PAGE>
[LOGO]
- --------------------------------------------------------------------------------
XYTRONYX, INC.
June 17, 1996
Dear Stockholder:
On behalf of the Board of Directors and management of Xytronyx, Inc., I
cordially invite you to our Annual Meeting to be held on Friday, August 9, 1996,
in the Company's conference room at 6555 Nancy Ridge Drive, Suite 200, San
Diego, California, at 9:00 a.m. This will be our eleventh Annual Meeting since
we became a public company in October, 1985, and we hope that it will be
possible for you to attend in person.
I look forward to meeting many stockholders personally at the Annual
Meeting at which time we can discuss important activities and accomplishments of
the Company.
It is important to us that your shares be represented at the meeting
whether or not you plan to attend. You can be sure your shares are voted at the
meeting in accordance with your preferences by properly completing, signing and
returning your proxy card in the enclosed envelope.
Sincerely,
/s/ LARRY O. BYMASTER
Larry O. Bymaster
Chairman of the Board
<PAGE>
XYTRONYX, INC.
6555 NANCY RIDGE DRIVE, SUITE 200
SAN DIEGO, CALIFORNIA 92121
(619) 550-3900
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 9, 1996
To the Stockholders of Xytronyx, Inc.:
The Annual Meeting of the Stockholders of Xytronyx, Inc. will be
held in the conference room of the Company at the above address on Friday,
August 9, 1996, at 9:00 a.m., for the following purposes as are more fully
described in the accompanying Proxy Statement:
1. To elect a Board of eight Directors to hold office for a one-year
term or until their successors are elected and qualified. The
following persons are nominees for election to the Board of
Directors by holders of the Common Stock: Mr. Larry O. Bymaster,
Mr. H. Lawrence Garrett, III, Mr. Jack H. Halperin, Mr. William
L. Jorgenson, Mr. John M. Kolbas, Mr. Elliott H. Vernon,
Mr. Morris S. Weeden and Mr. Michael S. Weiss;
2. To consider and act upon a proposal to ratify the initial
selection of Deloitte & Touche as the Company's independent
public accountants for the fiscal year ending March 31, 1997; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on June 10, 1996, are
entitled to vote at the meeting or any adjournment thereof.
To assure that your shares will be voted at the meeting, you are
requested to sign the enclosed proxy card and return it promptly in the
enclosed, postage-paid, addressed envelope. No additional postage is required
if mailed in the United States. If you attend the meeting, you may revoke your
proxy and vote in person on all matters submitted at the meeting even though you
have previously mailed your proxy card.
By order of the Board of Directors,
/s/ DALE A. SANDER
Dale A. Sander
Secretary
San Diego, California
June 17, 1996
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. YOUR
VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE EXECUTE
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
<PAGE>
XYTRONYX, INC.
6555 NANCY RIDGE DRIVE, SUITE 200
SAN DIEGO, CALIFORNIA 92121
(619) 546-1114
JUNE 17, 1996
-----------
PROXY STATEMENT
-----------
SOLICITATION OF PROXIES
This proxy statement (the "Proxy Statement") is furnished in
connection with the solicitation of proxies by the Board of Directors of
Xytronyx, Inc. (the "Company") for use at the Annual Meeting of Stockholders,
to be held August 9, 1996, and at any adjournments thereof (the "Meeting").
Shares of capital stock of the Company entitled to vote at the Meeting which
are represented by properly executed and dated proxies returned prior to the
Meeting will be voted at the Meeting in accordance with the specifications
thereon. If the proxy card is signed without specifying choices, the proxy
will be voted FOR the election of nominees for Directors listed in this Proxy
Statement and FOR approval of the proposals contained herein. The proxy also
confers discretionary authority on the persons designated therein to vote on
other business, not currently contemplated, which may come before the
Meeting. Any stockholder giving a proxy has the right to revoke it by giving
written notice to the Secretary of the Company or by duly executing and
delivering a proxy bearing a later date or by attending the Meeting and
giving oral notice to the Secretary at any time prior to the voting.
Pursuant to Delaware law and the Company's By-laws, the presence in
person or by proxy of stockholders entitled to cast a majority of all the votes
entitled to be cast at the meeting shall constitute a quorum. For purposes of
determining the number of votes cast with respect to any voting matter, only
those cast "for" or "against" are included. Abstentions and broker non-votes
are counted only for the purposes of determining whether a quorum is present at
the Meeting. A broker non-vote occurs when a nominee holding shares for a
beneficial owner votes on one proposal, but does not vote on another proposal.
Abstentions and broker non-votes with respect to a proposal are not counted as
favorable votes, and therefore have the same effect as a vote against the
proposal.
A complete list of the stockholders entitled to vote at the Meeting,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder, will be kept
open at the offices of the Company, 6555 Nancy Ridge Drive, Suite 200, San
Diego, California 92121, for examination by any stockholder during business
hours for a period of ten (10) days immediately prior to the Meeting.
The cost of the solicitation of proxies for the Meeting will be paid by
the Company. In addition to solicitation of proxies by use of the mails,
Directors, Officers and employees of the Company may solicit proxies personally,
or by other appropriate means. The Company will request banks, brokerage houses
and other custodians, nominees or fiduciaries holding stock in their names for
others to send proxy materials to, and to obtain proxies from the beneficial
holders of such stock, and the Company will reimburse them for their reasonable
expenses in doing so.
This Proxy Statement, accompanying form of proxy and the Fiscal 1996
Annual Report to Stockholders, including financial statements, are being mailed
to stockholders on or about June 17, 1996.
1
<PAGE>
VOTING
The securities of the Company entitled to vote at the Meeting consist,
as of June 10, 1996, the record date fixed by the Board of Directors (the
"Record Date"), of 8,088,529 shares of Common Stock, $0.02 par value (the
"Common Stock"). Each share of Common Stock is entitled to one vote on all
matters presented to the stockholders. The Company has no other outstanding
voting securities. Only stockholders of record on the books of the Company at
the close of business on the Record Date will be entitled to vote at the
Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
Eight Directors are to be elected at the Meeting, each to serve for a
term of one year and until his successor shall be duly elected and qualified.
The proxies solicited hereby are intended to be voted FOR the nominees whose
names are listed below unless authority to vote for election of any or all of
such nominees is withheld by marking the proxy to that effect. If a quorum is
present, the eight nominees receiving an affirmative vote of a majority of the
shares represented at the Meeting in person or by proxy shall be elected.
Shares with respect to which authority to vote for a nominee or nominees is
withheld will not be counted in the total number of shares voted for such
nominee or nominees. The Company has no reason to believe that any nominee will
not be available for election to serve his prescribed term. However, if any
nominee should for any reason be unable to serve, the shares represented by all
valid proxies will be voted for the election of such other person as the Board
may recommend in his place, or the Board may reduce the number of Directors to
eliminate the vacancy.
Pursuant to the Company's Bylaws, the size of Board of Directors is
currently fixed at nine members. However, the Board has nominated only the
eight existing Board member for election at the Meeting as the Board has not
determined whether it will replace a former Board member who retired in 1996.
Votes cannot be cast, either in person or by proxy, for a greater number of
persons than the number of nominees named herein.
The following table sets forth the name and age of each nominee and the
positions and offices with the Company held by him, his principal occupation and
business experience during the past five years and the year of commencement of
his term as a Director of the Company.
2
<PAGE>
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF THE
FOLLOWING NOMINEES:
<TABLE>
<CAPTION>
Year First
Principal Occupation and Business Became
Name Age Experience During the Past Five Years Director
---- --- ------------------------------------- ----------
<S> <C> <C> <C>
Larry O. Bymaster 54 Mr. Bymaster is Chairman of the Board and Chief 1992
Executive Officer of the Company, which positions
he has held since January 1, 1995 and November
1992, respectively. Mr. Bymaster has also served
as Chairman of the Executive Committee since
January 1, 1995. From September 1990, when
Mr. Bymaster joined the Company, until November
1992, Mr. Bymaster was President and Chief
Operating Officer. He has senior management
experience in both large corporations and smaller
medical companies, with emphasis on the successful
introduction and development of new products.
From late 1989 until he joined the Company,
Mr. Bymaster was a Management Associate with The
Bristol Management and Investment Group, a consulting
firm. From 1987 to 1989, he was a corporate officer
and Vice President with Cytotech, Inc., a San Diego
biotechnology company. From 1979 to 1987, he held
management positions with responsibilities for general
management, business/marketing development, strategic
planning and acquisitions with Baxter Healthcare
Corporation. From 1972 to 1979, he held various
management positions with Dart Industries.
Mr. Bymaster holds a Masters Degree in Business
Economics from the University of Southern California.
H. Lawrence Garrett, III 57 Mr. Garrett is Senior Vice President of Rolls-Royce, 1993
Inc. Previously he was a partner in the law firm of
Lipsen, Hamberger and Garrett in Washington D.C. He
formerly served as the Secretary of the Navy until
June 1992, a position to which he was confirmed in
May 1989. In this position, Mr. Garrett was the Chief
Executive Officer of the Department of the Navy,
responsible for recruiting, organizing, supplying,
equipping, training and administering all U.S. Naval
forces. From August 1987 until his appointment as
Secretary of the Navy, Mr. Garrett was Under Secretary
of the Navy. From February 1986 to August 1987, Mr.
Garrett was General Counsel, Department of Defense,
and from 1983 to 1986, he was Associate Counsel to the
President. Mr. Garrett holds a J.D., CUM LAUDE, from
the University of San Diego School of Law, and a
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Year First
Principal Occupation and Business Became
Name Age Experience During the Past Five Years Director
---- --- ------------------------------------- ----------
<S> <C> <C> <C>
B.S. in Business Management, University of West
Florida. He is a member of the Bar of the United
States Supreme Court, the Supreme Court of California,
the District of Columbia Court of Appeals, the United
States Court of Military Appeals and the United States
District Court (Southern District of California).
Jack H. Halperin 49 Mr. Halperin is a corporate and securities attorney 1992
with expertise in financing transactions who has
practiced independently since 1987. Mr. Halperin was
a member of the law firm of Solinger Grosz &
Goldwasser, P.C. from 1981 to 1987. Mr. Halperin has
a B.A. from Columbia College and a J.D. from New York
University School of Law. Mr. Halperin is a member of
the Board of Directors of I-Flow Corporation, AccuMed
International, Inc., and Memry Corporation.
William L. Jorgenson 53 Mr. Jorgenson has been the Managing Principal of 1984
Senechal, Jorgenson, Hale & Co., Inc. since 1992,
and was a Senior Principal in The Hale Group, an
associated consulting firm, from 1987 to 1992.
From 1984 to 1987, he served as President and Chief
Executive Officer of Fanny Farmer Candy Shops, Inc.
He was President and Chief Operating Officer of the
Terson Company, Inc. from 1981 to 1984. Before that,
he held various officer positions with the Quaker
Oats Company.
John M. Kolbas 70 Mr. Kolbas is a retired business executive who served 1990
as a consultant to pharmaceutical companies from 1985
to 1995, having had extensive experience in that
industry. He retired as President of Norwich Eaton
Pharmaceutical, Inc. in 1985, a position he had occupied
since 1979. From 1977 to 1979, he was President of
Morton Salt Company and from 1975 to 1977 he was Vice
President, Manufacturing, Norwich Eaton Pharmaceutical,
Inc. From 1947 to 1975, he held various positions
including Vice President of Operations of Bristol
Laboratories. Mr. Kolbas holds a Bachelor of Chemical
Engineering degree from Ohio State University.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Year First
Principal Occupation and Business Became
Name Age Experience During the Past Five Years Director
---- --- ------------------------------------- ----------
<S> <C> <C> <C>
Elliott H. Vernon 53 Elliott H. Vernon has been the Chairman of the 1995
Board and Chief Executive Officer of Healthcare
Imaging Services, Inc., a publicly held health
care management and services company that supplies
state-of-the-art medical equipment and services to
physicians, hospitals, and other health care
providers in the Northeast region since its
inception in 1991. Mr. Vernon is also the managing
partner of MR General Associates, a New Jersey
general partnership and the general partner of DMR
Associates, and has held such positions for the
past seven years. Mr. Vernon is Of Counsel to the
law firm of Schottland, Aaron, Plaza, Costanzo &
Manning, Esqs., with offices in New York and
New Jersey. Mr. Vernon is currently a director of
Transworld Home Healthcare, Inc., a publicly held
regional supplier of a broad range of alternate site
healthcare services and products.
Morris S. Weeden 76 Mr. Weeden is a retired business executive. He was 1984
the Vice Chairman of the Board of Directors of
Morton Thiokol, Inc., a chemical, salt and aerospace
manufacturer, from 1980 to 1984, when he retired.
He also served as both Group and Executive Vice
President of Morton's worldwide pharmaceutical and
household operations from 1975 to 1980, and President
of its Norwich International Division from 1973 to
1975. He is currently a member of the Board of
Directors of Matria Healthcare, Inc.
Michael S. Weiss 30 Mr. Weiss is Senior Managing Director of 1995
Paramount Capital, Incorporated, an investment
banking firm, and General Counsel of the Castle
Group, a venture capital firm. He joined the
companies is 1993. Previously, from 1991 through
1993, Mr. Weiss was an attorney with Cravath,
Swaine & Moore. Mr. Weiss is also currently a
member of the Board of Directors of several
privately held biopharmaceutical companies,
including RhoMed Incorporated, Channel
Therapeutics, Inc. and Optex Ophthalmologics, Inc.
and serves as secretary of Atlantic
Pharmaceuticals, Inc., a publicly traded
biotechnology company. Mr. Weiss received his
J.D. from Columbia University School of Law and
a B.S. in Finance from The State University of
New York at Albany.
</TABLE>
5
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met nine times during the last fiscal year.
The Company's Board of Directors has an Audit Committee, a Compensation and
Officer Selection Committee, a Stock Option Committee and an Executive
Committee. The Board has no nominating or similar committee. The current
members of the Audit Committee are Mr. Jorgenson, Mr. Kolbas and Mr. Vernon.
This committee monitors the Company's basic accounting policies, reviews
audit and management reports and makes recommendations regarding the
appointment of the independent auditors. The Audit Committee met once during
the last fiscal year, and otherwise its responsibilities were assumed by the
full Board of Directors. The members of the Compensation and Officer
Selection Committee are Mr. Garrett, Mr. Kolbas and Mr. Weeden. This
committee, which met once during the last fiscal year, chooses Officers of
the Company and reviews and determines appropriate Officer compensation.
Members of the Stock Option Committee are Mr. Garrett, Mr. Halperin, Mr.
Weeden and Mr. Weiss. This committee, which administers and makes awards
under the Company's 1988 Stock Option Plan, 1989 Key Executive Stock Option
Plan and 1991 Stock Option Plan for Employees and Consultants, met twice
during the last fiscal year. Members of the Executive Committee are
Mr.Bymaster, Mr. Halperin and Mr. Garrett. The Executive Committee, with the
exception of certain fundamental corporate actions inclusive of the power to
give final approval to a financing transaction in the name of and on behalf
of the Company, is authorized to exercise the powers of the Board of
Directors in the management of the business and affairs of the Company with
respect to any matter which may require action prior to, or which in the
opinion of the Executive Committee may be inconvenient, inappropriate or
undesirable to be postponed until, the next meeting of the Board of
Directors. The Executive Committee did not meet during Fiscal 1996. During
Fiscal 1996, all of the Company's Directors, except Mr. Garrett, Mr.
Jorgenson and Mr. Kolbas, attended at least 75% of the meetings of the full
Board and of committees of which they were members.
EXECUTIVE COMPENSATION
The information under this heading relates to the compensation of the
Chairman of the Board (who was also the Chief Executive Officer at Fiscal 1996
year end) and the other most highly compensated executive officer of the Company
as of the Fiscal 1996 year-end for services in all capacities during Fiscal
1996. This information is presented in compliance with the rules and
regulations of the Securities and Exchange Commission applicable to those
companies, such as Xytronyx, Inc., that meet the definition of a "small business
issuer".
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------------
Annual Compensation Awards Awards Payouts
- -----------------------------------------------------------------------------------------------------------------
Restricted
Name and Stock Number LTIP All Other
Principal Fiscal Awards of Payout Compensation
Position Year Salary Bonus Other Amount Options Amount Amount
- --------------------------------------------------------------------------- ---------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Larry O. Bymaster 1996 $ 207,169 $ 75,000 $ - $ - 75,000 $ - $ -
Chairman of the 1995 $ 163,925 $ 75,000 $ - $ - 195,000 $ - $ -
Board and Chief 1994 $ 150,000 $ 50,000 $ - $ - 35,000 $ - $ -
Executive Officer
Dale A. Sander
VP of Finance, 1996 $ 95,250 $ 18,400 $ - $ - 35,000 $ - $ -
CFO, Secretary 1995 $ 88,250 $ 13,050 $ - $ - 10,000 $ - $ -
and Treasurer 1994 $ 28,011(a) $ - $ - $ - 25,000 $ - $ -
</TABLE>
(a) Represents approximately four month's compensation earned after Mr. Sander
joined the Company in December, 1993.
6
<PAGE>
COMPENSATION PURSUANT TO PLANS
INDIVIDUAL OPTION GRANTS TO EXECUTIVE OFFICERS DURING FISCAL 1996
<TABLE>
<CAPTION>
Potential Realized
Value
Percent At Assumed Annual
Number of of Total Rates of Stock Price
Securities Options Appreciation for Option
Underlying Granted to Term
Name of Options Employees Exercise Expiration -------------------------
Executive Officer Granted(a) in FY 1996 Price(b) Date(c) 5% 10%
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Larry O. Bymaster 50,000 31% $ 2.250 8/11/00 $ 31,082 $ 68,682
25,000 16% $ 2.250 8/11/00 $ 15,541 $ 34,341
Dale A. Sander 35,000 22% $ 2.250 8/11/00 $ 21,757 $ 48,078
</TABLE>
(a) Options are exercisable after the first, second, third and fourth
anniversary of the grant date in increments of 20%, 30%, 20% and 30%,
respectively.
(b) The exercise price and tax withholding obligations related to exercise may
be paid by delivery of shares already owned, subject to certain conditions.
(c) Options were granted for a term of five years.
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND FISCAL YEAR END 1996 OPTION
VALUES
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Number of Unexercised Options In-The-Money Options
Shares at March 31, 1996 at March 31, 1996
Name of Acquired Value --------------------------- ---------------------------
Executive Officer on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------- --------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Larry O. Bymaster - $ - 134,000 256,000 $ - $ -
Dale A. Sander - $ - 14,500 55,500 $ - $ -
</TABLE>
7
<PAGE>
EMPLOYMENT AGREEMENT
Effective January 1, 1995, the Company entered into an employment
agreement to engage Larry O. Bymaster to serve in the capacity of Chairman of
the Board and Chief Executive Officer of the Company. This agreement provides
for a guaranteed base salary and an annual bonus of up to 50% of salary, such
bonus amount to be determined by the Board of Directors. It also provides for
payment in lieu of pension coverage of up to 10% of Mr. Bymaster's cash salary
compensation, and payment of premiums, on behalf of Mr. Bymaster, for a term
life insurance policy with coverage in an amount equal to twice the base salary
earned by Mr. Bymaster. The agreement is effective for a period of 24 months
and expires on December 31, 1996. The agreement provides that Mr. Bymaster will
have the right to terminate his employment if there is a demotion in his
responsibilities after a change-in-control of the Company and to continue to
receive his salary and benefits for the remainder of the term of the agreement.
CONSULTING AGREEMENT
Effective January 1, 1995, the Company engaged Dr. Peter Baram as a
consultant to assist the Company with financing activities, issues relating to
technology and to provide other consultation that the Company may require. The
agreement provides for an annual consulting fee of $100,000 for the calendar
year 1995 and $50,000 for the calendar year 1996. Payments for the fiscal year
ended March 31, 1996 totaled $87,500. Prior to Dr. Baram's retention as a
consultant, he served as Chairman of the Board of the Company. Dr. Baram is the
beneficial owner of approximately 5.75% of the outstanding common stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Michael S. Weiss was appointed as a director of Xytronyx, Inc. on
December 1, 1995 and is currently a Senior Managing Director of Paramount
Capital, Inc. Pursuant to a Placement Agreement dated September 11, 1995
between Xytronyx, Inc. and Paramount Capital, Inc., Paramount Capital, Inc.
acted as placement agent for the private placement of 34.85 units ("Units") at
$100,000 per unit to "accredited" investors as defined by federal securities
regulations. Each Unit was comprised of 80,000 shares of Xytronyx's common
stock and 100,000 warrants to purchase one share of common stock per warrant at
an exercise price of $1.00 per share for a period of ten years. As compensation
for its services, Paramount Capital, Inc. received $313,650 in commissions and a
nonaccountable expense allowance of $139,400. Additionally, Paramount Capital,
Inc. received 4.35625 Unit purchase warrants at an exercise price equal to 110%
of the price per Unit paid by the investors in the private placement, to
purchase up to 784,125 shares of common stock. Also pursuant to the terms of
the Placement Agreement, Paramount Capital, Inc. received the right to: (i)
receive a commission of 6% of the gross proceeds received from the exercise of
the warrants; (ii) serve as a financial consultant for the Company until
November 21, 1996 and receive a monthly retainer fee of $2,500; (iii) designate
two nominees to the Board of Directors of Xytronyx, Inc. for an undefined period
of time, for which Mr. Weiss and Mr. Vernon have been designated.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company currently receive an
annual retainer of $3,000 and a fee of $1,000 for each Board meeting attended in
person. The Company also reimburses Directors for reasonable travel and related
expenses incurred in attending meetings. Officers of the Company who serve on
the Board or any Committee thereof receive no compensation for doing so.
The 1991 Stock Option Plan for Non-Employee, Non-Consultant Directors
(the "1991 Directors' Plan") was approved by the stockholders on September 27,
1991, under which all non-employee, non-consultant Directors automatically
participate. Under the 1991 Directors' Plan, 87,000 shares of the Company's
Common Stock, as adjusted for stock splits, were reserved for issuance upon
exercise of Nonqualified Stock Options granted or to be granted to Directors of
the Company. All options granted under the 1991 Directors' Plan are at a per
share exercise price equal to the closing price per share of Common Stock on the
American Stock Exchange on the grant date. The 1991 Directors' Plan will
terminate on September 27, 2001, unless terminated earlier by the Board of
Directors.
8
<PAGE>
Options to purchase 5,000 shares of common stock were granted to Mr.
Vernon and Mr. Weiss, exercisable at $1.75 per share, and options to purchase
2,000 shares of common stock were granted to Mr. Halperin, Mr. Jorgenson, Mr.
Kolbas, Mr. Garrett and Mr. Weeden, each exercisable at $2.50 per share, under
the 1991 Directors' Plan during Fiscal 1996. All options expire on the tenth
anniversary of the date of grant. None of such options have been exercised.
9
<PAGE>
BENEFICIAL AND RECORD OWNERSHIP OF SECURITIES
The following table sets forth certain information as of June 10, 1996,
with respect to the beneficial ownership of the Company's Common Stock by (a)
each person who is known to the Company to own beneficially more than 5% of the
outstanding shares of common stock; (b) each present executive officer, Director
and nominee for election as a Director of the Company, and (c) all executive
officers, Directors and Director Nominees of the Company as a group.
Shares of
Common Stock Percent of
Name and Address Beneficially Owned Outstanding
of Beneficial Owner (1)(2) Common Stock
- ----------------------------------- --------------------- ---------------
Dr. Lindsay Rosenwald
375 Park Avenue, Suite 1501
New York, NY 10152 1,444,883 (3) 15.16%
Aries Financial Services, Inc. 1,012,500 (3) 11.13%
The Aries Trust 506,250 (3) 6.03%
Aries Domestic Fund, L.P. 506,250 (3) 6.03%
Peter Baram
6835 La Jolla Scenic South
La Jolla, CA 92037 479,797 5.75%
Larry O. Bymaster
6555 Nancy Ridge Drive, Suite 200
San Diego, CA 92121 136,500 1.66%
H. Lawrence Garrett, III 2,900 *
Jack H. Halperin 4,900 *
William L. Jorgenson 18,800 *
John M. Kolbas 9,800 *
Dale A. Sander 14,500 *
Elliott H. Vernon - -
Morris S. Weeden 16,300 *
Michael S. Weiss 46,173 (4) *
All Directors and Executive Officers
as a group (9 persons) 249,873 3.06%
10
<PAGE>
(1) The inclusion of any shares of common stock deemed beneficially
owned does not constitute an admission by the person named that he is
the beneficial owner of those shares. Beneficial ownership also
includes shares of common stock which may be acquired within 60 days of
June 10, 1996, through the exercise of warrants or options, or
otherwise, as follows: Dr. Rosenwald, 1,044,883 shares; Aries Financial
Services, Inc., 612,500 shares; Aries Domestic Fund, L.P., 306,250
shares; The Aries Trust, 306,250 shares; Dr. Baram, 250,000 shares; Mr.
Bymaster, 144,000 shares; Mr. Sander, 14,500 shares; Mr. Garrett, 2,900
shares; Mr. Halperin, 4,900 shares; Mr. Jorgenson, 18,800 shares; Mr.
Kolbas, 9,800 shares; Mr. Weeden, 16,300 shares; Mr. Weiss, 46,173
shares; and all Directors and Officers as a group, 257,373 shares.
(2) To the best of the Company's knowledge, unless otherwise indicated,
the beneficial owners named in column one have sole voting and
investment power with respect to the shares of common stock held.
(3) The Aries Domestic Fund, L.P. and the Aries Trust are each the
beneficial owner of 506,250 shares of common stock over which they may
be deemed to hold shared voting power with Dr. Lindsay Rosenwald and
Aries Financial Services, Inc. Aries Financial Services, Inc. is the
general partner of Aries Domestic Fund, L.P. and is the investment
manager of the Aries Trust, and therefore may be deemed to be the
beneficial owner of the 506,250 shares of common stock beneficially
owned by each. Dr. Lindsay Rosenwald is the beneficial owner of 432,383
shares of common stock issuable upon the exercise of certain warrants
and, as the President and sole shareholder of Aries Financial Services,
Inc., may be deemed to be the beneficial owner of the 1,012,500 shares
of common stock beneficially owned by Aries Financial Services, Inc.,
although he disclaims such beneficial ownership except to the extent of
his pecuniary interest. The address for each of Aries Financial
Services, Inc., Aries Domestic Fund, L.P. and the Aries Trust is 375
Park Avenue, Suite 1501, New York, NY 10152.
(4) Includes warrants to purchase 46,173 shares of common stock. Mr.
Weiss has disclaimed beneficial ownership of all shares owned by other
employees or principals of Paramount Capital, Inc.
* Less than 1%
_______________
PROPOSAL 2
APPROVAL OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Although not required to do so, the Board customarily seeks stockholder
ratification of its initial selection of Deloitte & Touche to serve as the
Company's independent public accountants for the fiscal year ending March 31,
1997. Deloitte & Touche has served as the Company's independent public
accountants since 1983. It is anticipated that representatives of Deloitte &
Touche will attend the Meeting and will have the opportunity to make any
statement if they desire to do so and will be available to respond to
appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
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<PAGE>
OTHER BUSINESS
At the date of this Proxy Statement, the Company knows of no other
matters to be brought before the Meeting of Stockholders. If other matters
should properly come before the Meeting, it is the intention of each person
mentioned in the proxy to vote such proxy in accordance with his judgment of
such matters. Discretionary authority with respect to such other matters is
granted by the execution of the enclosed proxy.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Stockholders may submit proposals appropriate for stockholder action at
the Company's annual meeting to be held in calendar year 1997 consistent with
regulations of the Securities and Exchange Commission. In order for stockholder
proposals to be eligible for inclusion in the proxy statement and form of proxy
for such meeting, they must be received by the Secretary of the Company not
later than February 16, 1997. Such proposals should be directed to the
attention of the Corporate Secretary at the address shown on page 1.
REQUEST TO VOTE, SIGN AND RETURN PROXIES
Please vote, date and sign the enclosed proxy card and return it in the
accompanying envelope, at your earliest convenience.
DATED: June 17, 1996
By Order of the Board of Directors
By: /s/ DALE A. SANDER
------------------------------
Dale A. Sander, Secretary
AVAILABILITY OF FINANCIAL INFORMATION
THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED MARCH 31, 1996,
INCLUDING FINANCIAL STATEMENTS, ACCOMPANIES THIS PROXY STATEMENT. STOCKHOLDERS
MAY OBTAIN (FREE OF CHARGE) A COPY OF THE COMPANY'S MOST RECENT ANNUAL REPORT ON
FORM 10-K, EXCLUDING EXHIBITS, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION BY WRITING TO THE CORPORATE SECRETARY, AT THE ADDRESS SHOWN ON PAGE
1.
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<PAGE>
XYTRONYX, INC.
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY FOR
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 9, 1996
The undersigned hereby (i) acknowledge(s) receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement dated June 17, 1996, relating to the
Annual Meeting of Stockholders of XYTRONYX, INC. (the "Company") to be held
August 9, 1996 and (ii) appoints Larry Bymaster and Dale Sander, as proxies,
with full power of substitution, and authorizes them, or either of them, to vote
all shares of Common Stock of the Company standing in the name of the
undersigned at said meeting or any adjournment thereof upon the matters
specified below and upon such other matters as may be properly brought before
the meeting, conferring discretionary authority upon such proxies as to such
other matters. 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 PROPOSALS 1 AND 2.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting.
STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE IN PERSON EVEN THOUGH THEY HAVE
PREVIOUSLY MAILED THIS PROXY CARD.
(Continued on reverse side)
13
<PAGE>
1. Election of Directors. Nominees: Larry O. Bymaster
H. Lawrence Garrett, III
Jack Halperin
William L. Jorgenson
John M. Kolbas
Elliott H. Vernon
Morris S. Weeden
Michael S. Weiss
/ / FOR / / AGAINST / / ABSTAIN
For, except vote withheld from the following nominee(s)
_____________________________________________
2. Ratify the Board of Directors' initial selection of Deloitte & Touche
LLP as the Company's independent public accountants for the year ended March 31,
1997.
Please check this box if you plan to attend the meeting. / /
Please sign exactly as name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as 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.
__________________________________________
__________________________________________
Signature(s) Date
Please mark, date, sign and mail this proxy card in the envelope provided. No
postage is required for domestic mailing.
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