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
EROX CORPORATION
------------------------------------------------
(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
/ / 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:
- ----------------------------------------------------------------------------
(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
EROX CORPORATION
Notice of Annual Meeting of Shareholders
to be held May 15, 1997
To the Shareholders of EROX Corporation:
The annual meeting of shareholders (the "Annual Meeting") of EROX
Corporation (the "Company") will be held at the Holiday Inn Palo Alto-Stanford,
625 El Camino Real, Palo Alto, California, on May 15, 1997, at 10:00 a.m. local
time, for the following purposes:
(1) To elect six Directors to hold office until the next
Annual Meeting; and
(2) To act upon such other business as may properly come
before the meeting.
Only shareholders of record at the close of business on April 14, 1997,
are entitled to notice of, and to vote at, the Annual Meeting and any
adjournments or postponements thereof.
BY THE ORDER OF THE BOARD OF DIRECTORS,
Julian N. Stern, Secretary
Fremont, California
April 16, 1997
********************************************************************************
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE SIGN
AND RETURN THE ENCLOSED PROXY AS SOON AS POSSIBLE IN THE ENCLOSED POSTPAID
ENVELOPE. THANK YOU FOR ACTING PROMPTLY.
- ---*****************************************************************************
<PAGE>
EROX CORPORATION
4034 Clipper Court
Fremont, California 94538
Telephone: (510) 226-6874
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
The enclosed proxy is solicited on behalf of the Board of Directors
(the "Board") of EROX Corporation, a California corporation (the "Company"). The
proxy is solicited for use at the annual meeting of shareholders (the "Annual
Meeting") to be held at 10:00 a.m. local time on May 15, 1997, at the Holiday
Inn Palo Alto-Stanford, 625 El Camino Real, Palo Alto, California.
Record Date And Shares Outstanding
Only shareholders of record at the close of business on April 14, 1997,
are entitled to notice of, and to vote at, the Annual Meeting and any
adjournments or postponements thereof. At the close of business on that date,
the Company had outstanding 10,238,238 shares of Common Stock. Holders of a
majority of the outstanding shares of Common Stock of the Company, either
present in person or by proxy, will constitute a quorum for the transaction of
business at the Annual Meeting.
Revocability Of Proxies
Any shareholder giving a proxy in the form accompanying this proxy
statement has the power to revoke the proxy prior to its exercise. A proxy can
be revoked by an instrument of revocation delivered prior to the Annual Meeting
to the Secretary of the Company, by a duly executed proxy bearing a later date
or time than the date or time of the proxy being revoked, or at the Annual
Meeting if the shareholder is present and elects to vote in person. Mere
attendance at the Annual Meeting will not serve to revoke a proxy.
Voting And Solicitation
A shareholder has the right to request cumulative voting for the
election of directors by giving notice of such shareholder's intention to
cumulate votes at the meeting prior to the voting. Cumulative voting allows a
shareholder to cast that number of votes which equals the number of directors to
be elected multiplied by the number of shares held by such shareholder and to
distribute those votes among the nominees as the shareholder may choose.
However, no shareholder shall be entitled to vote for more than five candidates
and votes may not be cast in favor of a candidate unless the candidate's name
has been placed in nomination prior to the voting. In the election of Directors,
the five candidates receiving the highest number of affirmative votes of the
shares represented and voting at the Annual Meeting will be elected Directors.
On all other matters, each share is entitled to one vote on each
proposal that comes before the Annual Meeting. Abstentions and broker non-votes
will be counted in determining whether a quorum is present at the Annual
Meeting. However, abstentions are counted as votes against a proposal for
purpose of determining whether or not a proposal has been approved, whereas
broker non-votes are not counted for such purpose.
<PAGE>
The Company will bear the entire cost of solicitation, including
preparation, assembling and mailing this proxy statement, the proxies and any
additional material which may be furnished to shareholders. The Company will,
upon request, reimburse the reasonable charges and expenses of brokerage houses
or other nominees or fiduciaries for forwarding proxy materials to, and
obtaining authority to execute proxies from, beneficial owners for whose
accounts they hold shares of Common Stock. The original solicitation of proxies
by mail may be supplemented by telephone, telegram and/or personal solicitation
by directors, officers or employees of the Company. No additional compensation
will be paid for such services.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of April 14, 1997; (i) by
each person who is known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock; (ii) by each of the Company's executive
officers named in the Summary Compensation Table; (iii) by each of the Company's
directors; and (iv) by all directors and executive officers as a group. Except
as otherwise indicated, the Company believes that the beneficial owners of the
securities listed below, based on information furnished by such owners, have
sole investment and voting power with respect to the Common Stock shown as being
beneficially owned by them:
DIRECTORS, NOMINEES, SHARES PERCENT
OFFICERS AND 5% STOCKHOLDERS BENEFICIALLY OF
- ---------------------------- OWNED(1) CLASS
--------- -------
William P. Horgan (2) 234,656 2.2%
Michael V. Stern (3) 260,968 2.4%
Bernard I. Grosser, MD(4) 127,500 1.2%
Helen C. Leong(5) 168,808 1.6%
Robert Marx(6) 109,558 1.0%
Maxine C. Harmatta(7) 51,770 .5%
All Officers and Directors(8) 953,260 8.9%
as a group (6 persons)
David L. Berliner, MD 587,500 5.5%
535 Middlefield Road, Suite 240
Menlo Park, CA 94025
MK Global Ventures(9) 704,667 6.6%
2471 East Bayshore Road
Palo Alto, CA 94303
(1) The number of shares of Common Stock set forth in the table includes shares
issuable pursuant to stock options which may be exercised within 60 days
after April 14, 1997. Calculation of the percent ownership takes into
account those shares which may be issued on exercise of options held by the
named shareholder or group only.
(2) Includes 231,456 shares issuable on exercise of outstanding options.
2
<PAGE>
(3) Includes 63,628 shares issuable on exercise of outstanding options.
(4) Includes 55,000 shares issuable on exercise of outstanding options.
(5) Includes 55,000 shares issuable on exercise of outstanding options.
(6) Includes 45,000 shares issuable on exercise of outstanding options.
(7) Consists of 51,770 shares issuable on exercise of outstanding options.
(8) Includes 501,854 shares issuable on exercise of outstanding options.
(9) Includes 38,000 shares held in the name of a general partner of the
partnership.
PROPOSAL 1 - ELECTION OF DIRECTORS
Each of the five directors to be elected will hold office until the
next annual meeting of the shareholders or until a successor shall be elected
and qualified. The following individuals are proposed for election:
POSITIONS
NAME AGE WITH THE COMPANY
---- --- ----------------
William P. Horgan 49 Chairman of the Board of
Directors, Chief Executive
Officer and Director
Michael V. Stern 38 President and Director
Bernard I. Grosser, MD 67 Director
Helen C. Leong 69 Director
Robert Marx 66 Director
William P. Horgan was appointed to the newly created post of Chairman of the
Board in November 1996 after serving as President, Chief Executive Officer and
Director since January 1994, when he joined the Company. From May 1992 to
January 1994, he served as Chief Financial and Administrative Officer of
Geobiotics, Inc., a biotechnology-based development stage company, and from
January 1990 to May 1992, was employed by E.S. Jacobs and Company as Senior Vice
President of Worlds of Wonder, Inc. From March 1988 to January 1990, he was
Chief Financial Officer of Advanced Polymer Systems, Inc., a manufacturer and
supplier of polymer based delivery systems for the ethical dermatology, OTC skin
care and personal care markets. Prior thereto, he held various executive and
management positions with CooperVision, Inc. and several affiliated companies,
including President of its Revo, Inc. subsidiary.
Michael V. Stern was named President in November 1996. He had served as a
Director since March 1993, and was appointed Vice President Sales and Marketing
in February 1994. Prior to that, from February 1993 until February 1994 he was
Director of Marketing and Sales for Mc Guire Company, a division of Kohler
Company. He also served as a management consultant for Carter, Hawley, Hale, a
department store operation, from May 1992 until February 1993. From prior to
1989 until May 1992, Mr. Stern held various management positions with R.H. Macy
in its California Division.
Bernard I. Grosser, MD has served as a Director since March 1992. He is Chairman
of the Department of Psychiatry at the University of Utah and has served in that
capacity since 1982. He has conducted extensive research related to hormonal
target areas of the brain.
Helen C. Leong has served as a Director since April 1993. Mrs. Leong is and has
been for more than five years the managing partner of Leong Ventures, which
makes investments in the areas of biogenetics and health-oriented
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<PAGE>
technologies. She is a general partner of CLW Associates, which specializes in
real estate and start-up businesses in consumer fields. Mrs. Leong is also a
founder of Mid-Peninsula Bank of Palo Alto where she has served as a director
since 1988.
Robert Marx has served as a Director since October 1994. Mr. Marx was the
founder and Co-CEO of Gildamarx Incorporated, a firm specializing in designing
and manufacturing exercise apparel and products for active life styles from 1979
until the sale of the company in 1996. He is a member of the Executive Committee
of the Sports Apparel Products Council and the Board of Directors of the
California Manufacturers Association.
Board Compensation
Directors currently are not compensated for attending Board meetings, but are
reimbursed for their reasonable expenses incurred in attendance. The Board of
Directors has adopted, and the Company's shareholders approved at the 1994
annual meeting of shareholders, a Nonemployee Directors' Stock Option Plan.
Under this Plan, a total of 275,000 shares are reserved for issuance, and
non-employee directors are entitled to receive a mandatory initial option grant
of 25,000 shares and mandatory annual option grants of 10,000 shares.
Board Meetings and Committees of the Board
The Board of Directors met six times in 1996. Each director
participated in all of the meetings of the Board. The Board has a Compensation
and Stock Options Committee, whose members are Mrs. Leong, and Dr. Grosser, and
an Audit Committee, whose members are Mrs. Leong, Dr. Grosser, and Mr. Marx. The
function of the Compensation and Stock Options Committee is to propose and
review the compensation policies of the Company and to administer the Company's
Stock Option Plan. The Compensation and Stock Option Committee met four times in
1996, with all director members in attendance at each meeting. The Audit
Committee's purpose is to consult with the Company's independent auditors
concerning their audit plans, the results of the audit, the Company's accounting
principles and the adequacy of the Company's general accounting controls. The
Audit Committee met two times in 1996, with all members in attendance at each
meeting.
4
<PAGE>
<TABLE>
Executive Compensation
The following table sets forth the total compensation for 1996, 1995
and 1994 of the Chief Executive Officer and each of the other executive officers
of the Company whose total salary and bonus for 1996 exceeded $100,000.
<CAPTION>
Summary Compensation Table
---------------------------- Long-Term
Compensation
Annual Compensation Award
Name and ------------------- Securities Underlying
Principal Position Year Salary Bonus Options (#)
- ------------------ ---- ------ ----- -----------
<S> <C> <C> <C> <C>
William P. Horgan 1996 $185,000 $55,600 100,000
Chairman of the Board and 1995 $156,000 $10,000 100,000
Chief Executive Officer(1) 1994 $156,000 - 200,000
Michael P. Stern 1996 $134,000 $40,200 150,000
President(2)) 1995 $120,000 $ 7,000 25,000
1994 $106,818 - 50,000
Maxine C. Harmatta 1996 $110,000 $31,850 125,000
Vice President(3) 1995 $100,000 $ 5,300 15,000
1994 $ 81,818 - 35,000
<FN>
(1) Mr. Horgan joined the Company as President and Chief Executive Officer
in January 1994.
(2) Mr. Stern joined the Company as Vice President, Marketing and Sales in
February 1994.
(3) Ms. Harmatta joined the Company as Vice President, Controller in March
1994.
</FN>
</TABLE>
<TABLE>
The following table sets forth information with respect to options
granted in 1996 to the executive officers named in the Summary Compensation
Table.
<CAPTION>
Option Grants in Last Fiscal Year
---------------------------------
Number Potential Realizable
of % of Value at Assumed
Securities Total Annual Rates of
Under- Options Stock Price
lying Granted Appreciation for
Options Employees Exercise Option Term
Granted in Fiscal Price Expiration
Name (#) (1) Year $/Share Date 5%($)(2) 10%($)(2)
- ---- ------- ---- ------- ---- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
William P. Horgan 50,000 10% $5.87 09/10/02 $82,557 $187,054
50,000 10% $4.84 11/11/02 $96,752 $223,496
Michael V. Stern 50,000 10% $2.94 01/08/02 $49,993 $113,419
50,000 10% $5.87 09/10/02 $82,557 $187,054
50,000 10% $4.84 11/11/02 $96,752 $223,496
Maxine C. Harmatta 25,000 5% $2.94 01/08/02 $24,996 $56,709
50,000 10% $5.87 09/10/02 $82,557 $187,054
50,000 10% $4.84 11/11/02 $96,752 $223,496
5
<PAGE>
<FN>
(1) The options, granted under the Company's 1990 Stock Option Plan with
terms of 6 years, vest on an individual grant basis. The majority of
options vest on an annual basis over a period not exceeding four years.
Certain grants vest over a three year period. Payments by the optionee
on exercise (including any taxes the Company is required to withhold)
may be made in cash or, in accordance with the provisions of the Plan,
by delivery of shares of Common Stock. All options are granted at the
fair market value of the Company's Common Stock on the date of grant.
(2) The 5% and 10% rates of appreciation were set by the SEC and are not
intended to forecast future appreciation, if any, of the Company's
Common Stock. if Erox Corporation's common stock does not increase in
value, then the option grants described in the table will be valueless.
</FN>
</TABLE>
<TABLE>
Aggregated Option Exercises in Last Fiscal Year and FY End Option Values
<CAPTION>
Number Of Value Of
Securities Under- In the Money
Lying Unexercised Options at
Shares Options at FY End Fiscal Year End
Acquired Value (#)Exercisable/ ($)Exercisable/
Name on Exercise # Realized $ Unexercisable Unexercisable
- ---- ------------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
William P. Horgan 30,000 $189,700 216,873/153,127 $482,091/$109,283
Michael V. Stern 17,100 $110,275 41,057/166,843 $82,536/$85,033
Maxine C. Harmatta -0- -0- 38,644/136,356 $75,352/$48,806
</TABLE>
EROX did not make any awards during 1996 to any of the executive
officers named on the Summary Compensation Table under any long-term incentive
plan providing for compensation intended to serve as an incentive for
performance to occur over a period of longer than one fiscal year, excluding
stock options.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1991, the Company transferred to Pherin Corporation ("Pherin"), a
newly formed California corporation, all of the Company's rights to its human
pheromone technology for use other than in the fragrance and cosmetic field,
together with $2 million in cash, in exchange for all of the stock of Pherin.
Upon approval by its shareholders at the Annual Meeting held in August 1991, the
Company distributed to its shareholders all of the stock of Pherin. Certain
stockholders identified under "Principal Stockholders" above are also
stockholders of Pherin.
EROX and Pherin are parties to an agreement, pursuant to which Pherin
will supply EROX with its reasonable requirements of human pheromones and to
make available to EROX the basic manufacturing technology. Under the agreement,
payments to Pherin in 1996 totaled $270,000. After January 31, 1996, rather than
supply human pheromones to EROX, Pherin may instead elect to provide to the
Company all manufacturing technology in its possession that it has not
previously supplied to EROX. On February 29, 1996, the Company signed an
amendment renewing the agreement. The terms remain substantially the same as the
original agreement with payments to Pherin increasing to $23,000 per month and
the agreement extending to March 1, 1998. Under this amendment, the Company has
the ability to cancel the agreement with 60 days prior notice.
6
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
the outstanding shares of the Company's Common Stock, to file with the
Securities and Exchange Commission initial reports of ownership (Form 3) and
changes in ownership of such stock (Forms 4 and 5).
To the Company's knowledge, based solely upon review of the copies of
such reports and certain representations furnished to it, all Section 16(a)
filing requirements applicable to its executive officers and directors were
complied with during the year ended December 31, 1996.
OTHER BUSINESS
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as stated in the Notice of
Meeting. If, however, other matters are properly brought before the meeting, it
is the intention of the persons named in the accompanying form of proxy to vote
the shares presented thereby on such matters in accordance with their best
judgment.
SHAREHOLDER PROPOSALS
Under the rules of the securities and exchange commission, shareholders
who wish to submit proposals for inclusion in the Proxy Statement of the Board
of Directors for the Annual meeting of shareholders to be held in 1998 must
submit such proposals so as to be received by the Company at 4034 Clipper Court,
Fremont, California 94538, on or before December 31, 1997.
BY ORDER OF THE BOARD OF DIRECTORS
Julian N. Stern, Secretary
Fremont, California
April 17, 1997
IMPORTANT
You are cordially invited to attend the meeting in person. Whether or
not you plan to attend the meeting, you are earnestly requested to sign and
return the accompanying proxy in the enclosed envelope.
7
<PAGE>
Appendix A
PROXY
EROX CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 15, 1997
The undersigned hereby appoints William P. Horgan and Julian N. Stern,
or either of them, each with full power of substitution, as the proxyholder(s)
of the undersigned to represent the undersigned and vote all shares of Common
Stock of EROX Corporation (the "Company") which the undersigned would be
entitled to vote if personally present at the annual meeting of shareholders of
the Company at 10:00 a.m. local time on May 15, 1997 and at any adjournments or
postponements of such meeting as follows:
(Continue, and to be signed on reverse side)
<PAGE>
<TABLE>
<S> <C> <C>
A [X] Please mark
votes as in
this example.
FOR all nominees WITHHOLD
listed (except as AUTHORITY to
marked to the contrary vote for all nominees
below). listed at right
1. To elect as
directors, to hold [ ] [ ]
office until their Nominees: William P. Horgan 2. In their discretion the
successors are Michael V. Stern proxyholders are authorized to
elected, the nominees listed at right. Bernard I. Grosser, M.D. transact such other business as
Helen C. Leong may properly come before the
To withhold authority to vote for any of the nominees Robert Marx meeting or any adjournments or
listed at right, write the nominee's name on line below postponements of the meeting. The
Board of Directors at present
- ----------------------------------------------------- knows of no other business to be
presented by or on behalf of the
Company or the Board of Directors
at the Meeting.
The Board of Directors recommends that you vote FOR
each of the above proposals. This proxy, when
properly executed, will be voted in the manner
directed above. WHEN NO NO CHOICE IS INDICATED, THIS
PROXY WILL BE VOTED FOR THE ABOVE PROPOSALS. This
proxy may be revoked by the undersigned at any time,
prior to the time it is voted, by any of the names
described in the accompanying proxy statement.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE.
SIGNATURE(S) OF SHAREHOLDERS ____________________________________________________________ DATED ___________________________
(Please print name(s) exactly as appear(s) on Stock Certificate.
NOTE: Print name(s), date and sign exactly as name(s) appear(s) on stock certificate. If shares are held jointly, each shareholder
should sign. If signing for estates, trusts, corporations or other entities, title or capacity should be stated.
</TABLE>
