SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
EROX CORPORATION
------------------------------------------------
(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] No fee required.
[ ] 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 transactions applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions 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:
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[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(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 20, 1998
------------------------------------
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 20, 1998, at 10:00 a.m. local
time, for the following purposes:
(1) To elect six Directors to hold office until the next Annual
Meeting;
(2) To approve an amendment to the Company's Articles of
Incorporation to change its name from Erox Corporation to Human
Pheromone Sciences, Inc.;
(3) To approve an amendment to the Company's Non-Employee Directors'
Stock Option Plan to increase the number of shares available for
issuance by 200,000; and
(4) To act upon such other business as may properly come before the
meeting.
These items of business are more fully described in the Proxy Statement
accompanying this notice.
Only shareholders of record at the close of business on April 13, 1998,
are entitled to notice of, and to vote at, the Annual Meeting and any
adjournments or postponements thereof.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, please mark, sign, date
and return the enclosed proxy card as soon as possible in the postage-prepaid
envelope enclosed for that purpose. Any shareholder attending the meeting may
vote in person even if the shareholder has returned a proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Julian N. Stern, Secretary
Fremont, California
April 16, 1998
================================================================================
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 20, 1998, 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 13, 1998,
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 10,289,488 shares of common stock and 1,433,333
shares of preferred stock. Holders of a majority of the outstanding shares of
common and preferred 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 six 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 six 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.
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
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<PAGE>
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.
STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
<TABLE>
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of April 13, 1998 by: (i)
each person who is known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock; (ii) each of the Company's executive
officers named in the Summary Compensation Table; (iii) 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:
<CAPTION>
Directors, Nominees, Officers And 5% Stockholders Shares Beneficially Owned(1) Percent Of Class(1)(2)
------------------------------------------------- ---------------------------- ----------------------
<S> <C> <C>
William P. Horgan (3) 297,433 2.8
Michael V. Stern(4) 308,885 3.0
Bernard I. Grosser, M.D.(5) 141,716 1.3
Helen C. Leong(6) 219,124 2.1
Michael D. Kaufman(7) 909,916 8.8
Robert Marx(8) 152,724 1.5
Maxine C. Harmatta(9) 88,854 0.8
All executive officers and directors as a group (7 persons)(10) 2,118,652 19.3
David L. Berliner, M.D 587,500 5.7
535 Middlefield Road, Suite 240
Menlo Park, CA 94025
<FN>
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of Shares
beneficially owned by a person and the percentage of ownership of that
person, shares of Common Stock subject to options held by that person
that are currently exercisable or exercisable within 60 days of April
13, 1998 are deemed outstanding. Such shares, however, are not deemed
outstanding for the purpose of computing the percentage ownership of
each other person. The persons named in this table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable and except as indicated in the other footnotes to this
table.
(2) Percentage of beneficial ownership is based on 10,289,488 shares of
Common Stock outstanding as of April 13, 1998.
(3) Includes 284,233 shares issuable on exercise of outstanding options.
(4) Includes 111,545 shares issuable on exercise of outstanding options.
(5) Includes 64,166 shares issuable on exercise of outstanding options.
(6) Includes 64,166 shares issuable on exercise of outstanding options.
(7) Includes 891,167 shares held in the name of a partnership and 18,749
shares issuable on exercise of outstanding options.
(8) Includes 54,166 shares issuable on exercise of outstanding options
(9) Includes 88,854 shares issuable on exercise of outstanding options.
(10) Includes 685,879 shares issuable on exercise of outstanding options.
</FN>
</TABLE>
-3-
<PAGE>
PROPOSAL 1 -- ELECTION OF DIRECTORS
Each of the six 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:
Name Age Principal Occupation
- ---- --- --------------------
William P. Horgan 50 Chairman of the Board of Directors,
Chief Executive Officer and Director
Michael V. Stern 39 President and Director
Bernard I. Grosser, M.D. 68 Director
Michael D. Kaufman 57 Director
Helen C. Leong 70 Director
Robert Marx 67 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.
Michael V. Stern was named President in November 1996. Mr. Stern has
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 McGuire Company, a division of
Kohler Company.
Bernard I. Grosser, M.D. has served as a Director since March 1992. Dr.
Grosser is Chairman of the Department of Psychiatry at the University of Utah
and has served in that capacity since 1982. Dr. Grosser has conducted extensive
research related to hormonal target areas of the brain.
Michael D. Kaufman, a Director since August 1997, is Managing General
Partner of MK Global Ventures, a firm he founded in 1987. Prior to 1987, Mr.
Kaufman spent six years as a General Partner of Oak Investment Partners, where
he was involved in the formation of numerous technology companies and served as
founding investor and director of Businessland, Davox, Katun, Easel, Ekco,
Interlan and Ziyad, among others. Prior to becoming a Partner of Oak Investment
Partners, Mr. Kaufman was President and COO of Centronics Data Corporation, a
$150 million NYSE-listed manufacturer of computer-related printing devices.
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
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-Chief Executive Officer of Gildamarx Incorporated, a firm
specializing in designing and manufacturing exercise apparel and products for
active lifestyles 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.
-4-
<PAGE>
There are no family relationships between directors or executive
officers of the Company.
Required Vote
The six nominees receiving the highest number of affirmative votes of
the shares present or represented and entitled to be voted for them will be
elected as directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE ELECTION
OF THE NOMINEES.
Board Compensation
Directors currently are not compensated for attending Board meetings,
but are reimbursed for their reasonable expenses incurred in attendance. The
Company's Non-Employee Directors' Stock Option Plan (the "Directors' Plan")
provides for the automatic grant of 25,000 shares of Common Stock if a person
who is neither an officer nor an employee of the Company and who has not
previously been a member of the Board is elected or appointed director. Each
such option will become exercisable at the rate of one-twelfth of the number of
shares covered by the option each month following the grant date, so long as the
individual is serving as a director, with full vesting over one year. In
addition, in June of each year, the Company is required to grant to each
non-employee director a 10-year Non-Qualified Option to purchase 10,000 shares
of the Company's Common Stock at an exercise price equal to the fair market
value of Common Stock on the date of the grant. These options will vest
one-twelfth per month after the date of grant, as long as the individual is
serving as a director, with full vesting over one year. The exercise price of
all options granted pursuant to the Directors' Plan is the fair market value of
the Company's Common Stock at the time of grant. A total of 275,000 shares are
reserved for issuance under the Directors' Plan.
An increase in the number of shares available for issuance under this
Plan is the subject of Proposal 3.
Board Meetings and Committees of the Board
The Board of Directors met eight times in 1997. Each director
participated in at least 88% of the meetings of the Board.
The Board of Directors has an Audit Committee and a Compensation and
Stock Option Committee.
The Audit Committee of the Board of Directors, whose members are Mrs.
Leong, Dr. Grosser, and Mr. Marx, held one meeting during 1997, with all
director members in attendance at such 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 Compensation and Stock Option Committee of the Board of Directors,
whose members are Mrs. Leong and Dr. Grosser, held two meetings during 1997,
with all director members in attendance at such meetings. The Compensation
Committee is responsible for determining salaries, incentives and other forms of
compensation for officers and other employees of the Company and administers
various incentive compensation and benefit plans.
-5-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the total compensation for 1997, 1996
and 1995 of the Chief Executive Officer and each of the other executive officers
of the Company whose total salary and bonus for 1997 exceeded $100,000 (the
"Named Officers").
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Compensation
Annual Compensation Award
----------------------------------------- -----------
Securities Underlying
Name and Principal Position Year Salary Bonus Options (#)
--------------------------- ---- ------ ----- -----------
<S> <C> <C> <C> <C>
William P. Horgan 1997 $193,000 -- --
Chairman of the Board and Chief 1996 $185,000 $55,000 100,000
Executive Officer 1995 $156,000 $10,000 100,000
Michael P. Stern 1997 $143,400 -- --
President 1996 $134,000 $40,200 150,000
1995 $120,000 $ 7,000 25,000
Maxine C. Harmatta 1997 $118,000 -- --
Vice President 1996 $110,000 $31,850 125,000
1995 $100,000 $ 5,300 15,000
</TABLE>
Option Grants in Last Fiscal Year
There were no option grants in 1997 to the Named Officers and none of
the Named Officers acquired any shares on exercise of options in 1997.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
The following table sets forth certain information concerning the
exercise of options to purchase Common Stock during the year ended December 31,
1997 and the number of unexercised options held as of December 31, 1997 by the
Named Officers.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at December 31, 1997 December 31, 1997
Exercisable/Unexercisable Exercisable/Unexercisable
Name (#) ($)(1)
---- --- ------
William P. Horgan 271,039/98,961 -/-
Michael V. Stern 91,754/116,146 -/-
Maxine C. Harmatta 78,646/96,354 -/-
- --------------------
(1) Assuming a stock price of $.75 per share, which was the closing price
of a Share of Common Stock reported on the NASDAQ National Market on
December 31, 1997.
-6-
<PAGE>
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 consumer products 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 1997 totaled $280,000. 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 10, 1998, the Company signed an
amendment renewing the agreement. The terms remain substantially the same as the
original agreement with payments to Pherin of $23,000 per month and the
agreement extending to March 1, 1999. Under this amendment, the Company has the
ability to cancel the agreement with 60 days prior written notice.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
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, 1997.
-7-
<PAGE>
PROPOSAL 2 -- APPROVAL OF AN AMENDMENT TO THE COMPANY'S ARTICLES OF
INCORPORATION TO CHANGE ITS NAME FROM EROX CORPORATION TO HUMAN PHEROMONE
SCIENCES, INC.
At the Annual Meeting, shareholders will be asked to approve a change
of name for the Company from Erox Corporation to Human Pheromone Sciences, Inc.
In February 1998, the Board of Directors of the Company approved an
amendment to its Articles of Incorporation to change the Company's name from
Erox Corporation to Human Pheromone Science, Inc. The Company believes that the
name Erox connotes a line of fragrance products and as such does not effectively
communicate to consumers or investors the biotechnology base of the Company. The
Company considers the strength and breadth of its patented human pheromone
technology to be of greater significance than its current line of fragrance
products.
Recent developments in the scientific community have created increasing
media interest in pheromones. The scientific community as well as the consumer
is becoming more educated regarding the Vomeronasal Organ (VNO) and human
pheromones and their potential uses. The Company believes that the key to fully
exploiting its patented human pheromone technology is to firmly position itself
as the first consumer products company to employ the science and applications of
human pheromones. The name Human Pheromone Sciences, Inc. clearly identifies the
Company as one whose business is the science and technology of human pheromones.
This change should aide in the Company's goal of expanding consumer and investor
perceptions of its technology into a broader range of consumer products.
The Board of Directors believes that the name change will provide
investors and the consuming public with a clearer picture of the mission of the
Company.
Required Vote
The approval of the amendment to the Articles of Incorporation of the
Company requires the affirmative vote of the holders of a majority of the
outstanding shares of the Company. Consequently, abstentions will have the
effect of a vote against the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE AMENDMENT
TO THE COMPANY'S ARTICLES OF INCORPORATION TO CHANGE ITS NAME FROM EROX
CORPORATION TO HUMAN PHEROMONE SCIENCES, INC.
-8-
<PAGE>
PROPOSAL 3 -- APPROVAL OF 200,000 ADDITIONAL SHARES OF COMMON STOCK FOR THE
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
At the Annual Meeting, shareholders will be asked to approve an
amendment to the Non-Employee Directors' Stock Option Plan to increase the
number of shares available for issuance by 200,000 shares. This Plan currently
has remaining 25,000 shares of Common Stock available for issuance.
Background
In 1994, the Board and the shareholders approved the Non-Employee
Directors' Stock Option Plan (the "Directors' Plan") for which 275,000 shares of
Common Stock were reserved for issuance on exercise of options; 25,000 shares
remain available for issuance. On February 11, 1998, the Board of Directors
passed a resolution recommending that the Directors' Plan be amended to increase
the authorized number of shares by 200,000. The purpose of this proposal is to
obtain shareholder approval of the amendment to the Directors' Plan increasing
the authorized number of shares by 200,000. Only non-employee directors of the
Company are eligible to participate, and only non-qualified options may be
granted. The Directors' Plan provides that option grants to non-employee
directors of the Company be made on a mandatory basis and not on a discretionary
basis. The Directors' Plan may be administered by the Board of Directors or the
Board may delegate its authority to a committee composed of not less than two
outside directors (the "Administrator") and may delegate routine matters to
management.
Description of the Directors' Plan
The Directors' Plan operates as follows. Each director who is neither
an officer nor an employee of the Company and who has not previously been
granted a stock option by the Company as of the date the Directors' Plan was
adopted by the Board shall be granted an initial 10-year Non-qualified Option to
purchase 25,000 shares of the Company's Common Stock at an exercise price equal
to the fair market value of Common Stock on the date of the grant. Each person
who is not an officer or employee of the Company and who has not previously been
a member of the Board who is thereafter elected or appointed to the Board shall
also be granted a Non-qualified Option for 25,000 shares on the same terms. Each
such option will become exercisable at the rate of one-twelfth of the number of
shares covered by the option each month following the grant date, so long as the
individual is serving as a director, with full vesting over one year.
In June of each year, the Company is required to grant to each
non-employee director a 10-year Non-qualified Option to purchase 10,000 shares
of the Company's Common Stock at an exercise price equal to the fair market
value of Common Stock on the date of the grant. These options will vest
one-twelfth per month after the date of grant, as long as the individual is
serving as a director, with full vesting over one year.
The consideration payable in connection with any Non-qualified Option
granted under the Directors' Plan (including any related taxes) may be paid in
cash or by delivery of shares of Common Stock of the Company. Options generally
terminate three months after a non-employee director ceases to be, for any
reason, a director of the Company, with the following exceptions: if a
non-employee director ceases to be a director due to death, disability or
retirement, the options may be exercised for one year after the termination,
unless a shorter period is specified in the option agreement but, in no event,
after the expiration date of the option.
The Board may amend, alter or discontinue the Directors' Plan or any
option at any time, except that the consent of a participant is required if the
participant's existing rights under an outstanding option would be impaired. In
addition, to the extent required under applicable tax and securities laws and
regulations, the shareholders of the Company must approve any amendment,
alteration, or discontinuance of the Directors' Plan that would increase the
total number of shares reserved under the Directors' Plan and in certain other
circumstances as the Board may deem advisable to comply with such laws and
regulations. In addition, the provisions of the Directors' Plan governing who is
granted options, the number of shares covered by each option, the exercise
price, and the period of exercisability and the timing of option grants may not
be amended more than
-9-
<PAGE>
once every six months, other than for changes necessary to conform to the
Internal Revenue code of 1986 or the Employee Retirement Income Security Act of
1974.
The Company views stock options as a means of providing incentives to
its Board members. In addition, the Company believes it important that directors
have meaningful equity ownership in the Company; stock options are one way for
directors to obtain such ownership.
Federal Income Tax Consequences
In general, a non-employee director who is not a citizen or resident of
the United States ("U.S. Director") should not have taxable income upon the
grant of a Non-qualified Option. Upon exercise of a Non-qualified Option, the
U.S. Director will generally have ordinary income (and the Company will be
entitled to a corresponding deduction) in the amount by which the fair market
value of the stock at the time exceeds the purchase price. If shares are held at
least eighteen months after the date the U.S. Director has taxable income from
acquiring them, then upon sales of the shares the non-employee director will
have long-term capital gain or loss equal to the difference between the sales
price and the fair market value of the shares on the date the income is
recognized. Under current federal income tax law, long-term capital gain is
taxable at a maximum stated rate of 20%, while ordinary income is taxable at a
maximum stated rate of 39.6%. In the case of both capital gains and ordinary
income, the effective rate of tax may be higher because of various phase out and
recapture provisions.
Required Vote
Approval of the amendment to the Directors' Plan providing for
additional shares requires the affirmative vote of a majority of the votes cast
at a duly held shareholders' meeting at which a quorum of the voting power is
represented.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE APPROVAL
OF 200,000 ADDITIONAL SHARES OF COMMON STOCK FOR THE NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN.
Plan Benefits
The following table shows the number of options which may be granted to
the named individuals and groups under the Directors' Plan over the 10-year life
of the Directors' Plan assuming the Board of Directors to have members who are
not officers or employees of the Company:
Non-Employee Directors' Stock Option Plan
Name and Position Number of Options(1)
----------------- --------------------
William P. Horgan 0
Chairman and Chief Executive Officer
Executive Officers as a Group 0
Non-Executive Director Group(2) 225,000
Non-Executive Officer Employee Group 0
- ------------------------
(1) All options granted at fair market value as of date of grant.
(2) Only non-employee directors are eligible to receive grants under the
Directors' Plan.
-10-
<PAGE>
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 PROPOSAL
Under the rules of the Securities and Exchange Commission, shareholders
who wish to submit proposals for inclusion in the Proxy Statement for the Annual
Meeting of Shareholders to be held in 1999 must submit such proposals so as to
be received by the Company at 4034 Clipper Court, Fremont, California 94538, on
or before December 31, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
Julian N. Stern, Secretary
Fremont, California
April 16, 1998
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.
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<PAGE>
APPENDIX A
PROXY
EROX CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 20, 1998
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 20, 1998 and at any adjournments of
postponements of such meetings as follows:
(Continued, and to be signed on reverse side)
<PAGE>
<TABLE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
EROX CORPORATION
May 20, 1998
^ Please Detach and Mail in the Envelope Provided ^
<CAPTION>
A [X] Please mark your
votes as in this
example.
<S> <C>
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 Nominees: William P. Horgan
directors, to [ ] [ ] Michael V. Stern
hold office until Bernard I. Grosser, M.D.
their successors Michael D. Kaufman
are elected, the nominees listed at right: Helen C. Leong
Robert Marx
To withhold authority to vote for any of the nominees
listed at right, write the nominee's name on line below.
________________________________________________________
2. To approve an amendment to the Company's Articles of Incorporation to change FOR AGAINST ABSTAIN
its name from Erox Corporation to Human Pheromone Sciences, Inc. [ ] [ ] [ ]
3. To approve an amendment to the Non-Employee Directors Stock Option Plan to
increase the number of shares available for issuance by 200,000 shares. [ ] [ ] [ ]
4. In their discretion the proxyholders are authorized to transact such other business as may properly
come before the meeting or any adjournments or 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 the above proposals. This proxy, when properly
executed, will be voted in the manner directed above. WHEN 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 means described in the accompanying proxy statement.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTY 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.
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