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
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
HUMAN PHEROMONE SCIENCES, INC. 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:
[ ] 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>
HUMAN PHEROMONE SCIENCES, INC. CORPORATION
Notice of Annual Meeting of Shareholders
to be held July 13, 1999
------------------------------------
To the Shareholders of Human Pheromone Sciences, Inc.:
The annual meeting of shareholders (the "Annual Meeting") of Human
Pheromone Sciences, Inc. (the "Company") will be held at the Sheraton Palo
Alto-Stanford, 625 El Camino Real, Palo Alto, California, on July 13, 1999, at
10:00 am. local time, for the following purposes:
(1) To elect five Directors to hold office until the next Annual
Meeting;
(2) To approve Amended and Restated Articles of Incorporation to
consolidate all provisions of the Company's Articles of
Incorporation into a single instrument; and
(3) 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 June 11, 1999,
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
June 15, 1999
================================================================================
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>
HUMAN PHEROMONE SCIENCES, INC.
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 Human Pheromone Sciences, Inc., 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 July 13,1999, at
the Sheraton 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 June 11, 1999,
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 3,429,839 shares of common stock and 1,445,716
shares of preferred stock. Holders of a majority of the outstanding shares of
common and the outstanding shares of 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
On all matters that come before the Annual Meeting, holders of the
Series BB Preferred Stock are entitled to 33 votes for each share of held; all
other shareholders are entitled to one vote for each share held. In the election
of Directors, the holders of Series AA Preferred Stock are entitled to elect one
director, and the remaining four directors are elected by all shareholders
voting together as a single class. Mr. Kaufman has been nominated for election
by the holders of the Series AA Preferred Stock, and the other four nominees
have been nominated for election by all shareholders.
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 votes the Shares held by such shareholder
are entitled to and to distribute those votes among the nominees as the
shareholder may choose. However, no shareholder shall be entitled to vote for
more than one candidate to be elected by the Series AA Preferred Stock or more
than four candidates to be elected by all the shareholders, 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 candidate
receiving the highest number of affirmative votes of the Series AA Preferred
Stock and the four other candidates receiving the highest number of affirmative
votes of all shares represented and voting at the Annual Meeting will be elected
directors.
-2-
<PAGE>
Abstentions and broker non-votes will be counted in determining whether
a quorum is present at the Annual Meeting. Generally, 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.
However, since Proposal 2 requires the affirmative vote of a majority of the
outstanding shares of common stock and preferred stock, voting separately, a
broker non-vote will have the effect of a vote against Proposal 2.
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.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of May 31, 1999 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) 114,400 3.2
Michael V. Stern 65,780 1.9
Bernard I. Grosser, M.D.(4) 52,239 1.5
Helen C. Leong(5) 76,375 2.2
Michael D. Kaufman(6) 365,388 10.6
Robert Marx(7) 54,408 1.6
Maxine C. Harmatta -- --
All executive officers and directors as a group (7 persons)(8) 728,590 20.1
<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 12, 1999
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 3,429,839 shares of Common
Stock outstanding as of May 31, 1999.
(3) Includes 106,667 shares issuable on exercise of outstanding options.
-3-
<PAGE>
(4) Includes 24,722 shares issuable on exercise of outstanding options.
(5) Includes 24,722 shares issuable on exercise of outstanding options.
(6) Includes 353,999 shares held in the name of partnerships and 34,166 shares
issuable on exercise of outstanding options.
(7) Includes 21,389 shares issuable on exercise of outstanding options.
(8) Includes 188,888 shares issuable on exercise of outstanding options.
</FN>
</TABLE>
-4-
<PAGE>
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:
Name Age Principal Occupation
- ---- --- --------------------
William P. Horgan* 51 Chairman of the Board of Directors, Chief
Executive Officer and Director
Bernard I. Grosser, MD* 69 Director
Michael D. Kaufman** 58 Director
Helen C. Leong* 71 Director
Robert Marx* 68 Director
- --------------------
* Nominated for election by all shareholders.
** Nominated for election by the holders of the Series AA Preferred Stock.
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.
Bernard I. Grosser, MD 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.
There are no family relationships between directors or executive
officers of the Company.
-5-
<PAGE>
Required Vote
The nominee receiving the highest number of affirmative votes of the
Series AA Preferred Stock and the four other nominees receiving the highest
number of affirmative votes of all 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 8,333 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 3,333 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 148,333 shares are
reserved for issuance under the Directors' Plan.
Board Meetings and Committees of the Board
The Board of Directors met five times in 1998. Each director
participated in at least 75% 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 1998, 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 one meetings during 1998,
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.
EXECUTIVE COMPENSATION
The following table sets forth the total compensation for 1998, 1997
and 1996 of the Chief Executive Officer and each of the other executive officers
of the Company whose total salary and bonus for 1998 exceeded $100,000 (the
"Named Officers").
-6-
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Compensation
Award
Annual Compensation ------------------------
--------------------------------------- Securities
Name and Principal Position Year Salary Bonus Underlying Options(#)(2)
--------------------------- ---- ------ ----- ------------------------
<S> <C> <C> <C> <C>
William P. Horgan 1998 $193,000 -- --
Chairman of the Board and Chief Executive 1997 $193,000 -- --
Officer 1996 $185,000 $ 55,000 100,000
Michael P. Stern 1998 $143,400 -- --
President (Resigned 9/30/98) 1997 $143,400 -- --
1996 $134,000 $ 40,200 150,000
Maxine C. Harmatta 1998 $106,650 -- --
Vice President (Resigned 8/31/98) 1997 $118,000 -- --
1996 $110,000 $ 31,850 125,000
</TABLE>
Option Grants in Last Fiscal Year
There were no option grants in 1998 to the Named Officers and none of
the Named Officers acquired any shares on exercise of options in 1998.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
The following table sets forth certain information concerning the
number of unexercised options held as of December 31, 1998 by the Named
Officers.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at December 31, 1998 December 31, 1998
Exercisable/ Exercisable/
Name Unexercisable(#)(2) Unexercisable($)(1)
- ---- ------------------- ----------------------
William P. Horgan 316,874/53,126 -/-
Michael V. Stern -/- -/-
Maxine C. Harmatta -/- -/-
- -------------
(1) Assuming a stock price of $.97 per share, which was the closing price of a
Share of Common Stock reported on the NASDAQ National Market on December
31, 1998.
(2) The number of options are reported prior to the one for three reverse stock
split effective April 14, 1999, post-split amounts are one third of these
pre-split amounts.
-7-
<PAGE>
CERTAIN RELATIONSHIPSS 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.
HPSI and Pherin are parties to an agreement, pursuant to which Pherin
will supply HPSI with its reasonable requirements of human pheromones and to
make available to HPSI the basic manufacturing technology. Under the agreement,
payments to Pherin in 1998 totaled $303,625. After January 31, 1996, rather than
supply human pheromones to HPSI, Pherin may instead elect to provide to the
Company all manufacturing technology in its possession that it has not
previously supplied to HPSI. Through 1998 only small quantities of human
pheromones, which could be produced in a laboratory environment, were required
for its fragrance and ancillary products. As a result of the initial third party
supply agreement entered into in December 1998, the Company requires
significantly more production of the synthesized human pheromones than were
needed in the past. In January 1999, HPSI and Pherin contracted with two
independent laboratories to manufacture kilogram quantities of the synthesized
human pheromones under the direction of scientists working on behalf of the
Company and Pherin. HPSI has received the initial quantities from these
independent laboratories. The Company and Pherin have agreed to the terms of a
new research and development agreement, and a supply agreement effective April
1, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP
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, 1998.
-8-
<PAGE>
PROPOSAL 2 -- APPROVAL OF AMENDED AND RESTATED ARTICLES OF INCORPORATION
Introduction
The Board of Directors has approved, and the shareholders of the
Company are now being asked to approve, Amended and Restated Articles of
Incorporation (the "Restated Articles") to consolidate all provisions of the
Company's Articles of Incorporation into a single instrument. Currently,
provisions of the Articles of Incorporation are contained in a number of
documents, and certain provisions of the Company's Articles of Incorporation,
such as those relating to previously converted shares of preferred stock no
longer outstanding, are no longer operative. The Restated Articles will become
effective, only if they are approved by the shareholders of the Company, on
filing of the Restated Articles with the Secretary of State of the State of
California. The text of the Restated Articles is attached to this Proxy
Statement as Appendix A.
Purpose of the Proposal
The Company's Articles of Incorporation were originally filed with the
Secretary of State of California in June 1992. Three series of preferred stock
authorized by those Articles of Incorporation automatically converted into
common stock following the Company's initial public offering, leaving 1,500,000
authorized but undesignated shares of preferred stock. In August 1997, the
Company filed a Certificate of Determination of Preferences, approved by the
Board of Directors in accordance with the Articles of Incorporation,
establishing the rights and preferences of 1,433,333 shares of Series AA
Preferred Stock. Following shareholder approval, in June 1998 the Company
amended its Articles of Incorporation changing the name of the Company to "Human
Pheromone Sciences, Inc." In December 1998, the Company also filed a Certificate
of Determination of Preferences, approved by the Board of Directors and the
holders of the Series AA Preferred Stock in accordance with the Articles of
Incorporation, establishing the rights and preferences of its Series BB
Preferred Stock, which was amended in April 1999 to increase the number of
shares of Series BB Preferred Stock to 20,000. Finally, in April 1999, the
Articles of Incorporation were amended, following shareholder approval, to
effect a one for three reverse stock split of the Company's common stock.
The approval of the Restated Articles is not intended to effect any
substantive changes to the Company's Articles of Incorporation. Instead, the
Restated Articles will incorporate all previously approved and filed amendments
and certificates of determination in one instrument. The Restated Articles will
also eliminate provisions in the Articles of Incorporation which relate to the
previously authorized Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock which are no longer outstanding. These shares of
preferred stock previously converted into common stock and, pursuant to the
Company's Articles of Incorporation, have been eliminated from the shares which
the Company is authorized to issue. If approved by the shareholders, the
Restated Articles will provide for 40,000,000 shares of common stock and
1,500,000 shares of preferred stock, of which 1,433,333 shares will be
designated Series AA Preferred Stock and 20,000 shares will be designated Series
BB Preferred Stock.
As of May 31, 1999, the Company had authorized 40,000,000 shares of
common stock, of which 3,429,839 were issued and outstanding, and 1,500,000
shares of preferred stock, of which 1,433,333 were designated as Series AA
Preferred Stock, all of which were outstanding, and 20,000 were designated as
Series BB Preferred Stock, 12,383 of which were outstanding. As of May 31, 1999,
an aggregate of 581,495 shares of common stock were reserved for issuance under
the Company's Stock Option Plans, or for exercise of option issued under such
Plans, and 890,544 shares of common stock had been reserved for issuance on
conversion of outstanding preferred stock.
The following is a general description of the rights and privileges of
the Company's common stock and preferred stock under the Company's current
Articles of Incorporation and the Restated Articles for which shareholder
approval is sought. The holders of common stock have one vote per share on all
matters submitted to a vote of stockholders, except the shareholders have
cumulative voting rights in the election of directors as discussed above. The
holders of common stock have the right to receive dividends when, as and if
declared by the
-9-
<PAGE>
Board and there are sufficient funds to legally pay dividends, subject to the
rights of the holders of any outstanding preferred stock to receive preferential
dividends. Upon the liquidation of the Company, holders of common stock would
share ratably in any assets available for distribution to shareholders after
payment of all obligations of the Company and the aggregate liquidation
preference (including accrued and unpaid dividends) of any outstanding preferred
stock. The common stock is not redeemable and has no preemptive, subscription or
conversion rights.
The Company's outstanding shares of Series AA Preferred Stock are
entitled to one vote per share and are entitled to elect one director. The
outstanding shares of Series BB Preferred Stock are entitled to 33 votes per
share and, together with the Series AA Preferred Stock vote with the holders of
common stock for the election of all other directors. The outstanding preferred
stock is also entitled to a preference over common stock with respect to
dividends and liquidation preference. The outstanding preferred stock is
convertible into common stock with each share of Series AA Preferred Stock
convertible into 1/3 of a share of common stock and each share of Series BB
convertible into 33.33 shares of common stock. The outstanding preferred stock
is not redeemable and has no preemptive or subscription rights.
The authorized unissued preferred stock is available for issuance from
time to time at the discretion of the Board without stockholder approval other
than by the outstanding shares of preferred stock. The Board has authority to
prescribe for each series of preferred stock it established the number of shares
in that series, the dividend rate, and the voting rights, conversion privileges,
redemption, and liquidation rights, if any, and any other rights, preferences,
qualifications and limitations of the particular series. The issuance of
preferred stock could decrease the amount of earnings and assets available for
distribution to the holders of common stock or adversely affect the rights and
powers, including voting rights, of the holders of common stock.
Required Vote
Approval of Proposal 2 requires the affirmative vote of a majority of
the outstanding shares of common stock and a majority of the outstanding shares
of preferred stock, each voting as a separate class. Consequently, abstention
and non-votes will have the effect of a vote against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED AMENDED
AND RESTATED ARTICLES OF INCORPORATION.
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 represented 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 2000 must submit such proposals so as to
be received by the Company at 4034 Clipper Court, Fremont, California 94538, on
or before February 19, 2000.
BY ORDER OF THE BOARD OF DIRECTORS
Julian N. Stern, Secretary
Fremont, California
June 15, 1999
-10-
<PAGE>
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.
-11-
<PAGE>
APPENDIX A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
HUMAN PHEROMONE SCIENCES, INC.
William P. Horgan and Greg Fredrick certify that:
1. They are the Chief Executive Officer and Assistant Secretary,
respectively, of Human Pheromone Sciences, Inc., a California corporation.
2. The Articles of Incorporation of this corporation are amended and
restated to read as follows:
Article I. Name. The name of this corporation is HUMAN PHEROMONE SCIENCES,
INC.
Article II. Purposes. The purpose of this corporation is to engage in any
lawful act or activity for which a corporation may be organized under the
general corporation law of California other than the banking business, the trust
company business or the practice of a profession permitted to be incorporated by
the California Corporations Code.
Article III. Authorized Capital Stock. This corporation is authorized to
issue two classes of stock to be designated, respectively, Common Stock and
Preferred Stock. The total number of shares of Common Stock that this
corporation is authorized to issue is 40,000,000. The total number of shares of
Preferred Stock that this corporation is authorized to issue is 1,500,000, of
which 1,433,333 shares have been designated "Series AA Preferred Stock" and
20,000 shares have been designated "Series BB Preferred Stock".
The remaining authorized but undesignated shares of Preferred Stock may
be issued from time to time in one or more series. The Board of Directors of
this corporation is hereby authorized to fix or alter the dividend rights,
dividend rate, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), redemption price or prices, and the
liquidation preferences of any wholly unissued series of Preferred Stock not
designated herein, and the number of shares constituting any such series and the
designation thereof, or any of them; and to increase or decrease the number of
shares of any such series subsequent to the issuance of shares of that series,
but not below the number of shares of such series then outstanding. In case the
number of shares of any series shall be so decreased, the shares constituting
such
<PAGE>
decrease shall resume the status that they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
The rights, preferences, privileges and restrictions relating to the
Common Stock, Series AA Preferred Stock and Series BB Preferred Stock are as
follows:
Section 1. General Definitions. For purposes of this Article III of the
Articles of Incorporation, the following definitions shall apply:
(a) "Series AA Preferred" shall refer to the Series AA Preferred Stock.
(b) "Series BB Preferred" shall refer to the Series BB Preferred Stock.
(c) "Common" shall refer to the Common Stock.
(d) "Original Issue Date" shall mean the date on which a share of
Series AA Preferred or Series BB Preferred is first issued.
(e) "Series AA Original Issue Price" shall equal $1.50 per share.
(f) "Series BB Original Issue Price" shall equal $100.00 per share.
(g) "Board" shall mean the Board of Directors of this corporation.
(h) "Preferred" shall mean the Series AA Preferred, the Series BB
Preferred and any other series of Preferred Stock authorized to be issued.
Section 2. Dividend Rights.
(a) Dividend Rights of Preferred. The holders of Series AA Preferred
shall be entitled to receive, out of any funds legally available therefor,
non-cumulative dividends in an amount equal to $0.12 per annum for each share of
Series AA Preferred held by them, payable in preference and priority to any
payment of any dividend on any Series BB Preferred or Common. The holders of
Series BB Preferred shall be entitled to receive, out of any funds legally
available therefor, non-cumulative dividends in an amount equal to $8.00 per
annum for each share of Series BB Preferred held by them, after payment in full
of any preferential dividends payable on the Series AA Preferred and in
preference and priority to any payment of any dividend on any Common. No
dividends (other than those payable solely in the Common of this corporation)
shall be payable on any Common during any fiscal year of this Corporation until
dividends in the full respective preferential amount per share set forth above
shall have been paid or declared and set apart for payment to the Series AA
Preferred and the Series BB
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Preferred during that fiscal year and no dividend in excess of the preferential
amount payable to the Series AA Preferred or the BB Preferred, respectively
(calculated on an as if converted to Common basis) shall be paid on any shares
of Common unless an equal dividend per share has first been paid to the holders
of the Series AA Preferred and the Series BB Preferred (calculated on an as if
converted to Common basis). The right to such dividends on shares of Series AA
Preferred and Series BB Preferred shall be non-cumulative and no right shall
accrue to holders of Series AA Preferred and Series BB Preferred by reason of
the fact that dividends on such shares are not declared or paid in any prior
year.
(b) Dividend Rights of Common. At any time after the full preferential
dividend per share on Preferred shall have been declared and paid or set apart
for payment in accordance with the provisions of Section 2(a), dividends may be
paid on the outstanding Common out of any funds legally available therefor. The
holders of Preferred shall not be entitled to participate in any dividends other
than as provided in Section 2(a).
Section 3. Liquidation Rights.
(a) Liquidation Preference of Series AA Preferred. In the event of any
liquidation, dissolution or winding up of this Corporation, either voluntary or
involuntary, each holder of Series AA Preferred shall be entitled to receive,
prior to and in preference to any distribution of any of the assets or surplus
funds of this Corporation, an amount per share equal to the sum of $1.50 per
share of Series AA Preferred plus all declared and unpaid dividends, if any.
Such amounts shall be paid to the holders of the Series AA Preferred prior to
any payments to the holders of any other series of Preferred Stock pursuant to
Article III, Section 3 of this Corporation's Amended and Restated Articles of
Incorporation.
If upon the occurrence of such event, the assets and funds available to
be distributed among the holders of the Series AA Preferred shall be
insufficient to permit the payment to such holders of the full preferential
amounts, then the entire assets and funds of this Corporation legally available
for distribution shall be distributed ratably among the holders of Series AA
Preferred. The Series AA Preferred shall not be entitled to participate in any
amounts distributed in liquidation other than as provided in this Section 3(b).
(b) Liquidation Preference of Series BB Preferred. In the event of any
liquidation, dissolution or winding up of this Corporation, either voluntary or
involuntary, each holder of Series BB Preferred shall be entitled to receive, an
amount per share equal to the sum of $100.00 per share of Series BB Preferred
plus all declared and unpaid dividends, if any, after payment in full of the
liquidation preference of the Series AA
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Preferred and prior to and in preference to any distribution of any of the
assets or surplus funds of this Corporation to the Common. Such amounts shall be
paid, after payment in full to the holders of the Series AA Preferred, to the
holders of the Series BB Preferred prior to any payments to the holders of any
other series of Preferred Stock pursuant to Article III, Section 3 of this
Corporation's Amended and Restated Articles of Incorporation.
If upon the occurrence of such event, the assets and funds available to
be distributed among the holders of the Series BB Preferred shall be
insufficient to permit the payment to such holders of the full preferential
amount, then the entire assets and funds of this Corporation legally available
for distribution to the Series BB Preferred after payment in full to the Series
AA Preferred shall be distributed ratably among the holders of the Series BB
Preferred. The Series BB Preferred shall not be entitled to participate in any
amounts distributed in liquidation other than as provided in this Section 3(b).
(c) Liquidation Rights of Common. After payment has been made to the
holders of the Preferred of the full amount to which they shall be entitled as
provided in Sections 3(a) and 3(b), the remaining assets of the corporation
available for distribution to shareholders shall be distributed among the
holders of Common, pro rata, based on the number of shares of Common held by
each such holder.
(d) Merger or Sale of Assets Deemed a Liquidation. A consolidation or
merger of this Corporation with or into any other corporation or any other
entity or person, or any other corporate reorganization, following which the
shareholders of this corporation hold less than 50% of the voting equity
securities of the continuing or surviving entity, or a sale of all or
substantially all of the assets of this Corporation, shall be deemed to be a
liquidation, dissolution or winding up within the meaning of this Section 3.
Section 4. Voting Rights.
(a) The holder of each share of Common shall be entitled to one vote
for each share held and the holder of each share of Preferred shall be entitled
to the number of votes equal to the number of shares of Common into which such
shares of Preferred could be converted. Except as specifically provided herein
or as otherwise provided by law, the holders of Common and Preferred shall have
equal voting rights and powers (voting together as a single class) and shall be
entitled to notice of any shareholders' meetings in accordance with the bylaws
of this Corporation. Fractional votes, shall not, however, be permitted and any
fractional voting rights resulting from the above formula shall be rounded to
the nearest whole number (with one half being rounded upward).
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(b) The holders of shares of Series AA Preferred voting as a class
shall be entitled to elect one director, and the remaining directors shall be
elected by the affirmative vote of the holders of the Common Stock and Preferred
Stock voting together as one class. In the case of any vacancy in the office of
a director elected by the Series AA Preferred, a successor shall be elected to
hold office for the unexpired term of such director by the affirmative vote of a
majority of the shares of the Series AA Preferred, given at a special meeting of
such shareholders duly called or by an action by written consent for that
purpose. Subject to Section 303 of the California Corporations Code, any
director who shall have been elected by the Series AA Preferred may be removed
during the aforesaid term of office, either for or without cause, by, and only
by, the affirmative vote of the holders of a majority of the shares of the
Series AA Preferred, given at a special meeting of such shareholders duly called
or by an action by written consent for that purpose, and any such vacancy
thereby created may, be filled by the vote of the holders of a majority of the
shares of the Series AA Preferred represented at such meeting or in such
consent.
Section 5. Conversion. The holders of Preferred shall have conversion
rights as follows (the "Conversion Rights"):
(a) Right to Convert.
(i) Each share of Series AA Preferred and Series BB Preferred
shall be convertible, at the option of the holder thereof at any time after the
Original Issue Date of such share, into such number of fully paid and
nonassessable shares of Common as is determined by dividing the Series AA
Original Issue Price or the Series BB Original Issue Price, as the case may be
(as adjusted pursuant to Section 5(a)(ii) or (iii) below) by the then applicable
Series AA Conversion Price or Series BB Conversion Price, respectively,
determined as hereinafter provided, in effect at the time of conversion. The
price at which shares of Common shall be deliverable upon conversion of the
Series AA Preferred (the "Series AA Conversion Price") shall initially be $4.50
per share of Common and the price at which shares of Common shall be deliverable
upon conversion of the Series BB Preferred (the "Series BB Conversion Price")
shall initially be $3.00 per share of Common. Such initial Series AA Conversion
Price and initial Series BB Conversion Price shall be subject to adjustment as
hereinafter provided.
(ii) In addition to any other adjustment provided for herein,
the Series AA Original Issue Price shall be increased on each January 1, April
1, July 1 and October 1, beginning October 1, 1997, by an amount equal to
$0.0225, such that the Series AA Original Issue Price shall increase by $0.09
per share each year.
(iii) In addition to any other adjustment provided for herein,
the Series BB Original Issue Price shall be increased on each January 1, April
1, July 1 and
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October 1, beginning April 1, 1999, by an amount equal to $2.00, such that the
Series BB Original Issue Price shall increase by $8.00 per share each year.
(b) Automatic Conversion.
(i) Each share of Series AA Preferred and Series BB Preferred
shall automatically be converted into shares of Common at the then effective
Conversion Price for such series of Preferred Stock (x) immediately after the
closing bid price for the Common on the Nasdaq Stock Market exceeds $15.00 per
share for a period of twelve consecutive weeks or (y) immediately after the
Corporation reports earnings per Common share for any fiscal year of $1.50 or
greater.
(ii) Each share of Series AA Preferred or Series BB Preferred
shall automatically be converted into shares of Common at the then applicable
Conversion Price for such series of Preferred Stock immediately upon the receipt
by the corporation of a written request for such conversion duly executed by
holders of at least sixty six and seven tenths percent (66.7%) of the then
outstanding shares of Series AA Preferred or Series BB Preferred, respectively.
(iii) Each share of Series AA Preferred or Series BB Preferred
shall automatically be converted into shares of Common at the then effective
applicable Conversion Price for such series of Preferred Stock at such time as
sixty six and seven tenths percent (66.7%) of the shares of Series AA Preferred
or Series BB Preferred, respectively, ever outstanding have converted to Common.
(c) Mechanics of Conversion.
(i) Before any holder of Preferred shall be entitled to
convert the same into Common, the holder shall surrender the certificate or
certificates representing the Preferred to be converted, duly endorsed for
transfer, at the office of the corporation or of any transfer agent for
Preferred, and shall give written notice to the corporation at such office that
the holder elects to convert the same and shall state therein the name or names
in which the holder wishes the certificate or certificates for shares of Common
to be issued. The corporation shall, as soon as practicable thereafter, issue
and deliver at such office to such holder of Preferred, a certificate or
certificates for the number of shares of Common to which the holder shall be
entitled as aforesaid and a check payable to the holder in the amount of any
cash amounts payable as the result of a conversion into fractional shares of
Common pursuant to Section 5(l) hereunder and any declared but unpaid dividends
on the converted Preferred to which the holder may be entitled. In the case of
any conversion pursuant to Section 5(a), such conversion shall be deemed to have
been made immediately prior to the close of business on the date of surrender of
the shares of Preferred to be converted, and the person or persons entitled to
receive the
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shares of Common issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common on such date.
(ii) In the case of any conversion pursuant to Section
5(b)(i), the conversion shall be deemed to have been made immediately after the
event specified in clause (x) or (y) thereof, whichever shall first occur.
Written notice of such conversion shall be given by the corporation to the
holders of Preferred within ten (10) days after the occurrence of such event.
Following such notice, each holder of Preferred shall surrender the certificate
or certificates representing such Preferred, duly endorsed for transfer, at the
office of the corporation or any transfer agent for Preferred. The corporation
shall as soon as practicable thereafter, issue and deliver at such office to
such holder of Preferred, a certificate or certificates for the number of shares
of Common to which he or she shall be entitled as aforesaid and a check payable
to the holder in the amount of any cash amounts payable as a result of a
conversion into a fractional share of Common, and any declared but unpaid
dividends on the converted Preferred. Such conversion shall be deemed to have
been made immediately prior to the closing of such underwritten public offering
of securities, and, notwithstanding that any certificate representing the
Preferred shall not have been surrendered, each holder of such Preferred shall
thereafter be treated for all purposes as the record holder of the number of
shares of Common issuable to such holder upon such conversion.
(iii) In the case of any conversion pursuant to Sections
5(b)(ii) or 5(b)(iii), such conversion shall be deemed to have been made as of
the date of receipt by the corporation of a written request for conversion duly
executed by holders of at least sixty six and seven tenths percent (66.7%) of
the then outstanding shares of Series AA Preferred or Series BB Preferred,
respectively, or as of the date as of which sixty six and seven tenths percent
(66.7%) of the shares of such series of Preferred ever outstanding has converted
to Common. Written notice of such conversion shall be given by the corporation
to the holders of Preferred within twenty (20) days following the date on which
such conversion shall be deemed to have occurred. As promptly as possible after
receipt of such notice, each holder of Preferred shall surrender the certificate
or certificates representing such Preferred, duly endorsed for transfer, at the
office of the corporation or any transfer agent for Preferred. The corporation
shall, as soon as practicable thereafter, issue and deliver at such office to
such holder of Preferred, a certificate or certificates for the number of shares
of Common to which the holder shall be entitled as aforesaid and a check payable
to the holder in the amount of any cash amounts payable as a result of a
conversion into a fractional share of Common, and any declared but unpaid
dividends on the converted Preferred. Such conversion shall be deemed to have
been made as of the date aforesaid and, notwithstanding that any certificate
representing Preferred shall not have been surrendered, each holder of Preferred
shall thereafter be treated for all purposes as the record holder of the number
of shares of Common issued to such holder upon such conversion.
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<PAGE>
(d) Adjustments to Conversion Price for Diluting Issues.
(i) Special Definitions. For purposes of this Section 5, the
following definitions apply:
(A) "Options" shall mean rights, options, or warrants
to subscribe for, purchase or otherwise acquire either Common or Convertible
Securities other than rights, options or warrants issued or issuable to members
of the Board, officers, or employees of, or consultants to, the corporation
pursuant to a stock, grant or option plan or other stock incentive program
approved by the Board, but not exceeding the rights, options or warrants to
subscribe for or purchase in the aggregate not more than [514,828] shares of
Common, subject to adjustment for all subdivisions and combinations.
(B) "Convertible Securities" shall mean any evidence
of indebtedness, shares (other than Common, Series AA Preferred, Series BB
Preferred or other securities convertible into or exchangeable for Common.
(C) "Additional Shares of Common" shall mean all
shares of Common issued (or, pursuant to section 5(d)(iii), deemed to be issued)
by the corporation after the Original Issue Date, other than shares of Common
issued or issuable:
(1) upon conversion of shares of Series AA
Preferred or Series BB Preferred;
(2) to directors, officers or employees of,
or consultants to, the corporation pursuant to a stock, grant or option plan or
other stock incentive program approved by the Board but not exceeding 581,495
shares of Common, subject to adjustment for all subdivisions, combinations and
repurchases;
(3) as a dividend or distribution on Series
AA Preferred or Series BB Preferred; and
(4) by way of dividend or other distribution
on shares of Common excluded from the definition of Additional Shares of Common
by the foregoing clauses (1), (2), and (3) or this clause (4) or on shares of
Common so excluded.
(ii) No Adjustment of Conversion Prices. No adjustment in the
Conversion Price of a particular share of any series of Preferred shall be made
in respect of the issuance of Additional Shares of Common unless the
consideration per share for an
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Additional Share of Common issued or deemed to be issued by the corporation is
less than the Conversion Price of such series in effect on the date of, and
immediately prior to such issue, for such share of Preferred.
(iii) Deemed Issuance of Additional Shares of Common.
(A) Options and Convertible Securities. In the event
the corporation at any time or from time to time after the Original Issue Date
shall issue any Options or Convertible Securities or shall fix a record date for
the determination of holders of any class of securities then entitled to receive
any such Options or Convertible Securities, then the maximum number of shares
(as set forth in the instrument relating thereto without regard to any
provisions contained therein designed to protect against dilution) of Common
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common issued as of the
time of such issue or, in case such a record date shall have been fixed, as of
the close of business on such record date, provided that Additional Shares of
Common shall not be deemed to have been issued unless the consideration per
share (determined pursuant to Section 5(d)(v) hereof) of such Additional Shares
of Common would be less than the Conversion Price for the Preferred in effect on
the date of and immediately prior to such issue, or such record date, as the
case may be, and provided further that in any such case in which Additional
Shares of Common are deemed to be issued:
(1) Except as provided in Section
5(d)(iii)(A)(2), no further adjustments in the Conversion Price for any series
of Preferred shall be made upon the subsequent issue of Convertible Securities
or shares of Common upon the exercise of such Options or conversion or exchange
of such Convertible Securities;
(2) if such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any increase in the consideration payable to the corporation, or decrease in the
number of shares of Common issuable, upon the exercise, conversion or exchange
thereof, the Conversion Price for any series of Preferred computed upon the
Original Issue Date thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon any
such increase or decrease becoming effective, be recomputed to reflect such
increase or decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities (provided, however,
that no such adjustment of the Conversion Price for such series of the Preferred
shall affect Common previously issued upon conversion of such series of
Preferred); and
(3) no readjustment pursuant to Section
5(d)(iii)(A)(2) shall have the effect of increasing the Conversion Price for
Preferred to an
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amount which exceeds the lower of (i) the Conversion Price for such Preferred on
the original adjustment date, or (ii) the Conversion Price for such Preferred
that would have resulted from any issuance of Additional Shares of Common
between the original adjustment date and such readjustment date.
(B) Stock Dividends and Subdivisions. In the event
that this corporation at any time or from time to time after the Original Issue
Date shall declare or pay any dividend on the Common payable in Common, or
effect a subdivision of the outstanding shares of Common into a greater number
of shares of Common (by reclassification or otherwise than by payment of a
dividend in Common), then and in any such event, Additional Shares of Common
shall be deemed to have been issued:
(1) in the case of any such dividend,
immediately after the close of business on the record date for the determination
of holders of any class of securities entitled to receive such dividend, or
(2) in the case of any such subdivision, at
the close of business on the date immediately prior to the date upon which such
corporate action becomes effective.
(iv) Adjustment of Conversion Prices Upon Issuance of
Additional Shares of Common.
(A) In the event this Corporation shall, on or before
the date that is one year after the Original Issue Date, issue Additional Shares
of Common (including Additional Shares of Common deemed to have been issued
pursuant to Section 5(d)(iii)) without consideration or for a consideration per
share less than the Conversion Price in effect on the date of or immediately
prior to such issuance, then and in such event, such Conversion Price shall be
reduced, concurrently with such issuance, to a price equal to the consideration
per share for which such Additional Shares of Common were issued.
(B) In the event that this Corporation shall, after
the date that is one year following the Original Issue Date, issue Additional
Shares of Common (including Additional Shares of Common deemed to be issued
pursuant to Section 5(d)(iii)) without consideration or for a consideration per
share less than the Conversion Price in effect on the date of and immediately
prior to such issuance, then and in such event, such Conversion Price shall be
reduced, concurrently with such issuance, to a price (calculated to the nearest
cent) determined by multiplying such applicable Conversion Price by a fraction,
the numerator of which shall be the number of shares of Common outstanding
immediately prior to such issuance, plus the number of shares of Common that
could be purchased for the aggregate consideration received by the Corporation
for
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the Additional Shares of Common at the then existing Conversion Price, and the
denominator of which shall be the number of shares of Common outstanding
immediately prior to such issuance plus the number of such Additional Shares of
Common so issued; provided, that for the purposes of this sentence, all shares
of Common issuable upon conversion of outstanding Series AA Preferred or Series
BB Preferred shall be deemed to be outstanding, and immediately after any
Additional Shares of Common are deemed issued pursuant to Section 5(d)(iii),
such Additional Shares of Common shall be deemed to be outstanding.
(v) Determination of Consideration. For purposes of this
Section 5(d), the consideration received by the corporation for the issuance of
any Additional Shares of Common shall be computed as follows
(A) Cash and Property. Such consideration shall:
(1) insofar as it consists of cash, be
computed at the aggregate amount of cash received by the corporation excluding
amounts paid or payable for accrued interest or accrued dividends;
(2) insofar as it consists of property other
than cash, be computed at the fair market value thereof at the time of such
issuance, as determined in good faith by the Board; and
(3) in the event Additional Shares of Common
are issued together with other shares or securities or other assets of the
corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in Sections 5(d)(v)(A)(1) and
(2), as determined in good faith by the Board.
(B) Options and Convertible Securities. The
consideration per share received by the corporation for Additional Shares of
Common deemed to have been issued pursuant to Section 5(d)(iii)(A), relating to
Options and Convertible Securities shall be determined by dividing
(1) the total amount, if any, received or
receivable by the corporation as consideration for the issuance of such Options
or Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein designed to protect against dilution) payable
to the corporation upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, or in the case of Options for
Convertible Securities, the exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible Securities by
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(2) the maximum number of shares of Common
(as set forth in the instruments relating thereto, without regard to any
provision contained therein designed to protect against dilution) issuable upon
the exercise of such Options or the conversion or exchange of such Convertible
Securities.
(C) Stock Dividends. Any Additional Shares of Common
deemed to have been issued relating to stock dividends shall be deemed to have
been issued for no consideration.
(vi) Adjustments for Combinations or Consolidation of Common.
In the event the outstanding shares of Common shall be combined or consolidated,
by reclassification or otherwise, into a lesser number of shares of Common, the
Conversion Price for each series of Preferred Stock then in effect immediately
prior to such combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be proportionately
increased.
(e) Adjustments for Other Distributions. In the event the corporation
at any time or from time to time makes, or fixes a record date for the
determination of holders of Common entitled to receive any distribution payable
in securities of the corporation other than Common, Options or Convertible
Securities, then in each such event provision shall be made so that the holders
of each series of Preferred shall receive upon conversion thereof, in addition
to the number of shares of Common receivable thereupon, the amount of securities
of the corporation which they would have received had their shares of such
series of Preferred been converted into Common on the date of such event and had
they thereafter, during the period from the date of such event to and including
the date of conversion, retained such securities receivable by them as aforesaid
during such period, subject to all other adjustments called for during such
period under this Section 5 with respect to the rights of the holders of such
series of the Preferred.
(f) Adjustments for Reorganization, Reclassification, Exchange and
Substitution. If the shares of Common issuable upon conversion of any series of
Preferred shall be changed into the same or a different number of shares of any
other class or classes of stock or other securities or property, whether by
reorganization, reclassification or otherwise (other than a subdivision or
combination of shares provided for above), the Conversion Price for each series
of Preferred Stock then in effect shall, concurrently with the effectiveness of
such reorganization or reclassification, be proportionately adjusted such that
each series of Preferred shall be convertible into, in lieu of the number of
shares of Common which the holders would otherwise have been entitled to
receive, a number of shares of such other class or classes of stock or other
securities or property equivalent to the number of shares of Common that would
have been subject to receipt by the holders upon conversion of such series of
Preferred
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<PAGE>
immediately before such event; and, in any such case, appropriate adjustment (as
determined by the Board) shall be made in the application of the provisions
herein set forth with respect to the rights and interest thereafter of the
holders of such series of Preferred, to the end that the provisions set forth
herein (including provisions with respect to change in and other adjustments of
the Conversion Price for each series of Preferred Stock) shall thereafter be
applicable, as nearly as reasonably may be, in relation to any shares of stock
or other property thereafter deliverable upon the conversion of such Preferred.
(g) No Impairment. The corporation will not, by amendment of its
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of
Preferred against impairment.
(h) Certificates as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price for a series of Preferred
Stock pursuant to this Section 5, the corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of Preferred, a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The corporation shall, upon the written
request at any time of any holder of Preferred, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such applicable adjustments
and readjustments, (ii) the applicable Conversion Price at the time in effect,
and (iii) the number of shares of Common and the amount, if any, of other
property which at the time would be received upon the conversion of such
holder's shares of Preferred. Any certificate sent to the holders of Preferred
pursuant to this Section 5(h) shall be signed by an officer of the corporation.
(i) Notices of Record Date. In the event (i) of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, any security or right convertible into or
entitling the holder thereof to receive Common, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, (ii) the Corporation
shall propose at any time to effect any reclassification or recapitalization of
its Common Stock outstanding involving a change in the Common Stock, or (iii)
the Corporation shall propose at any time to merge with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or
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wind up; then in connection with each such event, the Corporation shall mail to
each holder of each series of Preferred at least 20 days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution, security or right, and
the amount and character of such dividend, distribution, security or right, or
for the purpose of determining rights to vote in respect of the matters referred
to in (ii) and (iii) above.
(j) Issue Taxes. The corporation shall pay any and all issue and other
taxes that may be payable in respect of any issuance or delivery of shares of
Common on conversion of shares of Preferred pursuant hereto; provided, however,
that the corporation shall not be obligated to pay any transfer taxes resulting
from any transfer requested by any holder in connection with any such
conversion.
(k) Reservation of Common Issuable Upon Conversion. The corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common, solely for the purpose of effecting the conversion of the
shares of Preferred, such number of its shares of Common as shall from time to
time be sufficient to effect the conversion of all outstanding shares of the
Preferred; and if at any time the number of authorized but unissued shares of
Common shall not be sufficient to effect the conversion of all the then
outstanding shares of Preferred, the corporation will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common to such number of shares as shall be sufficient
for such purpose.
(l) Fractional Shares. No fractional share shall be issued upon the
conversion of any share or shares of Preferred. If the conversion would result
in the issuance of a fraction of a share of Common, the corporation shall, in
lieu of issuing any fractional share, pay the holder otherwise entitled to such
fraction a sum in cash equal to the closing bid price for the Common on the
Nasdaq Stock Market on the date of conversion.
(m) Notices. Any notice required by the provisions of this Section 5 to
be given to the holders of shares of Preferred shall be deemed given if
delivered personally or deposited in the United States mail, first class postage
prepaid, and addressed to each holder of record at his address appearing on the
books of the corporation.
Section 6. Certain Repurchases. Each holder of an outstanding share of
Common or Preferred shall be deemed to have consented, for purposes of Sections
502, 503 and 506 of the California Corporations Code, to distributions made by
the corporation in connection with the repurchase, at the initial purchase price
thereof, or at such other price as may be approved by the Board, of shares of
Common issued to or held
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<PAGE>
by officers, directors, employees or consultants upon termination of their
employment or services pursuant to agreements providing for the right of said
repurchase between the corporation and such persons.
Section 7. Restrictions and Limitations.
(a) Reorganizations. In addition to any other rights provided by law,
so long as at least sixty six and seven tenths percent (66.7%) of the issued
shares of any series of Preferred are outstanding, the corporation shall not,
without the vote or written consent by the holders of at least a majority of the
then outstanding shares of Series AA Preferred and Series BB Preferred, each
voting as a separate class, effect any sale or other conveyance of all or
substantially all of the assets of the corporation or any of its subsidiaries,
or any consolidation or merger involving the corporation or any of its
subsidiaries if the corporation shall not be the continuing or surviving entity
of such consolidation or merger, or any reclassification or other change of any
stock, or any recapitalization, or any transaction or series of transactions in
which more than fifty percent (50%) of the outstanding stock of the corporation
is transferred.
(b) Changes Affecting Preferred. In addition to any other rights
provided by law, so long as at least sixty six and seven tenths percent (66.7%)
of the issued shares of Series AA Preferred and Series BB Preferred are
outstanding, the corporation shall not, without the vote or written consent by
the holders of at least a majority of the then outstanding shares of Series AA
Preferred and Series BB Preferred, each voting as a separate class:
(i) Increase or decrease (other than by conversion) the total
number of authorized shares of Preferred Stock or any series of Preferred of the
corporation; or
(ii) Amend or repeal any provision of, or add any provision
to, its Articles of Incorporation or Bylaws if such action would alter or change
any of the rights, preferences, privileges of, or limitations provided for
herein for the benefit of, any shares of any series of Preferred; or
(iii) Authorize or issue, or obligate itself to issue, any
other equity security senior to any series of Preferred as to dividend or
redemption rights, liquidation preferences, conversion rights, voting rights or
otherwise, or create any obligation or security convertible into or exchangeable
for, or having any option rights to purchase, any such equity security which is
senior to any series of Preferred; or
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(iv) Reclassify any Common into shares having a preference or
priority as to dividends or assets superior to or on a parity with any such
preference or priority of any series of Preferred; or
(v) Increase the size of the Board to greater than six
members; or
(vi) Amend this Section 7(b).
Section 8. No Reissuance of Preferred. No share or shares of Preferred
acquired by the corporation by reason of redemption, purchase, conversion or
otherwise shall be reissued, and all such shares shall be canceled, retired and
eliminated from the shares which the corporation shall be authorized to issue.
Section 9. No Preemptive Rights. No holder of Common or Preferred shall
have any preemptive right to purchase and/or subscribe to any additional shares
of any class of stock which may be issued at any time by this corporation.
Article IV. Director Liability and Indemnification of Corporate Agents. The
liability of the directors of this corporation for monetary damages shall be
eliminated to the fullest extent permissible under California law. This
corporation is also authorized to the fullest extent permissible under
California Law, to indemnify its agents (as defined in Section 317 of the
California Corporations Code), whether by bylaw, agreement or otherwise, for
breach of duty to the corporation and its shareholders in excess of that
expressly permitted by Section 317 and to advance defense expenses to its agents
in connection with such matters as they are incurred, subject to limits on such
excess indemnification set forth in Section 204 of the California Corporations
Code. If, after the effective date of this Article IV, California Law is amended
in a manner which permits a corporation to limit the monetary or other liability
of its directors or to authorize indemnification of, or advancement of any such
defense expenses to, its directors or other persons, in any such case to a
greater extent than is permitted on such effective date, the references in this
Article IV to "California Law" shall to that extent be deemed to refer to
California Law as so amended.
3. The foregoing amendment and restatement of the Articles of Incorporation
has been duly approved by the Board of Directors of this corporation.
4. The foregoing amendment and restatement of the Articles of Incorporation
has been duly approved by the required vote of shareholders in accordance with
Section 902 of the California Corporations Code. The total number of outstanding
shares of the corporation is 3,429,839 shares of Common Stock, 1,433,333 shares
of Series AA Preferred Stock and 12,383 shares of Series BB Preferred Stock. The
number of shares voting in favor of the amendment equaled or exceeded the vote
required. The percentage
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vote required was more than 50% of the outstanding shares of Common Stock and
more than 50% of the outstanding shares of Preferred Stock each voting as a
separate class.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in the foregoing certificate are true and
correct of our knowledge.
EXECUTED at _____________________________ on _____________, 1999.
__________________________________________
William P. Horgan, Chief Executive Officer
__________________________________________
Greg Fredrick, Assistant Secretary
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<PAGE>
Appendix A
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HUMAN PHEROMONE SCIENCES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JULY 13, 1999
The undersigned hereby appoints William P. Horgan and Julian N. Stern,
or either of them, each with full power of substitution, as proxyholder(s) of
the undersigned to represent the undersigned and vote all shares of Common Stock
of Human Pheromone Sciences, Inc. (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 July 13, 1999 and at any adjournments or
postponements of such meeting as follows:
(Continued, and to be signed on reverse side)
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<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
HUMAN PHEROMONE SCIENCES, INC.
July 13, 1999
<TABLE>
<CAPTION>
Please Detach and Mail in the Envelope Provided
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<S> <C>
A [X] Please mark your
votes as in this
example.
WITHHOLD
FOR AUTHORITY
all nominees to vote for all nominees
listed at right listed at right.
1. ELECTION [ ] [ ] Nominees: FOR AGAINST ABSTAIN
OF William P. Horgan 2. To approve an amendment
DIRECTORS Bernard I. Grosser, M.D. to the Company's Articles [ ] [ ] [ ]
(INSTRUCTION: To withhold authority to vote for any Michael D. Kaufman of Incorporation.
individual nominee, strike a line through the Helen C. Leong
nominee's name in the list at right.) Robert Marx 3. 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 proposal. 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
PROPOSAL. 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 PROMPTLY IN THE ENCLOSED ENVELOPE.
SIGNATURE(S) OF SHAREHOLDERS _____________________________________________________________________ DATED: ________________________
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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</TABLE>
