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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Applied Microbiology, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price 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:
- --------------------------------------------------------------------------------
/X/ 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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APPLIED MICROBIOLOGY, INC.
NOTICE OF AN ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders of Applied
Microbiology, Inc. (the "Company") will be held at the offices of Citibank, N.
A., 399 Park Avenue - 12 Floor, New York, New York 10043 on February 21, 1996 at
10 A.M. for the following purposes as set forth in the accompanying Proxy
Statement:
1. To elect seven directors to serve for a term of one year;
2. To consider and act upon a proposal to amend the Certificate of
Incorporation of the Company to provide for authorizing an additional
15,000,000 shares of Common Stock increasing the authorized Common Stock
from 25,000,000 shares to 40,000,000 shares;
3. To ratify the amendment of the Company's 1991 Stock Option Plan to
increase the number of shares of Common Stock authorized for issuance
thereunder from 1,500,000 shares to 3,000,000 shares;
4. To ratify the selection and appointment by the Company's Board of
Directors of KPMG Peat Marwick, independent certified public accountants,
as auditors for the Company for the fiscal year ending June 30, 1996; and
5. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Holders of record of the Company's Common Stock at the close of business on
January 3, 1996 will be entitled to vote at the meeting.
By Order of the Board of Directors
BENJAMIN T. SPORN,
Secretary
Dated: January 12, 1996
Whether or not you plan to attend the meeting, please date and sign the
enclosed proxy and return it in the envelope provided. Any person giving a
proxy has the power to revoke it at any time prior to its exercise and if
present at the meeting may withdraw it and vote in person. Attendance at the
meeting is limited to shareholders, their proxies and invited guests of the
Company.
<PAGE>
APPLIED MICROBIOLOGY, INC.
771 Old Saw Mill River Road
Tarrytown, New York 10591
____________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 21, 1996
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of proxies to be voted at the Annual Meeting of
Shareholders of the Company to be held at the offices of Citibank, N. A.,
399 Park Avenue, New York, New York 10043 on February 21, 1996 and at any
adjournments thereof. The shares represented by proxies that are received in
the enclosed form and properly filled out will be voted in accordance with the
specifications made thereon. In the absence of specific instructions, proxies
will be voted in accordance with the recommendations made herein with respect to
the proposals described in this Proxy Statement. Proxies may be revoked by
shareholders by written notice received by the Secretary of the Company at the
address set forth above, at any time prior to the exercise thereof.
Shareholders of record at the close of business on January 3, 1996 are entitled
to notice of and to vote at the Annual Meeting or any adjournments thereof. As
of January 3, 1996 the Company's voting securities outstanding totaled
18,348,226 shares of Common Stock.
ELECTION OF DIRECTORS
It is the intention of the persons named in the enclosed form of proxy,
unless such proxy specifies otherwise, to nominate and to vote the shares
represented by such proxy for the election of the nominees listed below to hold
office until the next Annual Meeting of Shareholders or until their respective
successors shall have been duly elected and qualified. The Company has no
reason to believe that any of the nominees will become unavailable to serve as
directors for any reason before the Annual Meeting. However, in the event that
any of them shall become unavailable, the person designated as proxy reserves
the right to substitute another person of his choice when voting at the Annual
Meeting. Certain information regarding each nominee is set forth in the table
and text below. The number of shares, if any, beneficially owned by each
nominee is listed below under "Principal Shareholders and Share Ownership of
Directors and Officers."
The directors serve for a term of one year and until their successors are
duly elected and qualified. The Board of Directors held eight meetings in the
fiscal year ended June 30, 1995. All directors attended at least six meetings of
the Board during the fiscal year. Drs. Cotter, Cross and Pollack each received
a quarterly director's fee of $1,250 and $500 for each meeting of the Board
attended in person, $250 for each meeting of the Board attended telephonically
and received options to acquire 10,000 shares of Common Stock. The Company has
an Audit Committee of the Board which currently consists of Dr. Friend and Dr.
Cotter. There are no arrangements as to compensation of members of this
committee in such capacity. The Audit Committee held one meeting during the
fiscal year ended June 30, 1995. The Company has a Compensation Committee of the
Board which was established in March 1995 and consists of Drs. Cotter, Cross and
Pollack. There are no arrangements as to compensation of members of this
committee in such capacity. The Compensation Committee held one meeting during
the fiscal year ended June 30, 1995. Officers serve at the pleasure of the
Board of Directors. There are no family relationships among directors, nominees
or executive officers, nor are there any arrangements or understandings between
any such director or nominee and any other person pursuant to which any director
or nominee was selected as such other than as described below.
1
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The by-laws of the Company provide that until September 1, 1996 the Board
of Directors is to consist of seven directors. The by-laws further provided that
David Guttmann, Peter Blackburn and Benjamin Sporn were designated "Prior
Directors," and that the Board of Directors was to nominate three persons
designated by the Prior Directors as the Board's nominees for election as
directors at meetings of shareholders. In September 1994, the Company hired
Fredric D. Price as President and Chief Executive Officer. In connection with
this hiring, four directors, Peter Blackburn, Alan English, Colin Kop and
Benjamin Sporn, resigned from the Board. Mr. Price was elected to the Board and
designated a Prior Director by the remaining Prior Director, Mr. Guttmann. The
Board then authorized Mr. Price to propose three new directors to fill the
remaining vacancies. In January 1995, Drs. Audrey T. Cross, Douglas A. Cotter
and Robert E. Pollack were proposed by Mr. Price and elected to the Board. Mr.
Guttmann resigned his position as Chairman of the Board and stepped down from
the Board on October 1, 1995. Sheldon G. Gilgore, MD was elected to the Board
and as Chairman of the Board on October 1, 1995. Mr. Price is currently
designated as a Prior Director for election at the Annual Meeting of
Shareholders. Burns, Philp & Company Limited and its affiliates (the "BP Group")
own an aggregate of 11,583,837 shares of Common Stock and have agreed that until
September 1996 they will vote all of their shares of the Company's stock in
favor of election of persons nominated by the Prior Directors.
The following table sets forth the name, age and term of office as
director of each nominee for election as director and his or her present
position(s) with the Company:
Nominee for Election Director Since Position(s)
- -------------------- -------------- -----------
Fredric D. Price (50) 1994 President and Chief Executive
Officer
Sheldon G. Gilgore, MD (63) 1995 Chairman of the Board,
Applied Microbiology, Inc.
Ian D. Clack (52) 1992 Managing Director and Chief
Executive, Burns, Philp &
Company Limited
Douglas A. Cotter, PhD (52) 1995 President, Healthcare Decisions,
Inc.
Audrey T. Cross, PhD (50) 1995 Associate Clinical Professor,
School of Public Health,
Columbia University
John P. Friend, PhD (51) 1989 General Manager - Technology,
Burns, Philp & Company Limited
Robert E. Pollack, PhD (55) 1995 Professor of Biological Science,
Columbia University
_______________________
Fredric Price has been President, Chief Executive Officer and a Director
of the Company since September 1994. From July 1991 to September 1994, he was
Vice President, Finance and Administration and Chief Financial Officer of
Regeneron Pharmaceuticals, Inc. For more than five years prior to joining
Regeneron, he was head of RxFDP, a consulting firm which provided strategic
planning, market development, and new product introduction services to
pharmaceutical and other health care businesses. From 1973 to 1986 he was at
Pfizer Pharmaceuticals, where he was a Vice President with both line and staff
responsibilities. Mr. Price is on the Executive Committee of the Board of
Directors of the New York Biotechnology Association. He has a BA
2
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from Dartmouth College and an MBA from the Wharton School of the University of
Pennsylvania.
Sheldon G. Gilgore, MD was elected Chairman of the Board of Directors of
the Company in October 1995. Dr. Gilgore served as Chairman of the Board, Chief
Executive Officer, and President of G. D. Searle & Co. from 1986 to April 1995
when he retired. From 1971 to 1986, he was President of Pfizer Pharmaceuticals
and was a member of the Board of Directors of Pfizer, Inc. In addition, he
served as Chairman of the Pharmaceutical Research Manufacturers of America
(PhRMA). Dr. Gilgore received a BS in biology from Villanova University and an
MD from Jefferson Medical College.
Ian D. Clack was elected a Director of the Company in August 1992. He
was appointed Managing Director and Chief Executive of Burns, Philp & Company
Limited in 1994. From 1962 to 1994, Mr. Clack served in various administrative
and executive capacities with Burns, Philp. He received a degree in Applied
Chemistry from the Caulfield Institute of Technology.
Douglas A. Cotter, PhD was elected a Director of the Company in January
1995. Dr. Cotter has been President of Healthcare Decisions, Inc. since 1985.
Healthcare Decisions, Inc. provides corporate development services to the
healthcare and biotechnology industries in connection with acquisitions,
divestitures, strategic planning and corporate partnering. For 19 years prior
to joining Healthcare Decisions, Inc., Dr. Cotter held various management
positions in research, product development, business development and clinical
information systems in the medical products business of Corning Glass Works.
Dr. Cotter is a director of Respironics, Inc., a publicly traded corporation. He
is also Adjunct Associate Professor of Biomedical Engineering at Boston
University. He has a BS in engineering from Duke University and MS and PhD
degrees in engineering from North Carolina State University.
Audrey T. Cross, PhD was elected a Director of the Company in January 1995.
Dr. Cross has been Associate Clinical Professor at the Institute of Human
Nutrition in the School of Public Health of Columbia University since 1988. She
also works as a consultant in the areas of nutrition and health policy. She has
served as a special assistant to the United States Secretary of Agriculture as
Coordinator for Human Nutrition Policy and has worked with both the United
States Senate and the California State Senate on nutrition policy matters. Dr.
Cross received a BS in dietetics, a Master of Public Health in nutrition and a
PhD from the University of California at Berkeley and a JD from the Hastings
College of Law at the University of California at San Francisco.
John P. Friend, PhD was elected a Director of the Company in July 1989. He
has been with Burns, Philp & Company Limited since 1981 and is currently General
Manager, Technology. He received a BSc and a PhD from the University of Sydney
(Australia) in colloid chemistry and a MSc in biotechnology from the University
of New South Wales.
Robert E. Pollack, PhD was elected a Director of the Company in January
1995. Dr. Pollack has been a Professor of Biological Sciences at Columbia
University since 1978 and from 1982-1989 he was, in addition, Dean of Columbia
College. Previously, he was Professor of Microbiology at the State University of
New York School of Medicine at Stony Brook, New York, Senior Scientist at Cold
Spring Harbor Laboratory, Special NIH fellow at the Weizmann Institute in
Israel, and NIH Fellow in the Department of Pathology at NYU School of Medicine
in New York. He is the author of more than a hundred research papers on the
molecular biology of viral oncogenesis, a dozen articles in the popular press,
and three books. He received a BA in physics from Columbia University and a PhD
in biology from Brandeis University.
3
<PAGE>
Executive Officers
The following table sets forth the name, age and position of each executive
officer of the Company:
Name Position(s)
---- -----------
Fredric D. Price (50) President, Chief Executive Officer and Director
Peter Blackburn, PhD (45) Executive Vice President - Scientific Affairs
Stephen C. Benoit (37) Vice President - Marketing and Sales
Benjamin T. Sporn (57) Vice President - Legal and Secretary
Peter E. Herring (44) Controller
____________________________
Officers of the Company serve at the pleasure of the Board of Directors
subject to any contracts of employment. See the biographical descriptions under
nominees for election as directors for additional information on Mr. Price.
Peter Blackburn, PhD has been Executive Vice President of the Company
since January 1987. In 1985, Dr. Blackburn became the Company's Senior
Scientist and Co-Director of Research and in 1986 he was appointed Associate
Member in Applied Genetics at the Public Health Research Institute of New York
City. From 1984 to 1985 he was a senior investigator with Enzo Biochem, Inc.
From 1979 to 1984 he was an Assistant Professor of Biochemistry at the
Rockefeller University and received the Irma T. Hirschl Career Scientist Award
(1979-1985). He was a director of the Company from 1990 until 1994. Dr.
Blackburn received a BSc with First Class Honors and a PhD in Biochemistry from
the University of Sheffield, England.
Stephen C. Benoit was appointed Vice President - Marketing and Sales of
the Company in January 1995. Prior to joining the Company he was with Calgene
Fresh, Inc., serving as Vice President of Marketing from January 1992 to March
1994 and Vice President for Strategic Planning from September 1990 to December
1992. From October 1987 to August 1990, Mr. Benoit served as Director, Financial
Planning and Analysis. He received a BBA and MBA in finance from Loyola
Marymount University, Los Angeles, California.
Benjamin T. Sporn has been Vice President - Legal of the Company since
1990 and has served as Secretary of the Company since 1986. He was an attorney
with AT&T from 1964 until December 1989 when he retired from AT&T as a General
Attorney for Intellectual Property Matters. Mr. Sporn is also Chairman of the
Board of Directors of Creative Technologies Corp. and Micel Corp., publicly
traded corporations. Mr. Sporn was a director of the Company from 1986 until
1994. He received a BSE degree from Rensselaer Polytechnic Institute and a JD
degree from American University.
Peter E. Herring was appointed Controller of the Company in January 1996.
Prior to joining the Company he was with Pfizer, Inc. from 1979 until January
1996. At Pfizer, he served as Director of Finance and Systems in a Corporate
Services Division from 1993 until he joined the Company. From 1979 until 1993
he held increasingly responsible financial management positions in both
corporate and operating divisions of Pfizer. He received a BS from the
University of Tennessee and an MBA from Vanderbilt University.
4
<PAGE>
Executive Compensation
The following table sets forth the compensation paid or accrued by the
Company during the three fiscal years ended June 30, 1995 (i) to its President
and Chief Executive Officer and (ii) to the three highest paid employees of the
Company whose cash compensation exceeded $100,000 per year in any such year
(other than the individuals listed in the table, no employee of the Company or
of its subsidiary, Aplin & Barrett, Ltd. ("A & B"), received compensation in
excess of $100,000).
SUMMARY COMPENSATION TABLE(1)(2)
Annual Compensation
Name and Principal ---------------------- All other
Position Period Salary ($) Bonus ($) Compensation ($)
- -------- ------ ---------- --------- ----------------
Fredric Price, President, 9/12/94- 210,000 15,000
Chief Executive Officer 6/30/95
and Director (3)
- --------------------------------------------------------------------------------
Peter Blackburn, Executive 7/1/92- 112,794 15,000
Vice President 6/30/93
7/1/93- 119,713 5,700
6/30/94
7/1/94- 150,000 23,153
6/30/95
- --------------------------------------------------------------------------------
Benjamin T. Sporn, 7/1/92- 110,910
Vice President-Legal 6/30/93
7/1/93- 117,400
6/30/94
7/1/94- 129,000
6/30/95
- --------------------------------------------------------------------------------
Alan English, Executive 7/1/92- 84,690 9,021
Vice President 6/30/93
7/1/93- 89,772 10,791
6/30/94
7/1/94- 59,267 11,500 77,139 (4)
6/30/95
- --------------------------------------------------------------------------------
5
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(1) The above compensation does not include the use of an automobile and other
personal benefits, the total value of which do not exceed as to any named
officer or director or group of executive officers the lesser of $50,000
or 10% of such person's or persons' cash compensation.
(2) Pursuant to the regulations promulgated by the Securities and Exchange
Commission (the "Commission"), the table omits a number of columns reserved
for types of compensation not applicable to the Company.
(3) Mr. Price became the Company's Chief Executive Officer on September 12,
1994.
(4) Consists of a payment made in connection with the termination of
Mr. English's employment on January 31, 1995.
None of the individuals listed above received any long-term incentive plan
awards during the fiscal year.
Employment Agreements
Effective September 1994 the Company entered into an employment agreement
with Fredric Price. The agreement provides for an annual salary of $260,000
plus a performance related bonus. He was also granted options to purchase up to
a total of 500,000 shares of Common Stock, vesting in equal installments over a
five year period commencing at the conclusion of his first year of employment.
In addition, he was granted 15,325 shares of Common Stock on the first
anniversary of the agreement. A further 15,326 shares of Common Stock are to be
granted on the second anniversary of the agreement. Although employment is at
will, salary and certain benefits continue for twelve months after notice of
termination.
Stock Option Plans
The Board of Directors has adopted and the shareholders have approved
four Stock Option Plans (the "Plan(s)"):
1. The Incentive Stock Option Plan provides for the grant of qualified
incentive stock options to officers and key employees.
2. The Non-qualified Stock Option Plan provides for the grant of options to
persons who render services to the Company.
3. The 1989 Stock Option Plan provides for the grant of options to officers,
key employees and persons who render services to the Company. In the case
of employees, the options may be incentive stock options.
4. The 1991 Stock Option Plan provides for the grant of options to officers,
key employees and persons who render services to the Company. In the case
of employees, the options may be incentive stock options.
6
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Each of the Incentive and Non-qualified Stock Option Plans permits the
purchase of an aggregate of up to 250,000 shares of Common Stock. The 1989
Stock Option Plan permits the purchase of an aggregate of up to 500,000 shares
of Common Stock. The 1991 Stock Option Plan permits the purchase of an
aggregate of up to 1,500,000 shares of Common Stock. The purpose of the Plans is
to attract and retain competent executive personnel, other employees and
consultants, and to provide incentives to all such persons to use their effort
and skill for the advancement and betterment of the Company by permitting them
to participate in the ownership of the Company.
Options granted as qualified Incentive Stock Options are intended to
qualify as Incentive Stock Options within the meaning of Section 422A of the
Internal Revenue Code of 1986, as amended. The exercise price of Incentive Stock
Options granted under the Plans shall not be less than the fair market value
(110% of the fair market value for 10% or greater shareholders) of the Common
Stock on the date of grant. Incentive Stock Options may not be exercised later
than ten years from the date of grant (five years for 10% or greater
shareholders). Determinations as to recipients of stock options under the Plans
and other terms of such grants are made by the Company's Board of Directors.
The following table sets forth information with regard to aggregated
option values at June 30, 1995 of options granted (i) to the Company's Chief
Executive Officer, and (ii) to the two highest paid employees of the Company
whose cash compensation exceeded $100,000 per year in such year. On September
12, 1994, Mr. Price was granted 500,000 options to purchase shares at $3.2625
per share. On January 9, 1995, Mr. Benoit was granted 50,000 options to
purchase shares at $3.00 per share. There were no options exercised during the
fiscal year ended June 30, 1995 by any of the listed officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
OPTION VALUES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Name Shares Value Number of Securities Value of Unexercised In-the
Acquired on realized ($) Underlying Unexercised Money Options at FY-End ($)
Exercise (#) Options at FY-End (#)
Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fredric 0 0 0 500,000 0 0
Price
Peter 0 0 170,000 0 $18,750 0
Blackburn
Benjamin 0 0 75,000 0 0 0
T. Sporn
</TABLE>
7
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Pension Plans
Applied Microbiology, Inc.
Eligible employees of the Company are entitled to participate in the Burns
Philp Inc. Retirement Plan for Non-Bargaining Unit Employees, a non-contributory
pension plan (the "Pension Plan") maintained by Burns, Philp & Company Limited
(BPC). Assuming retirement at age 65, the Pension Plan provides benefits equal
to the greater of (a) 1.1% of the employee's final average earnings multiplied
by the employee's final average earnings in excess of the average of the
contribution and the benefit basis in effect under Section 230 of the Social
Security Act for each year in the 35-year period ending with the year of Social
Security retirement age, multiplied by the employee's years of credited service
up to 35, minus any predecessor plan benefit in the case of an employee who
participated in a predecessor plan or (b) $24 multiplied by the number of years
of credited service up to 25 years plus $12 multiplied by the years of
employment from 26-40 years, minus any predecessor plan benefit in the case of
an employee who participated in a predecessor plan. The "final average earnings"
are the average monthly earnings during the five highest-paid consecutive
calendar years within the last ten calendar years of credited service with the
Company. Earnings include the salary and bonus listed in the summary
compensation table. Earnings which may be considered under the Pension Plan are
limited to $150,000 per year subject to annual cost of living adjustments as
determined by the IRS.
The following table sets forth estimated annual benefits payable upon
retirement, assuming retirement at age 65 in 1995 and a straight annuity
benefit, according to years of credited service and final average earnings. The
benefits listed are not subject to any deduction for Social Security or other
offset amounts.
final averageYears of Credited Service
earnings
15 20 25 30 35
- ---------------------------------------------------------------------------
$ 25,000 $ 4,320 $ 5,760 $ 7,200 $ 8,250 $ 9,625
$ 50,000 $10,598 $14,130 $17,663 $21,196 $24,728
$ 75,000 $17,160 $22,880 $28,601 $34,321 $40,041
$100,000 $23,723 $31,630 $39,538 $47,446 $55,353
$150,000 $36,846 $49,130 $61,413 $73,696 $85,978
Peter Blackburn and Benjamin Sporn each have approximately 2.5 years, and
Fredric Price and Stephen Benoit have 0.75 and 0.6 years, respectively, of
credited service under the Pension Plan as of June 30, 1995, and, at age 65,
would have 22, 10, 17 and 28 years of credited service, respectively.
8
<PAGE>
Aplin & Barrett, Ltd.
Eligible A&B employees are entitled to participate in the Burns Philp
(U.K.) p.l.c. Pension Plan, a defined benefit plan providing a pension of one
sixtieth of final pensionable earnings for each year of service at a normal
retirement age of 65. Pensionable earnings are basic salary less the basic U.K.
state pension.
The following table sets forth estimated annual benefits payable upon
retirement, assuming retirement at age 65 in 1995 and a straight annuity
benefit, according to years of credited service and final pensionable earnings.
Estimated benefits are shown in U.S. dollars based on an average exchange rate
of $1.5781 per Great Britain Pound (GBP) for 1995. The benefits listed are not
subject to any deductions.
final averageYears of Credited Service
earnings
15 20 25 30 35
- ---------------------------------------------------------------------------
$ 25,000 $ 5,043 $ 6,724 $ 8,405 $10,085 $ 11,766
$ 50,000 $11,293 $15,057 $18,821 $22,585 $ 26,350
$ 75,000 $17,543 $23,390 $29,238 $35,085 $ 40,933
$100,000 $23,793 $31,724 $39,655 $47,585 $ 55,516
$150,000 $36,293 $48,390 $60,488 $72,585 $ 84,683
$200,000 $48,793 $65,057 $81,321 $97,585 $113,850
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that during the period from July 1, 1994 through June 30, 1995 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with.
9
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PERFORMANCE GRAPH
The following graph compares the cumulative total return on a hypothetical
investment made on June 30, 1990 through June 30, 1995 (assuming reinvestment of
dividends) in: (a) the Company's Common Stock; (b) all NASDAQ stocks and (c) all
pharmaceutical companies listed on NASDAQ. Although the Company is a
biotechnology company, pharmaceutical companies represent the industry grouping
for which information was readily available which is most comparable to the
Company. The graph shows how a $100 investment would increase or decrease in
value over time, based on dividends (stock or cash) and increases or decreases
in the market price of the stock and each of the indexes.
Date AMBI NASDAQ NASDAQ Pharmaceuticals
6/29/90 100 100 100
6/28/91 243 106 160
6/30/92 254 127 199
6/30/93 254 160 173
6/30/94 186 162 145
6/30/95 86 215 194
Compensation Committee Interlocks and Insider Participation
In September 1994, four officers who had also been directors resigned from
the Board. The Board of Directors determines executive compensation taking into
consideration recommendations of the Compensation Committee. No member of the
Company's Board of Directors is an executive officer of a company whose
compensation committee or board of directors includes an executive officer of
the Company.
Board of Directors Report on Executive Compensation
The process of determining the compensation of the executive officers of
the Company includes, among other things, evaluations of its executive officers
performance against certain objective and subjective assessments and takes into
consideration the performance of Company against planned objectives. No
material salary increases nor stock options were approved for the fiscal year
ended June 30, 1995.
10
<PAGE>
Principal Shareholders and Share Ownership of Directors and Officers.
The following table sets forth, as of December 31, 1995, information
regarding the beneficial ownership of the Company's Common Stock based upon the
most recent information available to the Company for (i) each person known by
the Company to own beneficially more than five (5%) percent of the Company's
outstanding Common Stock, (ii) each of the Company's officers and directors and
(iii) all officers and directors of the Company as a group. Unless otherwise
indicated, each stockholder's address is c/o the Company, 771 Old Saw Mill River
Road, Tarrytown, New York 10591.
Shares Owned Beneficially and of Record (1)
Name and Address No. of Shares % of Total
- ---------------- ------------- ----------
Fredric D. Price (2) 115,325 *
Sheldon G. Gilgore (2) 105,000 *
Stephen C. Benoit (3) 10,000 *
Peter Blackburn (3) 170,000 *
Ian Clack 10,000 *
222 Sutter Street
San Francisco, CA
Douglas A. Cotter (4) 11,000 *
1500 Providence Highway
Norwood, MA 02062
Audrey T. Cross (3) 10,000 *
259 Sunset Avenue
Englewood, NJ 07631
John P. Friend 0 --
7 Bridge Street
Sydney, NSW 2000
Australia
Robert E. Pollack (3) 20,000 *
813B Sherman Fairchild
Columbia University
New York, NY 10027
Benjamin Sporn (5) 104,125 *
Burns Philp & Company 11,583,837 63.13
Limited (6)
7 Bridge Street
Sydney, NSW 2000
Australia
All Officers and Directors 1,068,450 2.95
as a Group (10 persons)
(2)(3)(4) and (5)
- -------------------------
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* Less than 1%
(1) Includes shares issuable within 60 days upon the exercise of all options
and warrants. Shares issuable under options or warrants are owned
beneficially but not of record.
(2) Includes 100,000 shares issuable upon exercise of currently exercisable
options under the Company's Stock Option Plans.
(3) Consists of shares issuable upon exercise of currently exercisable
options under the Company's Stock Option Plans.
(4) Includes 10,000 shares issuable upon exercise of currently exercisable
options under the Company's Stock Option Plans.
(5) Includes 75,000 shares issuable upon exercise of currently
exercisable options under the Company's Stock Option Plans.
(6) Consists of shares owned by subsidiaries.
Certain Relationships and Related Transactions
During the fiscal year ended June 30, 1995, the Company's A&B subsidiary
made sales of approximately $2,117,000 to Mauri Laboratories Pty Limited
("Mauri"). In addition, it purchased approximately $832,000 of goods from Mauri.
Mauri is a wholly-owned subsidiary of BPC which currently holds a controlling
interest in the Company (as described below).
Certain of A&B's U.K. based staff provide accounting and administrative
services for other U.K. based subsidiaries of BPC. During the fiscal year ended
June 30, 1995, A&B, as a result of these activities, received income from Burns
Philp (U.K.) p.l.c. of approximately $75,000.
A&B manufactures certain products on a contract basis for Imperial
Biotechnology Limited ("IBT") at its U.K. production site. During the fiscal
year ended June 30, 1995, A&B received income of approximately $77,000 as a
result of these activities. IBT was a 50% owned affiliate of BPC. In December
1995, BPC sold its entire interest in IBT.
From time to time, the Company advances funds to Burns Philp Inc., a wholly
owned subsidiary of BPC. During the fiscal year ended June 30, 1995, the
Company received interest income of approximately $63,000 in respect of such
advances.
Pursuant to an Agreement for the Purchase and Sale of Stock dated as
of June 30, 1992 (the "Purchase Agreement"), in July 1993 the Company issued
935,000 shares of Common Stock to BPC. As a result of this issuance and of
prior acquisitions of shares of Common Stock, BPC currently owns 11,583,837
shares of Common Stock, and controls the Company.
Under the Purchase Agreement, the Company and BPC entered into the
following arrangements and understandings with respect to election of directors
and related matters:
The by-laws of the Company were amended to provide, among other things,
that until September 1, 1996 the Board of Directors shall consist of seven
directors. The by-laws further
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provided that David Guttmann, Peter Blackburn and Benjamin Sporn were
designated "Prior Directors," and that the Board of Directors was to nominate
three persons designated by the Prior Directors as the Board's nominees for
election as directors at meetings of shareholders. In September 1994, the
Company hired Fredric D. Price as President and Chief Executive Officer. In
connection with this hiring, four directors, Peter Blackburn, Alan English,
Colin Kop and Benjamin Sporn, resigned from the Board. Mr. Price was elected to
the Board and designated a Prior Director by the remaining Prior Director, Mr.
Guttmann. The Board then authorized Mr. Price to propose three new directors to
fill the remaining vacancies. In January 1995, Drs. Audrey T. Cross, Douglas A.
Cotter and Robert E. Pollack were proposed by Mr. Price and elected to the
Board.
The amended by-laws also provide that the following actions by the Company
shall require the prior favorable vote of not less than six directors:
termination of the Company's chief executive officer, or a change in his or her
responsibilities or compensation, or the retention of any chief executive
officer; removal of the Company's chairman or the election of any person as
chairman other than the person last elected to such position; the issuance of
any shares of capital stock or of securities convertible or exercisable into
shares of capital stock except as to outstanding warrants, options and other
convertible securities; the grant of options to any officer or director; any
merger, or any acquisition or disposition of assets in excess of $250,000; the
incurrence of a commitment or obligation in excess of $650,000; any change in
the Company's charter or by-laws; any transaction with any affiliate of BPC,
including any overhead charge or any other intercompany charge or allocation,
but excluding the continuation of certain current agency agreements; any
dividend or other distribution except on the 1992 Redeemable Preferred; any
purchase by BPC (whether in the public market or in private transactions, or
otherwise) of any shares of the Company's Common Stock which would increase
BPC's percentage ownership of the outstanding Common Stock beyond the percentage
ownership of such stock owned by BPC on August 31, 1992 subject to certain
increases provided for in the Agreement.
BPC also agreed that:
BPC and its affiliates will for a four-year period vote all shares of the
Company stock from time to time owned by them in favor of election as
directors of the Prior Directors and their nominees.
BPC and its affiliates will for a four-year period be entitled to purchase
shares of Common Stock (in the public market or in private transactions, or
otherwise) only as permitted in the Company's by-laws.
So long as BPC and its affiliates shall have control of the Company, BPC
will not sell, in a single transaction or in a series of transactions
occurring within a period of up to 18 months, to any single purchaser or to
any "group," a block of the Company shares owned by BPC or its affiliates
which shall be sufficient in itself both to (i) divest BPC and its
affiliates of control of the Company and (ii) vest control of the Company in
the purchaser or purchasers, unless BPC shall cause the purchaser to tender
for the purchase of all shares of the Company which are owned by all
shareholders of the Company on the same terms and conditions as those which
apply to the sale by BPC. The term "control" has the meaning assigned to it
in Rule 405 of Regulation C under the Securities Act, and "group" has the
meaning assigned to in Rule 13D of the Securities Exchange Act. However, BPC
is permitted to sell, without compliance with this provision, a block of
shares to an underwriter for the purposes of a broad distribution of the
shares.
An affiliate of BPC will, if required by the Company, for a four-year
period maintain its bank comfort letter in respect of not more than 300,000
Great Britain Pounds of bank borrowings by the Company.
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So long as BPC or its affiliates owns at least 50% of the Company's total
voting power and for five years after BPC and its affiliates ceases to own
at least 50% of the Company's total voting power, neither BPC nor any of its
affiliates will manufacture, sell or otherwise deal in or with nisin or
Nisaplin (or any derivative products) except under distribution agreements
with the Company on terms equivalent to those in effect on June 30, 1992.
At such time after the five-year period aforesaid that BPC shall be
permitted to engage in the businesses aforesaid, BPC will nevertheless
continue to refrain from using trade secrets and other confidential
information which are the property of the Company.
BPC has certain demand and "piggyback" registration rights for its
shareholdings.
Change of Accountants and Fiscal Year
In connection with the consummation of the BP Transactions, the Company in
September 1992 engaged KPMG Peat Marwick LLP as its independent accountants, and
the Company changed its fiscal year to end on June 30 of each year.
Proposal To Amend The Company's Certificate Of Incorporation To Increase
Authorized Common Stock
At the meeting, Stockholders will be asked to adopt an amendment to the
Company's Certificate of Incorporation to increase the number of authorized
shares of the Company's Common Stock to 40,000,000 shares, par value of $0.005
per share (the "Proposed Stock Amendment"). The Company's Board of Directors
has approved the Proposed Stock Amendment, subject to Stockholder authorization.
At January 3, 1996, the authorized capital of the Company consisted of
25,000,000 shares of Common Stock, par value $0.005 per share and 5,000,000
shares of non-designated Preferred Stock, par value $0.01 per share. As of that
date, 18,348,226 shares of Common Stock were outstanding and 2,395 shares of
Preferred Stock were outstanding. In addition, at that date, an aggregate of
6,060,573 shares of Common Stock were reserved for issuance upon: (i) exercise
of options which have been granted under the Company's Incentive Stock Option
Plan, Non-qualified Stock Option Plan, and 1989 Stock Option Plan (1,000,000
shares), (ii) exercise of options granted under the Company's 1991 Stock Option
Plan (1,500,000 shares), (iii) exercise of the Company's outstanding public
warrants (818,282 shares), (iv) exercise of a Unit Purchase Option and Warrants
granted to the underwriter in connection with a public offering of the Company's
securities (187,887 shares), (v) exercise of the Company's Series C Preferred
Stock (2,045,715 shares), and (vi) exercise of various other outstanding
warrants and options (508,689 shares). Therefore, the Company will have issued
or reserved for issuance a total of 24,408,799 of the 25,000,000 shares of
Common Stock currently authorized for issuance.
If the proposed Common Stock Amendment is adopted by the Company's
Stockholders, the additional shares of Common Stock would be issuable at any
time and from time to time, by action of the Board of Directors without further
authorization from the Company's Stockholders, except as otherwise required by
applicable law or rules and regulations to which the Company may be subject, to
such persons and for such consideration (but not less than the par value
thereof) as the Board of Directors determines.
After taking into account the currently issued and reserved shares
of Common Stock
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<PAGE>
discussed above, the Company would have less than 591,201 shares of Common
Stock authorized which are not issued or reserved for issuance. The Company's
Board of Directors believes that the authorization of the additional shares of
Common Stock is in the best interests of the Company and its Stockholders so
that sufficient shares will be readily available for use, if feasible, in
acquisitions, in raising additional capital and for grants as incentives to
employees, officers, directors and consultants of the Company.
From time to time the Company may consider acquisitions or other
transactions which may require the issuance of shares of Common Stock or
Preferred Stock. The Company presently has no understandings or arrangements
which would require the issuance of any of the additional 15,000,000 shares of
Common Stock which are proposed to be authorized. However, management believes
that the increase in the number of authorized shares of Common Stock is in the
best interest of the Company and its Stockholders since additional shares of
Common Stock will provide the Company with the flexibility of having a greater
number of shares available to it for the above and other corporate purposes.
Due to the Board of Directors' discretion in connection with the issuance of
additional shares of Common Stock to be issued in a private placement, it may,
under certain circumstances, possess timing and other advantages in responding
to a tender offer or other attempt to gain control of the Company, which may
make such attempts more difficult and less attractive. For example, issuance of
additional shares would increase the number of shares outstanding and could
necessitate the acquisition of a greater number of shares by a person making a
tender offer and could make such acquisition more difficult since the recipient
of such additional shares may favor the incumbent management. Moreover, these
advantages give the Board of Directors the ability to provide any such holders
with a veto power over actions proposed to be taken by the holders of the
Company's Common Stock. This could have the effect of insulating existing
management from removal, even if it is in the best interest of the common
stockholders. Management of the Company is not aware of any existing or
threatened efforts to obtain control of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
Ratification Of Amendment Of The 1991 Stock Option Plan
The Board has determined that the Company should amend the Company's 1991
Stock Option Plan (the "1991 Plan") in order to increase the number of shares of
Common Stock, $.005 par value, issuable under the 1991 Plan from 1,500,000
shares to 3,000,000 shares. See "Stock Option Plans" above for a summary of the
terms of the 1991 Plan as well as the Company's other stock option plans. Other
than the increase in the number of options available for issuance, no other
changes in the 1991 Plan will be made by this amendment. The 1991 Plan makes
options available to employees, officers, directors and others who render
services to the Company. As of January 3, 1996 the closing price as reported by
NASDAQ for a share of Common Stock was $3.50. Options to acquire 1,497,970
shares at exercise prices of $1.50 to $6.00 per share are currently outstanding
under the 1991 Plan. Of these options, Fredric D. Price holds 500,000 options,
Sheldon G. Gilgore holds 100,000 options, Douglas A. Cotter holds 10,000
options, Audrey T. Cross holds 10,000 options, and Robert E. Pollack holds
20,000 options. No other director holds any options granted under the 1991
Plan.
The 1991 Plan is administered by the Board of Directors ("Board"). The
Board determines the persons who are to be granted Options. The 1991 Plan
contains no preset criteria determining the identity or amount of options to be
granted to any person or group of persons. Therefore, no determinations can be
made at the present time as to the benefits or amounts that will be or would
have been issued to any specific person or group of persons under the 1991 Plan.
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<PAGE>
The grant or exercise of an incentive stock option will not generally cause
recognition of income by the Optionee; however, the amount by which the fair
market value of a share of Common Stock at the time of exercise of an incentive
stock option exceeds the option price, is a "tax preference item" for purposes
of the alternative minimum tax. In the event of a sale of the shares received
upon exercise of an incentive stock option more than two years from the date of
grant and more than one year from the date of exercise, any appreciation of the
shares received above the exercise price should qualify as long-term capital
gain. However, if shares of Common Stock acquired pursuant to the exercise of
an incentive stock option are sold by the Optionee before the completion of such
holding periods, so much of the gain as does not exceed the difference between
the option price and the lesser of the fair market value of the shares at the
date of exercise or the fair market value at the date of disposition will be
taxable as ordinary income for the taxable year in which the sale occurs. Any
additional gain realized on the sale should qualify as a capital gain.
Although the Tax Reform Act of 1986 has eliminated the difference in tax
rates between long term capital gains and ordinary income, the concept of long
term capital gains remains and may, in certain circumstances be relevant.
The grant of an Option that is not an incentive stock option (a
"non-qualified option") should not result in recognition of income by the
Optionee. Upon exercise of a non-qualified option by an employee who is not an
officer or director or who is not otherwise subject to the provisions of Section
16(b) of the Exchange Act ("Section 16(b)"), the excess of the fair market value
of the shares on the exercise date over the option price should be considered
compensation taxable as ordinary income to the employee. If the Optionee is
subject to the restrictions of Section 16(b), income will be recognized at the
time the restrictions lapse and should be measured by the excess of the fair
market value of the shares at such time over the option price unless the
Optionee elects to be taxed at the time of exercise. In the event of a sale of
the shares, any appreciation after the date of exercise or lapse of the
restriction of Section 16(b), as the case may be, should qualify as a capital
gain.
In connection with incentive stock options and non-qualified options, the
Company will be entitled to a deduction for federal income tax purposes at the
same time and in the same amount as the ordinary income recognized by the
employee provided any Federal income tax withholding requirements are satisfied.
If applicable holding period requirements in connection with an incentive stock
option are not satisfied, no deduction will be available to the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE AMENDMENT
OF THE 1991 STOCK OPTION PLAN.
Ratification Of Appointment Of Independent Accountants
Subject to the approval by the shareholders, the Board of Directors has
appointed KPMG Peat Marwick as the Company's independent public accountants to
audit its financial statements for the fiscal year ending June 30, 1996. KPMG
Peat Marwick also audited the Company's financial statements for the fiscal
years ended June 30, 1993, 1994 and 1995.
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<PAGE>
It is expected that a representative of KPMG Peat Marwick will be present
at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS YOU VOTE FOR RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK AS INDEPENDENT ACCOUNTANTS FOR FISCAL 1996.
Vote Required
Under New York law, the affirmative vote of a majority of the votes cast
at the Annual Meeting is required to approve the appointment of the independent
accountants. The affirmative vote of a plurality of the votes cast at the
Annual Meeting is required to elect directors.
Expense Of Solicitation
The cost of soliciting proxies, which also includes the preparation,
printing and mailing of this Proxy Statement, will be borne by the Company.
Solicitation will be made by the Company primarily through the mail, but regular
employees of the Company may solicit proxies personally, by telephone or
telegram. The Company will request brokers and nominees to obtain voting
instructions of beneficial owners of stock registered in their names and will
reimburse them for any expenses incurred in connection therewith.
Proposals Of Shareholders
Shareholders of the Company who intend to present a proposal for action
at the 1997 Annual Meeting of Shareholders of the Company, must notify the
Company's management of such intention by notice received at the Company's
principal executive offices not later than September 19, 1996 for such proposal
to be included in the Company's proxy statement and form of proxy relating to
such Meeting.
Financial Statements
The Company's Annual Report to Shareholders for the year ended June 30,
1995 is being delivered with this Proxy Statement to the Company's shareholders
along with the Company's quarterly report on Form 10-Q for the fiscal quarter
ended September 30, 1995.
Other Matters
The Board of Directors knows of no matters that are expected to be
presented for consideration at the Annual Meeting which are not described
herein. However, if other matters properly come before the meeting, it is
intended that the person named in the accompanying proxy will vote thereon in
accordance with his best judgment.
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PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE IN THE
ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES. A PROMPT RETURN OF YOUR PROXY CARD WILL BE APPRECIATED AS IT WILL SAVE
THE EXPENSE OF FURTHER MAILINGS.
Dated: Tarrytown, New York
January 12, 1996
By Order of the Board of Directors
BENJAMIN T. SPORN,
Secretary
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APPLIED MICROBIOLOGY, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
February 21, 1996 10 a.m.
The undersigned hereby appoints Fredric D. Price proxy, with full power of
substitution and revocation, to vote on behalf of the undersigned all shares of
Common Stock of Applied Microbiology, Inc. which the undersigned is entitled to
vote at the Annual Meeting of Shareholders to be held February 21, 1996 or any
adjournments thereof.
1. ELECTION OF DIRECTORS
FOR all the nominees listed below
(except as marked to the contrary below) / /
WITHHOLD AUTHORITY
To vote for all nominees listed below / /
(INSTRUCTION: To withhold authority to vote for any individual nominee, mark
the box next to the nominee's name below.)
Ian D. Clack / /
Douglas A. Cotter, PhD / /
Audrey T. Cross, PhD / /
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John P. Friend, PhD / /
Sheldon G. Gilgore, MD / /
Fredric D. Price / /
Robert E. Pollack, PhD / /
The Board of Directors recommends a vote FOR the following:
2. APPROVAL OF AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
INCREASING THE AMOUNT OF AUTHORIZED COMMON STOCK TO 40,000,000 SHARES.
FOR / / AGAINST / / ABSTAIN / /
3. RATIFICATION OF AMENDMENT OF THE COMPANY'S 1991 STOCK OPTION PLAN TO
INCREASE THE AMOUNT OF STOCK AVAILABLE FOR ISSUANCE TO 3,000,000 SHARES.
FOR / / AGAINST / / ABSTAIN / /
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4. RATIFICATION OF APPOINTMENT OF KPMG PEAT MARWICK AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL 1996.
FOR / / AGAINST / / ABSTAIN / /
In his discretion, the proxy is authorized to vote upon such other
business as may properly come before the meeting or any adjournment(s) thereof.
(Continued and to be signed on reverse side)
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THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED TO ELECT MS. CROSS AND MESSRS. PRICE, GILGORE, CLACK, COTTER, FRIEND AND
POLLACK AS DIRECTORS, TO INCREASE THE AMOUNT OF AUTHORIZED COMMON STOCK TO
40,000,000 SHARES, TO INCREASE THE STOCK IN THE 1991 STOCK OPTION PLAN TO
3,000,000 SHARES, AND TO APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK AS THE
COMPANY'S AUDITORS FOR THE FISCAL YEAR 1996.
Dated: ________________________
_______________________________
Signature
_______________________________
Signature if held jointly
(Please sign exactly as ownership
appears on this proxy. Where stock is
held by joint tenants, both should sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.)
Please mark, date, sign and
return this Proxy in the enclosed envelope.
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