<PAGE>
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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / 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):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
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 - 12th Floor, New York, New York 10043 on
December 17, 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 change the Company's name
to AMBI, Inc.;
3. 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, 1997; and
4. 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 November 4, 1996 will be entitled to vote at the meeting.
By Order of the Board of Directors
BENJAMIN T. SPORN,
Secretary
Dated: November 7, 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.
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APPLIED MICROBIOLOGY, INC.
771 Old Saw Mill River Road
Tarrytown, New York 10591
--------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 17, 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 December 17, 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 November 4, 1996 are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. As of November 4, 1996 the Company's voting securities outstanding
totaled [ ] 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, 1996. All directors attended at least seven
meetings of the Board during the fiscal year. David Guttmann resigned from the
Board on October 1, 1995 and Sheldon G. Gilgore, MD was elected to the Board on
October 1, 1995. Ian Clack resigned from the Board on May 21, 1996 and Colin
Kop was elected to the Board on May 21, 1996. Douglas Cotter, PhD resigned from
the Board on July 31, 1996 and Robert E. Flynn was elected to the Board on
October 15, 1996. 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. Beginning July 1, 1996,
directors will receive a quarterly director's fee of $1,600. The Company has an
Audit Committee of the Board which currently consists of Dr. Gilgore and Mr.
Kop. There are no arrangements as to compensation of members of this committee
in such capacity. The Audit Committee held two meetings during the fiscal year
ended June 30, 1996. The Company has a Compensation Committee of the Board
which was established in March 1995 and currently consists of Drs. Cross and
Pollack. There are no arrangements as to compensation of members of this
committee in such capacity. The Compensation Committee held two meeting during
the fiscal year ended June 30, 1996. Officers serve at the pleasure of the
Board of Directors. There are no family
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<PAGE>
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.
The by-laws of the Company were amended to provide, among other
things, 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. On May 21, 1996 Ian Clack resigned
from the Board and Colin Kop was elected to the Board on May 21, 1996. Dr.
Cotter resigned from the Board on July 31, 1996 and Robert E. Flynn was elected
to the Board on October 15, 1996.
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:
<TABLE>
<CAPTION>
Nominee for Election Director Since Position(s)
- -------------------- -------------- -----------
<S> <C> <C>
Fredric D. Price (50) 1994 President and Chief Executive Officer
Sheldon G. Gilgore, MD (63) 1995 Chairman of the Board,
Applied Microbiology, Inc.
Audrey T. Cross, PhD (50) 1995 Associate Clinical Professor, School of
Public Health, Columbia University
Robert E. Flynn (63) 1996 Senior Advisor, CSC Index
John P. Friend, PhD (51) 1989 General Manager - Technology,
Burns, Philp & Company Limited
Colin Kop (34) 1996 General Manager Business Development,
Burns, Philp & Company Limited
Robert E. Pollack, PhD (55) 1995 Professor of Biological Science,
Columbia University
</TABLE>
- -----------------------
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
3
<PAGE>
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 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.
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.
Robert E. Flynn was elected a Director of the Company in October 1996.
Mr. Flynn is a Senior Advisor to CSC Index, management consultants. He served
as Chairman of the NutraSweet Company from June 1990 until he retired in
December 1995. Mr. Flynn also served as Chief Executive Officer of the
NutraSweet Company from June 1990 until March 1995. From 1981 to 1990, he
served in various executive capacities with Fisher Controls International Inc.,
including Chairman and Chief Executive Officer. Prior thereto from 1957 to
1981, Mr. Flynn held positions of increasing importance with The Carborundum
Co. Mr. Flynn is also a member of the Board of Stanley Technology Group. He
received a BSc from Loyola College, a BEE from McGill University and an MBA
from Rutgers University.
John P. Friend, PhD was elected a Director of the Company in July
1989. He has been with Burns, Philp & Company Limited (BPC) 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.
Colin Kop was elected a Director of the Company in May 1996. Mr. Kop
was appointed General Manager Business Development of BPC in September 1995.
From 1994 to 1996, Mr. Kop served as General Manager Finance of BPC and has
served in various financial positions of increasing responsibility with BPC
since 1983. Mr. Kop was a Director of the Company from 1992 until 1994 and was
reelected a Director in May 1996. Mr. Kop is a Certified Practicing Accountant
and he earned a Masters of Commerce Degree 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.
4
<PAGE>
Executive Officers
The following table sets forth the name, age and position of each executive
officer of the Company:
<TABLE>
<CAPTION>
Name Position(s)
---- -----------
<S> <C>
Fredric D. Price (50) President, Chief Executive Officer and Director
Stephen C. Benoit (37) Vice President - Marketing and Sales
Solomon L. Mowshowitz, Ph.D. (53) Vice President - Research and Development
Benjamin T. Sporn (58) Vice President - Legal and Secretary
Peter E. Herring (44) Controller
</TABLE>
----------------------------
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.
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.
Solomon L. Mowshowitz, Ph.D., was appointed Vice President-Research
and Development of the Company in January 1996. For the five prior years, Dr.
Mowshowitz was President of Diligen, a company that provides scientific and
commercial consulting services to biotechnology companies as well as to the
venture capital community. From 1983 to 1990, Dr. Mowshowitz held senior
research management positions at three biotechnology companies. From 1970 to
1983, he was Assistant Professor in the Department of Microbiology at the Mt.
Sinai School of Medicine in New York. Dr. Mowshowitz holds a BA from the
University of Pennsylvania and a PhD in biochemistry from the Albert Einstein
College of Medicine in New York.
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.
5
<PAGE>
Executive Compensation
The following table sets forth the compensation paid or accrued by the
Company during the three fiscal years ended June 30, 1996 (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 $100,000).
SUMMARY COMPENSATION TABLE(1)(2)
Annual Compensation
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Name and Principal Period Salary ($) Bonus ($) All other
Position Compensation
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fredric Price, 9/12/94-
President, Chief 6/30/95 210,000 15,000
Executive Officer and
Director (3) 7/1/95-
6/30/96 260,000 21,121
Stephen Benoit, 7/1/94-
Vice President- 6/30/95 57,692
Marketing and Sales
7/1/95
6/30/96 135,000 5,000
Peter Blackburn,
Executive Vice 7/1/93-
President 6/30/94 119,713 5,700
7/1/94-
6/30/95 150,000 23,153
7/1/95-
5/25/96 150,000 150,000 (4)
Benjamin T. Sporn, 7/1/93-
Vice President- 6/30/94 117,400
Legal
7/1/94-
6/30/95 129,000
7/1/95-
6/30/96 120,000
</TABLE>
(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
6
<PAGE>
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 severance payment made to Dr. Blackburn in May 1996.
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 were 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 various persons who render certain services to the Company.
3. The 1989 Stock Option Plan provides for the grant of options to
either group which, in the case of employees, may be incentive stock options.
4. The 1991 Stock Option Plan provides for the grant of options to
either group which, in the case of employees, may be incentive stock options.
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 3,000,000 shares of Common Stock. The purpose of the Plans
is to attract and retain competent executive personnel and other key 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
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<PAGE>
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, 1996 of options granted (i) to the Company's Chief
Executive Officer, and (ii) to the 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 $3.00 per share.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Individual Grants
- ----------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Name Shares Value Number of Unexercised Value of Unexercised In-the
Acquired on realized ($) Options at FY-End (#) Money Options at FY-End
Exercise (#)
Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Stephen
Benoit 0 0 10,000 50,000 $22,500 $107,500
Peter
Blackburn 75,000 $398,438 95,000 0 $310,000 0
Benjamin
T. Sporn 0 0 75,000 0 $150,000 0
Fredric
Price 0 0 100,000 400,000 $198,750 $795,000
</TABLE>
8
<PAGE>
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.
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 1996 and a single life 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.
Years of Credited Service
<TABLE>
<CAPTION>
final average
earnings 15 20 25 30 35
- --------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$25,000 $4,320 $5,760 $7,200 $8,250 $9,625
$50,000 $10,436 $13,915 $17,394 $20,873 $24,351
$75,000 $16,987 $22,665 $28,331 $33,998 $39,664
$100,000 $23,561 $31,415 $39,269 $47,123 $54,976
$150,000 and up $36,686 $48,915 $61,144 $73,373 $85,602
</TABLE>
Stephen Benoit, Peter Herring, Solomon Mowshowitz, Benjamin Sporn and
Fredric Price each have 1.6, 0.6, 0.6, 3.5 and 1.75 years, respectively, of
credited service under the Pension Plan as of June 30, 1996, and, at age 65,
would have approximately 28, 21, 12, 10, and 17 years of credited service,
respectively.
Aplin & Barrett Limited
Eligible A&B employees are entitled to participate in the Burns Philp
(U.K.) plc 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
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<PAGE>
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 US dollars based on an average exchange rate of $1.5423 per GBP. The
benefits listed are not subject to any deductions.
Years of Credited Service
<TABLE>
<CAPTION>
final average
earnings 15 20 25 30 35
- -------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$25,000 $5,024 $6,699 $8,373 $10,048 $11,722
$50,000 $11,274 $15,032 $18,790 $22,548 $26,306
$75,000 $17,524 $23,365 $29,206 $35,048 $40,889
$100,000 $23,774 $31,699 $39,623 $47,548 $55,472
$150,000 $36,274 $48,365 $60,456 $72,548 $84,639
$200,000 $48,774 $65,032 $81,290 $97,548 $113,806
</TABLE>
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, 1995 through June 30, 1996 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with.
10
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on a
hypothetical investment made on June 28, 1991 through June 28, 1996 (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 healthcare 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.
[GRAPH-LINE CHART]
AMBI NASDAQ NASDAQ Pharmaceutical
---- ------ ---------------------
6/28/91 100 100 100 \
6/30/92 \
6/30/93 \ PLOT
6/30/94 / POINTS
6/30/95 /
6/28/96 /
Compensation Committee Interlocks and Insider Participation
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, 1996.
11
<PAGE>
Principal Shareholders and Share Ownership of Directors and Officers.
The following table sets forth, as of October 21, 1996, 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) 230,651 1.11
Sheldon G. Gilgore (3) 115,000 *
Stephen C. Benoit (4) 12,000 *
Audrey T. Cross (5) 24,000 *
259 Sunset Avenue
Englewood, NJ 07631
Robert E. Flynn (4) 10,000 *
John P. Friend 0 --
7 Bridge Street
Sydney, NSW 2000
Australia
Colin Kop 0 --
222 Sutter Street
San Francisco, CA
Robert E. Pollack (4) 20,000 *
813B Sherman Fairchild
Columbia University
New York, NY 10027
Benjamin Sporn (6) 104,125 *
Burns Philp & Company 10,183,837 49.40
Limited(7)
7 Bridge Street
Sydney, NSW 2000
Australia
All Officers and Directors 515,776 2.45
as a Group (10 persons)
(2)(3)(4)(5) and(6)
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* Less than 1%
(1) Includes shares issuable within 60 days upon the exercise of
all options and warrants.
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Shares issuable under options or warrants are owned
beneficially but not of record.
(2) Includes 200,000 shares issuable upon exercise of currently
exercisable options under the Company's Stock Option Plans.
(3) Includes 110,000 shares issuable upon exercise of currently
exercisable options under the Company's Stock Option Plans.
(4) Consists of shares issuable upon exercise of currently
exercisable options under the Company's Stock Option Plans.
(5) Includes 20,000 shares issuable upon exercise of currently
exercisable options under the Company's Stock Option Plans.
(6) Includes 75,000 shares issuable upon exercise of currently
exercisable options under the Company's Stock Option Plans.
(7) Consists of shares owned by subsidiaries.
Certain Relationships and Related Transactions
During the fiscal year ended June 30, 1996, the Company's A&B
subsidiary made sales of approximately $1,939,000 to Mauri Laboratories Pty
Limited ("Mauri"). In addition, it purchased approximately $1,430,000 of goods
from Mauri. Mauri was, until June 14, 1996, a wholly-owned subsidiary of BPC
which currently holds approximately a 49% interest in the Company (as described
below). On June 14, 1996, Mauri was sold to Gist-brocades N.V. of the
Netherlands and ceased to be an affiliate.
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, 1996, A&B, as a result of these activities, received
income from Burns Philp (U.K.) plc. of approximately $74,000.
A&B manufactures certain products on a contract basis for Imperial
Biotechnology Limited ("IBT") at its U.K. production site. IBT was, until
December 12, 1995, a 50% owned affiliate of BPC. On December 12, 1995, IBT was
sold to Protein Technologies International of the USA and ceased to be an
affiliate. During the fiscal year ended June 30, 1996, A&B received no income
as a result of sales to IBT prior to IBT ceasing to be an affiliate.
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, 1996, the
Company received interest income of approximately $79,000 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. During July 1996, BPC sold 1,400,000
shares of Common Stock. As a result of the July 1993 issuance, of prior
acquisitions of shares of Common Stock, and the July 1996 sale of Common Stock,
BPC currently owns 10,183,837 shares of Common Stock.
Under the Purchase Agreement, the Company and BPC entered into the
following arrangements and understandings with respect to election of directors
and related matters:
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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 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. In October
1995, David Guttmann resigned from the Board and Dr. Sheldon G. Gilgore was
elected to the Board. In May 1996, Ian Clack resigned from the Board and Colin
Kop was elected to the Board. In July 1996, Dr. Cotter resigned from the board.
See "Directors and Executive Officers of the Registrant--Arrangements Regarding
the Election of Directors."
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
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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
GBP 300,000 of bank borrowings by the Company.
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.
On September 24, 1996, the Company signed a non-binding Letter of
Intent to sell its nisin-based food preservative business to BPC, an affiliate
of the Company. The Company retained exclusive rights to its nisin-based
pharmaceutical and animal healthcare business. Key terms of the contemplated
transaction include the payment to the Company of $13.5 million in cash, a loan
to the Company of $2.5 million that could be forgiven under circumstances
related to the performance of the food preservative business over the next
three years, and the return of 2.42 million shares of the Company's Common
Stock held by BPC. The Company and BPC anticipate a closing by the end of
calendar 1996, subject to the approval of the Boards of the Company and BPC and
the execution of a definitive agreement. After the closing and so long as BPC
owns twenty percent or more of the Company's Common Stock, BPC will have the
right to nominate one member of the Company's Board. If BPC's ownership of the
Company's Common Stock falls below twenty percent, BPC will not have the right
to nominate any members of the Company's Board, although BPC may continue to
vote its shares for its representatives to the Board, as it deems prudent in
its sole judgment.
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE THE
COMPANY'S NAME TO AMBI, INC.
The Board of Directors has approved an amendment to the Certificate of
Incorporation which would change the name of the Company. The proposed change
is from Applied Microbiology, Inc. to AMBI, Inc. The Board believes that by
using the Company's NASDAQ National Market Symbol "AMBI", which is also the
Company's principal trading name, as its corporate name, the Company will
promote recognition of its trade name. In addition, as the Company's business
focus now includes products that are not microbiology-based, the term
microbiology no longer accurately describes the Company's business and its
products. Because the name AMBI derives from the acronym Applied Microbiology,
Inc., its proposed use incorporates the historical basis for the original
technology upon which the Company was founded. The Company currently plans to
implement the change of name when it would be most cost efficient with regard
to using current supplies of packaging, stationary, etc. The Company
anticipates that the cost of publicizing the change of name will not be
significant.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
Ratification Of Appointment Of Independent Accountants
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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, 1997. KPMG
Peat Marwick also audited the Company's financial statements for the fiscal
years ended June 30, 1993, 1994, 1995 and 1996.
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 1997.
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 change of the Company's
name and 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 July 11, 1997 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, 1996 is being delivered with this Proxy Statement to the Company's
shareholders.
Other Matters
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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.
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
November 7, 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
December 17, 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 December 17, 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.)
Audrey T. Cross / /
John P. Friend / /
Robert E. Flynn / /
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Sheldon G. Gilgore / /
Colin Kop / /
Fredric D. Price / /
Robert E. Pollack / /
The Board of Directors recommends a vote FOR the following:
2. APPROVAL OF AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
CHANGING THE COMPANY'S NAME TO AMBI, INC.
FOR / / AGAINST / / ABSTAIN / /
3. RATIFICATION OF APPOINTMENT OF KPMG PEAT MARWICK AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL 1997.
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. FRIEND, FLYNN, GILGORE, KOP,
POLLACK AND PRICE AS DIRECTORS, TO CHANGE THE COMPANY'S NAME TO AMBI, INC. AND
TO APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK AS THE COMPANY'S AUDITORS FOR
THE FISCAL YEAR 1997.
Dated:
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Signature
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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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