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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13G
Under the Securities Exchange Act of 1934
(Amendment No. 1)
Embrex, Inc.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
290817105
(CUSIP Number)
February 11, 2000
(Date of Event Which Requires Filing of this Statement)
Check the appropriate box to designate the rule pursuant to which this
Schedule is filed:
/ / Rule 13d-1(b)
/_XX/ Rule 13d-1(c)
/___/ Rule 13d-1(d)
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
Potential persons who are to respond to the collection of information
contained in this form are not required to respond unless the form
displays a currently valid OMB control number.
SEC 1745 (3-98) Page 1 of 9
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CUSIP No. 290817105 Page 2 of 9 Pages
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1 NAME OF REPORTING PERSONS
IRS IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Palo Alto Investors
- ----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a)/ X /
(b)/ /
- ----------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
California
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NUMBER OF 5 SOLE VOTING POWER
SHARES 0
BENEFICIALLY ---------------------------------------
OWNED BY 6 SHARED VOTING POWER
EACH 977,100
REPORTING ---------------------------------------
PERSON 7 SOLE DISPOSITIVE POWER
WITH 0
---------------------------------------
8 SHARED DISPOSITIVE POWER
977,100
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9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
977,100
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10 CHECK IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES
CERTAIN SHARES (See Instructions)
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11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
12.3%
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12 TYPE OF REPORTING PERSON (See Instructions)
CO, IA
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CUSIP No. 290817105 Page 3 of 9 Pages
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1 NAME OF REPORTING PERSONS
IRS IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
William Leland Edwards
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a)/ X /
(b)/ /
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3 SEC USE ONLY
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4 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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NUMBER OF 5 SOLE VOTING POWER
SHARES 32,400
BENEFICIALLY ---------------------------------------
OWNED BY 6 SHARED VOTING POWER
EACH 977,100
REPORTING ---------------------------------------
PERSON 7 SOLE DISPOSITIVE POWER
WITH 32,400
---------------------------------------
8 SHARED DISPOSITIVE POWER
977,100
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9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,009,500
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10 CHECK IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES
CERTAIN SHARES (See Instructions)
- ----------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
12.7%
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12 TYPE OF REPORTING PERSON (See Instructions)
IN
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CUSIP No. 290817105 Page 4 of 9 Pages
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1 NAME OF REPORTING PERSONS
IRS IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Micro Cap Partners, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a)/ X /
(b)/ /
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3 SEC USE ONLY
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4 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF 5 SOLE VOTING POWER
SHARES 0
BENEFICIALLY ---------------------------------------
OWNED BY 6 SHARED VOTING POWER
EACH 515,400
REPORTING ---------------------------------------
PERSON 7 SOLE DISPOSITIVE POWER
WITH 0
---------------------------------------
8 SHARED DISPOSITIVE POWER
515,400
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9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
515,400
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10 CHECK IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES
CERTAIN SHARES (See Instructions)
- ----------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9
6.5%
- ----------------------------------------------------------------
12 TYPE OF REPORTING PERSON (See Instructions)
PN
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CUSIP No. 290817105 13G Page 5 of 9 Pages
ITEM 1.
(a) The name of the issuer is Embrex, Inc. (the "Issuer").
(b) The principal executive office of the Issuer is located at
1035 Swabia Court, Durham, NC 27703.
ITEM 2.
(a) The names of the persons filing this statement are
Palo Alto Investors ("PAI"), William Leland Edwards
("Edwards") and Micro Cap Partners, L.P. ("Micro Cap")
(collectively, the "Filers").
(b) The principal business office of the Filers is located at
470 University Avenue, Palo Alto, CA 94301.
(c) See Item 4 of the cover sheet for each Filer.
(d) This statement relates to shares of common stock of the Issuer
(the "Stock").
(e) The CUSIP number of the Stock is 290817105.
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CUSIP No. 290817105 13G Page 6 of 9 Pages
ITEM 3. If this statement is filed pursuant to rule 240.13d-1(b) or
240.13d-2(b) or (c), check whether the person filing is a:
(a) ___ Broker or dealer registered under section 15 of the Act (15
U.S.C. 78o).
(b) ___ Bank as defined in section 3(a)(6) of the Act (15 U.S.C.
78c).
(c) ___ Insurance company as defined in section 3(a)(19) of the Act
(15 U.S.C. 78c).
(d) ___ Investment company registered under section 8 of the
Investment Company Act of 1940 (15 U.S.C. 80a-8).
(e) ___ An investment adviser in accordance with 240.13d-
1(b)(1)(ii)(E).
(f) ___ An employee benefit plan or endowment fund in accordance
with 240.13d-1(b)(1)(ii)(F).
(g) ___ A parent holding company or control person in accordance
with 240.13d-1(b)(1)(ii)(G)
(h) ___ A savings association as defined in section 3(b) of the
Federal Deposit Insurance Act (12 U.S.C. 1813).
(i) ___ A church plan that is excluded from the definition of an
investment company under section 3(c)(14) of the Investment Company Act of
1940 (15 U.S.C. 80a-3).
(j) ___ Group, in accordance with section 240.13d-1(b)(1)(ii)(J)
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CUSIP No.290817105 13G Page 7 of 9 Pages
ITEM 4. OWNERSHIP
See Items 5-9 and 11 on the cover sheet for each Filer.
ITEM 5. OWNERSHIP OF FIVE PERCENT OR LESS OF A CLASS
If this statement is being filed to report the fact that as of the date
hereof the reporting person has ceased to be the beneficial owner of more
than five percent of the class of securities, check the following /___/.
ITEM 6. OWNERSHIP OF MORE THAN FIVE PERCENT ON BEHALF OF ANOTHER PERSON
PAI is a registered investment adviser whose clients have the right to
receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, the Stock. No individual client's holdings of
the Stock, other than Micro Cap, are more than five percent of the
outstanding Stock.
ITEM 7. IDENTIFICATION AND CLASSIFICATION OF THE SUBSIDIARY WHICH
ACQUIRED THE SECURITY BEING REPORTED ON BY THE PARENT HOLDING COMPANY
Not applicable.
ITEM 8. IDENTIFICATION AND CLASSIFICATION OF MEMBERS OF THE GROUP
PAI is a registered investment adviser. Edwards is PAI's controlling
shareholder. PAI is the general partner of Micro Cap, which is an
investment limited partnership. No single client of PAI, other than Micro
Cap, holds more than five percent of the Stock.
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CUSIP No.290817105 13G Page 8 of 9 Pages
ITEM 9. NOTICE OF DISSOLUTION OF GROUP
Not applicable.
ITEM 10. CERTIFICATION
By signing below I certify that, to the best of my knowledge and belief,
the securities referred to above were acquired and are held in the
ordinary course of business and were not acquired and are not held for the
purpose of or with the effect of changing or influencing the control of
the issuer of the securities and were not acquired and are not held in
connection with or as a participant in any transaction having that purpose
or effect.
In a letter dated December 20, 1999, Micro Cap notified the Issuer of
Micro Cap's intention to present for the vote of shareholders at the
Issuer's 2000 annual meeting a proposed amendment to the Issuer's Bylaws.
Micro Cap requested that its proposal be included in the Issuer's proxy
statement relating to the meeting. A copy of Micro Cap's letter, and the
proposal and supporting statement, was attached as Exhibit A to the
Schedule 13D filed by the Filers on January 6, 2000. Micro Cap has
withdrawn its request and proposal, as confirmed in the letter agreement
with the Issuer dated February 11, 2000 and attached hereto as Exhibit A.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: February 23, 2000
PALO ALTO INVESTORS MICRO CAP PARTNERS, L.P.
By: /s/ William L. Edwards By: Palo Alto Investors,
William L. Edwards, President General Partner
By: /s/ William L. Edwards
William L. Edwards,
/s/ William Leland Edwards President
William Leland Edwards
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CUSIP No.290817105 13G Page 9 of 9 Pages
EXHIBIT A
February 11, 2000
Mr. William L. Edwards
MicroCap Partners, LP
Palo Alto Investors, Inc.
470 University Avenue
Palo Alto, CA 94301
Dear Will:
On behalf of the Embrex Board, I want to thank you for your consideration
of the withdrawal of your December 20 request asking that we include a
proposed bylaw amendment in our proxy statement for the upcoming annual
meeting. We understand that you and your funds have withdrawn that
request.
In response to your recent question, I also wanted to let you know who the
Board has nominated as its slate of director nominees for the upcoming
annual meeting. Those nominees are as follows: Dan Blackshear, Lester
Crawford, Peter Holzer (Chairman), Ken May, Art Pappas, Walter Smiley, and
myself. As I have mentioned to you, Chuck Austin has decided not to stand
for re-election so he can more actively pursue retirement and family
interests.
Finally, I wanted to confirm our agreement that neither you nor your funds
will directly or indirectly solicit proxies (as defined under securities
laws) regarding any matter or bring any proposal or matter before the 2000
Annual Meeting of Shareholders of Embrex.
We look forward to staying in close touch over the coming year. On behalf
of yourself and your funds, please confirm as correct the understandings
set forth in this letter by signing where indicated below. Thank you for
your ongoing assistance and cooperation.
Best wishes,
Embrex, Inc.
/s/ Randall L. Marcuson
By: Randall L. Marcuson
President and Chief Executive Officer
Confirmed and agreed to on behalf
of MicroCap Partners, LP, Palo Alto
Investors, Inc. and William L. Edwards
By: /s/ William L. Edwards
William L. Edwards
CSR/4325/011/1088358
