-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UOEyRw9U7sAsQC+Uc7WzhmGihpvtmpDmfJe2cAJiiQ9ocDKs1cizFk2KWYMgCjyW LJQUfvouY765tEN1+LdqQA== 0000002034-97-000008.txt : 19971029 0000002034-97-000008.hdr.sgml : 19971029 ACCESSION NUMBER: 0000002034-97-000008 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971204 FILED AS OF DATE: 19971028 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACETO CORP CENTRAL INDEX KEY: 0000002034 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-CHEMICALS & ALLIED PRODUCTS [5160] IRS NUMBER: 111720520 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-04217 FILM NUMBER: 97701613 BUSINESS ADDRESS: STREET 1: ONE HOLLOW LANE CITY: LAKE SUCCESS STATE: NY ZIP: 11042 BUSINESS PHONE: 5166276000 MAIL ADDRESS: STREET 1: ONE HOLLOW LANE CITY: LAKE SUCCESS STATE: NY ZIP: 11042 FORMER COMPANY: FORMER CONFORMED NAME: ACETO CHEMICAL CO INC DATE OF NAME CHANGE: 19851203 DEF 14A 1 ACETO CORPORATION One Hollow Lane Lake Success, New York 11042-1215 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS December 4, 1997 The Annual Meeting of Stockholders of Aceto Corporation, a New York corporation, ("the Company"), will be held at the Crowne Plaza LaGuardia, 104-04 Ditmars Boulevard, E. Elmhurst, New York, at 10:00 A.M. New York City time, on Thursday, December 4, 1997 for the following purposes: 1. To elect ten directors to hold office until the next Annual Meeting of Stockholders or until their successors are elected and qualified. 2. To consider and vote upon a proposal to Ratify Amendment of the Company's 1980 Stock Option Plan. 3. To transact such other business as may properly come before the meeting or any adjournment thereof. The Board of Directors has fixed the close of business on September 19, 1997 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting. If you do not expect to attend the meeting in person, please fill in, sign, and return the enclosed form of proxy. By order of the Board of Directors, DONALD HOROWITZ Secretary Lake Success, New York October 24, 1997 ACETO CORPORATION One Hollow Lane Lake Success, New York 11042-1215 PROXY STATEMENT ANNUAL MEETING OF STOCKHOLDERS December 4, 1997 Approximate Mailing Date of Proxy Statement and Form of Proxy: October 24, 1997 This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of Aceto Corporation ("the Company") of proxies to be voted at the Annual Meeting of Stockholders to be held on Thursday, December 4, 1997 and at any adjournment thereof. A stockholder who executes and mails a proxy in the enclosed return envelope may revoke such proxy at any time prior to its use by notice in writing to the Secretary of the Company or by revocation in person at the Annual Meeting. Unless so revoked, the shares represented by duly executed proxies received by the Company prior to the Annual Meeting will be voted for or against the proposals referred to therein and presented at the Annual Meeting in accordance with the stockholder's instructions marked thereon. If no instructions are marked thereon, proxies will be voted (l) FOR the election as directors of the nominees named below under the caption "ELECTION OF DIRECTORS"; (2) for the proposal listed in the accompanying Notice of Annual Meeting of Stockholders and described in this Proxy Statement under the caption "PROPOSAL TO RATIFY AMENDMENT OF STOCK OPTION PLAN", and (3) in the discretion of the proxies named on the proxy card with respect to such other business as may properly come before the Annual Meeting or any adjournments thereof. The close of business on September 19, 1997 has been fixed as the record date for the determination of stockholders entitled to notice and to vote at the meeting. At that record date, the following classes of stock were outstanding and entitled to notice and vote: Shares Votes per Class Outstanding Share Votes Common stock 4,484,351 1.0000* 4,484,351 Preferred stock Third series 100,000 2.0666* 206,664 Fourth series 40,000 1.9108* 76,432 Fifth series 40,000 1.7666* 70,665 Sixth series 40,000 1.6333* 65,333 Seventh series 40,000 1.5101* 60,403 Eighth series 40,000 1.4520* 58,080 Total preferred stock 300,000 537,577 Total all classes 4,784,351 5,021,928 *Adjusted for all subsequent stock dividends. All of the outstanding preferred stock is held by the Aceto Corporation Profit Sharing Plan. PRINCIPAL HOLDERS OF VOTING SECURITIES The following table sets forth as of September 19, 1997 certain information with respect to each person who to the best of the knowledge of the Company beneficially owned more than 5% of the outstanding shares of the Company's common or preferred stock: NAME and ADDRESS COMMON STOCK PREFERRED STOCK Amount & Nature Amount & Nature of Beneficial % of of Beneficial % of Ownership Class Ownership Class Arnold J. Frankel 265,571(1) 5.9% 300,000(4) 100% One Hollow Lane Lake Success, NY 11042 Leonard S. Schwartz 30,891(1)(2) 0.7% 300,000(4) 100% One Hollow Lane Lake Success, NY 11042 Donald Horowitz 13,823(1)(3) 0.3% 300,000(4) 100% One Hollow Lane Lake Success, NY 11042 Samuel I. Hendler 3,682(1) 0.1% 300,000(4) 100% 319 Willis Avenue Mineola, NY 11501 Aceto Corporation Profit Sharing Plan 92,875(4) 2.0% 300,000(4) 100% One Hollow Lane Lake Success, NY 11042 T. Rowe Price Associates, Inc. 451,900(5) 10.1% 100 East Pratt Street Baltimore, MD 21202 (l) Messrs. Frankel, Schwartz, Horowitz and Hendler have, or share with their wives, voting power and investment power with respect to the shares owned directly by each of them. (2) Includes 29,356 shares of currently exercisable stock options. (3) Includes 11,808 shares of currently exercisable stock options. (4) These shares are owned by the Company's Profit Sharing Retirement Plan (the "Plan"), vote as a class with common stock, and are entitled to a total of 537,577 votes at this Annual Meeting of Stockholders. The Trustees of the Plan are Arnold J. Frankel, Leonard S. Schwartz, Donald Horowitz and Samuel I. Hendler, who have voting and investment power with regard to these shares, and who disclaim ownership thereof. The preferred stock owned by the Plan is convertible into common stock at various conversion rates set forth in the Certificates of Amendment of the Certificate of Incorporation of the Company fixing the number, designation, relative rights, preferences and limitations of each series of preferred stock. As of September 19, 1997, the 300,000 shares of preferred stock owned by the Plan were convertible into 92,875 shares of common stock, and, if so converted on that date, the said shares of common stock would comprise 2.0% of the class. (5) The securities are owned by various individual and institutional invetors [including T. Rowe Price Small Cap Value Fund, Inc. (which owns 400,000 shares, representing 8.9% of the shares outstanding)], to which T. Rowe Price Associates, Inc. ("Price Associates") serves as investment advisor with power to direct invetments and/or sole power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, Price Associates is deemed sole owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities. ELECTION OF DIRECTORS At the meeting ten directors are to be elected, each to serve until the next Annual Meeting of Stockholders or until their successors are elected and qualified. If any nominee should become unavailable for any reason, it is intended that shares represented by proxies in the accompanying form will be voted for a substitute nominee designated by the management. The management has no reason to believe that any of the nominees named will not be a candidate or will be unable to serve if elected. The names of the nominees for directors, together with certain information regarding them, are as follows: Common Stock of the Company Beneficially Owned as of September 19,1997 Director Present of the Amount & Nature Principal Company of Beneficial % of Name Occupation Age Since Ownership Class Leonard S. Schwartz President, 51 1991 30,891 (1)(5) 0.7% and, since July 1, 1997, Chairman of the Board and Chief Executive Officer, and Member of the Executive Committee which functions as the Executive Compensation Committee Arnold J. Frankel Chairman 75 1947 265,571 (5) 5.9% of the Board, and Chief Executive Officer of the Company until June 30, 1997, Consultant to the Company, Chairman of the Executive Committee which functions as the Executive Compensation Committee, and Chairman of the Audit Committee Robert E. Parsont Consultant to 61 1968 1,859 the Company, and Member of the Executive Committee which functions as the Executive Compensation Committee Donald Horowitz Secretary, 50 1991 13,823 (2)(5) 0.3% Treasurer, and Chief Financial Officer of the Company Samuel I. 75 1990 3,682 (5) 0.1% Hendler Attorney and Member of the Executive Committee which functions as the Executive Compensation Committee Anthony President of 58 1991 23,102 (3) 0.5% Baldi Aceto Agricultural Chemicals Corp., a wholly owned subsidiary of the Company Thomas Senior Vice 58 1991 16,714 (4) 0.4% Brunner President of the Company Richard Senior Vice 49 - 11,808 (2) 0.3% Amitrano President of the Company Stephen M. Senior 58 1993 110 Goldstein Vice President Chase Manhattan Bank, and Member of the Audit Committee Robert A. Attorney, 46 1994 Wiesen Partner in Clifton Budd & DeMaria, and Member of Audit Committee All directors, officers and nominees as a group - 367,560(1)(2) 8.1% ten persons (3)(4)(5) (1) Includes 29,356 shares of currently exercisable stock options. (2) Includes 11,808 shares of currently exercisable stock options. (3) Includes 10,904 shares of currently exercisable stock options. (4) Includes 16,712 shares of currently exercisable stock options. (5) Messrs. Frankel, Hendler, Horowitz and Schwartz also are Trustees for the Company's Profit Sharing Retirement Plan. The Plan owns 300,000 shares of preferred stock. Messrs. Frankel, Hendler, Horowitz and Schwartz disclaim ownership of such shares. All the nominees for Director have, or share with their respective spouses, voting power and investment power with respect to the shares owned by each of them. Mr. Leonard S. Schwartz, Chairman of the Board of Directors, Chief Executive Officer and President of the Company, has served as Chairman and Chief Executive Officer since July 1, 1997, and President since July 1, 1996. He joined the Company in 1969, and became Senior Vice President in charge of its industrial chemicals department in 1991. Mr. Arnold J. Frankel is a founder of the Company and served as Chairman of the Board and as Secretary and Treasurer since the Company was incorporated in 1947 until 1990, at which time he, in addition to retaining his position as Chairman of the Board, became Chief Executive Officer, in which capacities he served until he retired effective June 30, 1997, at which time he became a consultant to the Company. Mr. Robert E. Parsont was employed by the Company since 1961. He was Executive Vice President of the Company until January 1990, when he became President and Chief Operating Officer, in which capacities he served until he retired effective June 30, 1996, at which time he became a consultant to the Company. Mr. Donald Horowitz has been employed by the Company since 1971 and was, in January 1990, elected Secretary and Treasurer and Chief Financial Officer. Mr. Samuel I. Hendler, who has been engaged in the private practice of law in New York since 1949, has acted as counsel to the Company for more than 45 years and is Secretary, a director and counsel to Pneumercator Company, Inc., a Farmingdale, New York Corporation. Messrs. Anthony Baldi and Thomas Brunner have been employed by the Company since 1957 and 1967, respectively, Mr. Baldi has been the President, a director and Chief Operating Officer of Aceto Agricultural Chemicals Corporation, a wholly-owned subsidiary of the Company since 1976, when it was incorporated, and prior thereto headed the Company's agricultural chemicals department. Mr. Brunner is Senior Vice President in charge of the Company's international sales. Mr. Richard Amitrano who joined the Company in 1972, has since July 1, 1997, been Senior Vice President in charge of its organic intermediates and colorants department. He holds BS and MS degrees in organic chemistry from Fordham University and an MBA from St. John's University. Mr. Stephen M. Goldstein is a Senior Vice President and Regional Manager in the Middle Market Division of Chase Manhattan Bank. He is responsible for the bank's middle market business in Queens, New York and has been employed by Chase Manhattan Bank since 1963. Mr. Robert A. Wiesen is an attorney and partner in the law firm of Clifton Budd & DeMaria. He joined the firm in 1979 subsequent to his employment with the National Labor Relations Board. He has handled matters for the Company relating to labor and employment law for over ten years and he has written and lectured on labor law. The Audit Committee is charged with making recommendations to the Board of Directors as to the selection of the Company's independent auditors, maintaining communications between the full Board and the independent auditors, reviewing the annual audit submitted by the auditors and determining the nature and extent of problems, if any, presented by such audit warranting consideration by the full Board. The Audit Committee is also utilized for a review of potential conflict-of-interest situations in reviews conducted by the Company of related party transactions, if any. The members of the Audit Committee during the fiscal year ended June 30, 1997 were Messrs. Arnold J. Frankel, Stephen M. Goldstein and Robert A. Wiesen. The Audit Committee held one meeting during the past fiscal year at which Messrs. Goldstein and Wiesen were present. The Board of Directors does not have a nominating committee. The Executive Committee of the Board of Directors, whose members are Messrs. Arnold J. Frankel, Samuel I. Hendler, Robert E. Parsont and Leonard S. Schwartz, functions as the Executive Compensation Committee. During the fiscal year ended June 30, 1997 there were four meetings of the Board of Directors. All directors attended at least 75% of the meetings. EXECUTIVE COMPENSATION Summary Compensation Table The following table sets forth certain information regarding compensation paid or accrued during each of the Company's last three fiscal years to the Company's Chief Executive Officer and each of the Company's four other most highly compensated executive officers. Annual Compensation Long Term Compensation Other Annual Restricted All Other Name and Compen- Stock Options/ LTIP Compen- Principal Year Salary Bonus sation Awards SARs Payouts sation(1) Position Anthony 1997 $216,962 $149,387 $3,699 - - - $32,535 Baldi 1996 204,624 185,000 3,519 - 20,000 - 33,669 President,1995 193,042 235,000 2,213 - - - 35,329 Aceto Agricultural Chemicals Corp. Thomas Brunner 1997 204,084 182,789 2,511 - - - 33,635 Senior 1996 192,532 186,848 2,280 - 20,000 - 33,157 Vice 1995 181,634 218,740 2,512 - - - 34,206 President Arnold J. Frankel 1997 353,641 350,000 2,814 - - - 49,369 Chairman 1996 345,288 267,000 4,185 - - - 45,201 and Chief 1995 325,743 325,000 3,716 - - - 46,724 Executive Officer Donald Horowitz 1997 185,807 120,000 2,147 - - - 28,995 Secretary 1996 173,885 105,000 1,924 - 15,000 - 25,315 Treasurer 1995 153,977 100,523 1,993 - - - 25,150 and Chief Financial Officer Leonard S. Schwartz 1997 224,231 300,000 5,345 - 135,000 - 40,399 President 1996 179,547 250,000 6,954 - 25,000 - 35,665 and Chief 1995 169,384 203,670 6,915 - - - 33,157 Operating Officer (1) Represents contributions to the Company's qualified and non-qualified retirement plans. Option Grants In Last Fiscal Year The following table contains information regarding the grant of stock options in the fiscal year ended June 30, 1997 to the named executives. All grants were made in the form of non-qualified stock options. Options Granted in Last Fiscal Year Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation Individual Grants for Option Term Number of Securities % of Total Exercise Underlying Options Granted or Base Options To Employees Price Expiration Name Granted in Fiscal Year ($/Sh) Date 5% (1) 10%(1) Anthony Baldi None Thomas Brunner None Arnold J. Frankel None Donald Horowitz None Leonard S. Schwartz 15,000 $13.50 6/30/07 $127,351 $322,733 15,000 13.50 12/31/07 136,917 353,196 15,000 13.50 12/31/08 153,888 408,766 15,000 13.50 12/31/09 171,707 469,893 15,000 13.50 12/31/10 190,417 537,132 20,000 13.50 12/31/11 280,084 814,793 20,000 13.50 12/31/12 307,589 923,273 20,000 90.1% 13.50 12/31/13 336,468 1,042,600 (1) The dollar amounts illustrate value that might be realized upon exercise of the options immediately prior to the expiration of their term, covering the specific compounded rates of appreciation set by the Securities and Exchange Commission (5% and 10%) and are not, therefore, intended to be forecasts by Aceto of possible future appreciation of the stock price of Aceto. Stock Option Exercises in Fiscal 1997 and Value at June 30, 1997 The following table summarizes information with respect to options held by the Chief Executive Officer and the executive officers named in the Summary Compensation Table, and the value of the options held by such persons at the end of fiscal year 1997. The Chief Executive Officer during fiscal 1997, Arnold J. Frankel, does not participate in the Company's stock option plan. Value of No. of Unexercised Unexercised In-the-money Options at Options at June 30, 1997 June 30, 1997(1) Shares Acquired Value Exercisable/ Exercisable/ Name on Exercise Realized Unexercisable Unexercisable Anthony Baldi 8,712 $ 54,708 10,904/ $ 44,748/ 12,000 33,960 Thomas Brunner - - 16,712/ 88,964/ 12,000 33,960 Arnold J. Frankel - - - - Donald Horowitz - - 11,808/ 61,196/ 9,000 25,470 Leonard S. Schwartz - - 29,356/ 76,462/ 135,000 162,450 (l) Value of unexercised in-the-money options is based on the common stock closing bid price on June 30, 1997 of $14.50. On June 9, 1992, the Company's Board of Directors adopted resolutions amending the Company's Stock Option Plan ("the Plan"), in the following respects: the Plan is to be administered by a committee consisting of not less than three directors, all of whom shall be "disinterested persons"; a committee member shall be a "disinterested person" only if such person is not, at the time he exercises discretion in administering the Plan, eligible, and has not at any time within one year prior thereto been eligible, for selection as a person as to whom options may be granted; and no option may be granted to any director as to whom the proxy statement for the meeting of stockholders at which the plan was submitted for approval of the stockholders of the Company disclosed that such director will not participate in the Plan. On December 5, 1996, a committee consisting of Arnold J. Frankel, Stephen M. Goldstein and Samuel I. Hendler (Mr. Arnold J. Frankel to be chairman of said committee) was appointed by the Board of Directors to administer the Plan. all of said directors were disinterested persons as defined by the Plan. On September 4, 1997, the Company's Board of Directors adopted an amendment to the Plan; increasing by 250,000 the number of shares of the Company's common stock with respect to which stock options may be granted; extending the termination date of the Plan to September 19, 2005; and providing that transactions under the Plan be approved by the Board of Directors or a committee of the Board of Directors that is comprised solely of two or more non- employee directors. The increase in the number of shares with respect to which stock options may be granted and the extension of the termination date is subject to ratification by stockholders at this meeting. (See, PROPOSAL TO RATIFY AMENDMENT OF STOCK OPTION PLAN). REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE The Executive Committee of the Board of Directors, whose members are Leonard S. Schwartz, Arnold J. Frankel, Robert E. Parsont, and Samuel I. Hendler, functions as the Executive Compensation Committee, and makes recommendations to the Board with respect to the remuneration of the Company's executive officers. The Company's compensation policy has been designed to enable the Company to attract, retain and motivate executives whose enthusiasm and abilities will contribute to the growth of its business and result in maximum profitability to the Company and its stockholders, by providing salaries and benefits competitive with those offered by other companies in the chemical industry. The executive compensation program includes base salary, annual incentive compensation (cash bonuses), and long term incentive compensation (stock options). Base salaries are set at levels competitive with the chemical industry. Because of the way that the Company operates its business, the contributions of its executives significantly affect corporate profitability. Bonuses (which can exceed base salary) are paid to reflect the extent of such contributions. The Chief Executive Officer (CEO) also is the President and Chief Operating Officer (COO) of the Company. The bonuses paid to the CEO and to the Secretary/Treasurer, who is the Chief Financial Officer (CFO), reflect the Company's overall performance (excluding extraordinary events such as a plant shut-down). The three highest paid executives, other than the CEO and CFO, are each responsible for the performance of one of the Company's principal profit centers. Internally generated performance records are kept on a monthly and yearly basis for these profit centers, and each center's profitability is compared in the current year to the previous year. Other factors considered in determining the bonuses of individual executives are the individual's own performance and the overall performance of the Company. The Executive Compensation Committee determines each bonus primarily based on this data, also taking into account the long term contributions of each individual. The Company's Stock Option Plan is administered by the Board or a committee comprised solely of two or more non-employee directors. Grants of stock options, which vary according to annual and longer term performance ratings, are made to senior and middle management executives. CHIEF EXECUTIVE OFFICER'S COMPENSATION The CEO's compensation was determined not only on the basis of the same factors utilized to compensate other executives, but also on the basis of the additional duties and responsibilities assumed by him. Mr. Schwartz had been an executive of the Company responsible for the performance of one of its principal profit centers prior to his becoming President and COO on July 1, 1996. In addition to serving in such capacities, as of July 1, 1997, he was appointed Chairman of the Board and CEO. Messrs. Frankel, Parsont and Hendler took into account the compensation which in their opinion the Company would have offered had it recruited outside of the Company a person with his experience, skills and talents to be Chairman, CEO and COO of the Company. (Mr. Schwartz removed himself from participation in the decision of the Executive Compensation Committee regarding his compensation, although he did express to the Committee his requests and views in the matter). The Executive Compensation Committee Arnold J. Frankel, Chairman Samuel I. Hendler Robert E. Parsont Leonard S. Schwartz Director Compensation Each non-employee director receives $7,500 per year for serving on the Board of Directors plus $500 for each committee meeting attended. There is no additional compensation for directors who are also employees. Employment Agreements There are no employment contracts with any director, nominee for election as director, or officer; however, Messrs. Amitrano, Baldi, Brunner and Schwartz have signed patent and trade secret agreements. STOCK PERFORMANCE GRAPH Shown below is a line graph comparing the yearly percentage change in the cumulative total shareholder return on the Company's common stock against the cumulative total return of the S & P 500 Index and the Dow Jones Chemicals Index for the period of five years commencing July 1, 1992 and ending June 30, 1997. Comparison of Five Year Cumulative Return* Among Aceto Corporation, The S & P 500 Index and the Dow Joines Chemicals Index. * $100 invested on 06/30/92 in stock or index including reinvestment of dividends. Fiscal year ending June 30. Cumulative Total Return 6/92 6/93 6/94 6/95 6/96 6/97 Aceto Corp. 100 104 117 116 140 133 S & P 500 100 114 115 145 183 247 DJ Chemicals 100 104 123 151 181 242 CERTAIN TRANSACTIONS Samuel I. Hendler, a director of the Company, serves as general counsel to the Company. Robert A. Wiesen, a director of the Company, is a partner in the law firm of Clifton Budd & DeMaria, which serves as labor and employment law counsel of the Company. Robert E. Parsont, a director of the Company, retired from his position as President and Chief Operating Officer of the Company effective June 30, 1996. The Board of Directors authorized his being retained as a consultant for a period of eighteen months, which was recently extended for another twelve months, to December 31, 1998. He will be paid $128,400 for consulting services during the current fiscal year. Arnold J. Frankel, a director of the Company, retired from his position as Chairman of the Board and Chief Executive Officer effective June 30, 1997. The Board of Directors authorized his being retained as a consultant for a period of eighteen months. He will be paid $128,400 for consulting services during the current fiscal year. PROPOSAL TO RATIFY AMENDMENT OF STOCK OPTION PLAN Stockholders will be asked to consider and ratify an amendment of the Aceto Corporation 1980 Stock Option Plan ("1980 Stock Option Plan"), which amendment was adopted by the Company's Board of Directors on September 4, 1997, subject to ratification by the stockholders at the Annual Meeting (as amended the 1980 Stock Option Plan is referred to herein as the "Amended Plan"). The Amended Plan increases by 250,000 the number of shares of the Company's common stock with respect to which stock options may be granted; extends the termination date to September 19, 2005 and provides that transactions under the Plan be approved by the Board of Directors or a committee of the Board of Directors that is comprised solely of two or more non- employee directors (the provision that transactions under the plan be approved by the Board of Directors or Committee of the Board of Directors that is comprised solely of two or more non-employee directors does not require ratification by stockholders). As of September 4, 1997 options to purchase 8,635 shares of common stock remained available for grant pursuant to the terms of the 1980 Stock Option Plan. The Board of Directors believes that the 1980 Stock Option Plan has contributed significantly to the success of the Company by enabling the Company to attract and retain upper management personnel of outstanding ability and that the amount of shares remaining for grant thereunder is inadequate for future requirements. If the stockholders do not ratify the increase in the number of shares with respect to which options may be granted or the extension of the termination date, such provisions shall be without further force and effect, no options additional to those authorized under the 1980 Stock Option Plan will be granted, and the 1980 Stock Option Plan as amended and restated in 1990 will remain in effect. If the Amendment to the Plan is ratified by stockholders, the voting power of the stockholders (as is the case with any stock option plan) may be diluted in the event that options granted under the Amended Plan are exercised. Summary of amended Plan The Amended Plan permits the issuance of options to purchase an aggregate of up to 650,000 shares of common stock (an increase of 250,000 over the 1980 Stock Option Plan, as amended in 1990). If the Amendment is ratified, options to purchase 258,635 shares of common stock would be available for grant pursuant to the terms thereof. The options may be issued on or prior to September 19, 2005 to officers and other key employees. A director, as such, shall not be considered an officer or employee for purposes of the Amended Plan, but a person otherwise eligible to participate in the plan is not disqualified because he is a director of the Company. No option however may be granted to any person who owns, at the time an option is granted to such person, more than 10% of the then outstanding shares of the Company's common stock. Administration of the Amended Plan The Company's Board of Directors (the "Board") is authorized to administer the Amended Plan. Transactions under the Amended Plan must be approved by the Board or a committee of the Board comprised solely of two or more non-employee directors, which transactions include the persons to whom options are granted, the exercise price of options granted, the period during which options will be exercisable, and the number of shares subject to each option. Securities Subject to Amended Plan The Amended Plan covers a maximum of 650,000 authorized shares of common stock, subject to adjustment in the event of changes in the outstanding common stock by reason of stock dividends, stock splits, stock distributions, recapitalizations or the like. Upon the termination or expiration of an unexercised option, in whole or in part, the number of shares subject to the unexercised option will become available again for allocation under the Amended Plan. The market value (bid price) of the Company's common stock as of September 4, 1997 was $18.00 per share. Description of Options The per share exercise price of any option may be greater than or less than the market value of the stock on the date the option is granted. Each option granted shall become exercisable at such time, or in installments at such times, as may be provided therein. To the extent that any installment of an option has become exercisable it may be exercised thereafter, in whole at any time or from time to time in part, until the option or that installment terminates. An option shall be exercisable by written notice of exercise, in the form prescribed by the Board, delivered to the Company, in such manner as the Board may designate. The notice shall specify the number of shares for which the option is being exercised (which number, if less than all of the shares then subject to exercise, shall not be less than such number as the Board may designate) and shall be accompanied by payment in full of the purchase price of such shares. Upon any exercise of an option, the Company may, in the discretion of the Board, offer to lend to the person exercising the option all or any part of the purchase price of the shares to be purchased upon exercise of the option, the loan to be on such terms (including the rate of interest, the repayment schedule and the security, if any) as the Board may determine. Upon any exercise of an option, the Company may, in the discretion of the Board, permit the person exercising the option to make all or any portion of such payment in kind by the delivery of shares of the Company's common stock having a fair market value, on the date of delivery, equal to the portion of the option price so paid. Each option, to the extent it has not theretofore been exercised, shall terminate upon the termination of the optionee's employment for any reason, except that if the optionee's employment ceases by reason of his death, his option may be exercised (by the person or persons to whom his rights under the option pass by his will or by the laws of descent and distribution) at any time within 90 days after his death for the lesser of (i) that number of shares which the optionee was entitled to purchase at the time of his death or (ii) that number of shares for which the option would have been exercisable on the date of exercise had the optionee's employment not been terminated. Options are not transferable except upon the death of the optionee. Duration and Modification of Amended Plan The Amended Plan will terminate not later than September 19, 2005. The Board may at any time suspend or terminate the Amended Plan and may amend it from time to time in such respects as the Board may deem advisable in order to conform to any change in the law, or in any other respect which the Board may deem to be in the best interest of the Company; provided,however, that without the approval of the stockholders of the Company no such amendment shall (a) except for adjustments upon changes in stock set forth in the following paragraph, increase the maximum number of shares for which options may be granted under the Amended Plan, or (b) change the provisions thereof relating to eligibility. Adjustments Upon Changes in Stock Each option shall contain such provisions as the Board may determine to be appropriate for the adjustment of the kind and number of shares subject to the option, or the option price, or both, in the event of any changes in the outstanding common stock of the Company by reason of stock dividends, stock splits, stock distributions, recapitalizations, reorganization, mergers, consolidations, sales or exchanges of assets, combinations or exchange of shares, or the like. In the event of any such change in the outstanding common stock, the kind and aggregate number of shares of stock subject to the Amended Plan shall be adjusted if and to the extent determined appropriate by the Board, whose determination shall be conclusive. Federal Income Tax Consequences of Issuance and Exercise of Options The following discussion of the Federal income tax consequences of granting and exercise of options under the Amended Plan, and the sale of common stock acquired as a result thereof, is based on an analysis of the Code, as currently in effect, existing laws, judicial decisions and administrative rulings and regulations, all of which are subject to change. Each optionee must consult his or her personal tax advisor to determine the taxes applicable to the issuance, exercise and sale of options. No income will be recognized by an optionee at the time a stock option under the Amended Plan is granted. Ordinary income will be recognized by an optionee at the time an option is exercised, and the amount of such income will be equal to the excess of the fair market value on the exercise date of the shares issued to the optionee over the option price. This ordinary income will also constitute wages subject to the withholding of the income tax and the Company will be required to be withheld is available for withholding, in cash. An optionee's holding period with respect to the shares acquired will begin on the date of the exercise of the stock options. The tax basis of the stock acquired upon the exercise of a stock option will be equal to the sum of (a) the exercise price of such stock option and (b) the amount included in income of the exercise of such option. Gain or loss on a subsequent sale or other disposition of the stock will be measured by the difference between the amount realized on the disposition and the tax basis of such shares. If an optionee is permitted to, and does, make the required payment of the option price by delivering shares of common stock the optionee generally will not recognize any gain as a result of such delivery, but the amount of gain, if any, which is not so recognized will be excluded from his or her basis in the new shares received. In such a case, an optionee's holding period in the shares received will be determined by reference to his or her holding period in the shares of common stock exchanged. The Company will be entitled to a deduction for Federal income tax purposes in the same amount as the amount included in income by the optionee with respect to his or her stock option, subject to the usual rules as to reasonableness of compensation and provided that suitable arrangements are made to collect and pay over applicable withholding tax from the optionee. The deduction will be allowed for the taxable year of the Company in which the exercise of the option occurs. Recommendation and Vote Required The Board of Directors believes that ratification of the amendment of the 1980 Stock Option Plan is in the best interests of the Company and all stockholders and recommends a vote FOR the ratification of the amendment. Ratification requires the affirmative vote of the holders of a majority of the outstanding shares of the voting stock. Proxies received in response to this solicitation will be voted FOR the ratification of the amendment of the 1980 Stock Option Plan unless otherwise specified in the proxy. SECTION 16 COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and persons who own more than 10% of the registered class of the Company's equity securities to file with the Securities and Exchange Commission (the "SEC"), initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on review of the copies of such reports furnished to the Company and representations that no other reports were required during the fiscal year, all Section 16(a) filing requirements applicable to its officers, directors and greater than 10% beneficial owners were complied with. RELATIONSHIP WITH THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS KPMG Peat Marwick LLP was the Company's principal accountant for the Company's most recent fiscal year ended June 30, 1997. Representatives of KPMG Peat Marwick LLP are expected to be present at the Stockholders' Meeting with an opportunity to make a statement, if they desire to do so. Such representatives are also expected to be available to respond to appropriate questions. The Company has not as yet selected its principal accountant for its current fiscal year since such selection is usually made by the Company's Board of Directors late in the fiscal year. At present, management has no reason to believe that there will be any change in its principal accountant for the current fiscal year. STOCKHOLDER PROPOSALS Any proposal which a stockholder intends to present at the 1998 Annual Meeting of Stockholders must be duly received by the Company on or before June 12, 1998. OTHER MATTERS The Company's Annual Report to Stockholders for the year ended June 30, 1997 is being mailed to stockholders with this Proxy Statement. The cost of solicitation of proxies in the accompanying form will be borne by the Company, including expenses in connection with preparing and mailing this Proxy Statement. In addition to the use of mails, proxies may be solicited by personal interview, facsimile, telephone or telegram by directors, officers and employees of the Company. Arrangements may also be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of stock held of record by such persons, and the Company may reimburse them for reasonable out-of-pocket expenses incurred by them in connection therewith. The management does not know of any matters to be presented for consideration, other than the matters described in the Notice of Annual Meeting, but if other matters are presented, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their judgment. The Company will provide, without charge to each person whose proxy is solicited, on the written request of any such person, a copy of the Company's annual report on Form 10-K for its fiscal year ended June 30, 1997 required to be filed with the Securities and Exchange Commission, including the financial statements and the schedules thereto. Such written request should be directed to Mr. Donald Horowitz, Aceto Corporation, One Hollow Lane, Lake Success, New York 11042- 1215. Each such request must set forth a good faith representation that, as of September 19, 1997 the person making the request was a beneficial owner of securities entitled to vote at the annual meeting of stockholders. By Order of the Board of Directors, DONALD HOROWITZ Secretary October 24, 1997 STATEMENT PURSANT TO SECTION 726 (d) OF Addendum THE NEW YORK BUSINESS CORPORATION LAW RELATING TO DIRECTOR AND OFFICER INDEMNIFICATION The following information pertains to directors and officers liability indemnity insurance purchased by the Company: Insurance Carrier: Great American Insurance Company Date of Contract: March 10, 1997 Expiration Date: March 10, 1998 Cost of Insurance: $44,000 Corporate Positions Insured: Directors and Officers EXHIBIT A ACETO CORPORATION STOCK OPTION PLAN (as Amended and Restated effective as of September 4, 1997) 1. Purpose The Aceto Corporation Stock Option Plan (the "Plan") is intended to give to officers and other key employees of Aceto Corporation (the "Company") an increased incentive to promote the success of the Company by affording them an opportunity to purchase stock in the Company pursuant to stock options. 2. Number of Shares Options may be granted by the Company from time to time under the Plan to one or more persons falling within the class of employees specified in Paragraph 4 hereof to purchase an aggregate of 650,000 shares of the Company's common stock, $.01 par value, subject to adjustment as provided in paragraph 8. The shares available for options to be granted under the Plan may consist either in whole or in part of shares of the Company's authorized but unissued common stock or shares of the Company's authorized and issued common stock reacquired by the Company and held in its treasury, as may from time to time be determined by the Board of Directors (the "Board"). If any option granted under the plan expires or terminates for any reason, in whole or in part, without having been exercised, the number of shares subject to that option or part shall be available for further options pursuant to the Plan. 3. Administration The Plan shall be administered by the Board, or a committee appointed by the Board that is comprised solely of two or more non-employee directors, which shall have full authority, subject to the provisions of the Plan, (i) to determine, in its discretion, the individuals to whom, and the times at which, options shall be granted, the number of shares covered by each option, the option price, and the other terms and provisions of the respective option agreements (which need not be identical), including provisions concerning the time or times when, and the extent to which, the options may be exercised, (ii) to adopt rules and regulations relating to the Plan, (iii) to interpret the Plan and the option agreements, and (iv) to make all other determinations and to take all other action necessary or advisable for the administration of the Plan. All such determination and actions shall be final and conclusive for all purposes and upon all persons. 4. Eligibility Officers and other key employees of the Company or any subsidiary of the Company shall be eligible to receive an option or options hereunder. A director, as such, shall not be considered an officer or employee for purposes of the Plan, but a person otherwise eligible to participate in the Plan shall not be disqualified because he is a director of the Company or any subsidiary. More than one option may be granted to any eligible person. No option may be granted to any person who owns, at the time an option is granted to him, more than 10% of the then outstanding shares of the Company's common stock. As used herein, the term "subsidiary" means any corporation of which stock possessing 50% or more of the total combined voting power of all classes of stock is owned directly by the Company or by any one of its subsidiaries (as defined in this sentence). 5. Option Price; Date of Option (a) The option price shall be determined by the Board, and may be greater than or less than the market value of the stock on the date the option is granted. (b) The date of the granting of an option under the Plan shall be the date on which such option shall be duly executed by or on behalf of the Company. 6. Exercise of Option (a) Each option granted under the Plan shall become exercisable at such time, or in installments at such times, as may be provided therein. To the extent that any installment of an option has become exercisable it may be exercised thereafter, in whole or at any time or from time to time in part, until the option or that installment terminates. An option may be exercised only during the continuance of the optionee's employment, except as provided in paragraph 7 with respect to termination of optionee's employment on his death. As used herein, the term "optionee's employment" shall mean the employment of the optionee by the Company or by a subsidiary. (b) An option shall be exercised by written notice of exercise in the form prescribed by the Board, delivered to the Company, in such manner as the Board may designate. The notice shall specify the number of shares for which the option is being exercised (which number, if less than all of the shares then subject to exercise, shall not be less than such number as the Board may designate) and shall be accompanied by payment in full of the purchase price of such shares. (c) Upon any exercise of an option, the Company may, in the discretion of the Board, offer to lend to the person exercising the option all or any part of the purchase price of the shares to be purchased upon exercise of the option, the loan to be on such terms (including the rate of interest, the repayment schedule and the security, if any) as the Board may determine. (d) Upon any exercise of an option, the Company may, in the discretion of the Board, permit the person exercising the option to make all or any portion of such payment in kind by the delivery of shares of the Common Stock having a fair market value, on the date of delivery, equal to the portion of the price so paid. (e) No shares shall be delivered upon exercise of any option until all laws, rules and regulations which the Board may deem applicable have been complied with. If a registration statement under the Securities Act of 1933 is not then in effect with respect to the shares issuable upon such exercise, the person exercising the option must give to the Company a written representation and undertaking, satisfactory in form and substance to the Board, that he is acquiring the shares for his own account for investment and not with a view to the distribution thereof; in such case the certificates for the shares shall bear an appropriate legend. (f) The person exercising an option shall not be considered a recordholder of the stock so purchased for any purchase until the date on which he is actually recorded as the holder of such stock upon the stock records of the Company. 7. Termination of Option Each option, to the extent is has not theretofore been exercised, shall terminate upon the termination of the optionee's employment for any reason, except that if the optionee's employment ceases by reason of his death, his option may be exercised (by the person or persons to whom his rights under the option pass by his will or by the laws of descent and distribution) at any time within 90 days after his death, for the lesser of (i) that number of shares which the optionee was entitled to purchase at the time of his death or (ii) that number of shares for which the option would have been exercisable on the date of exercise had the optionee's employment not terminated. An optionee's employment shall not be deemed to have ceased by reason of the transfer of his employment, without interruption of service, between or among the Company and any subsidiary of the Company. 8. Adjustments Upon Changes in Stock Each option agreement shall contain such provisions as the Board may determine to be appropriate for the adjustment of the kind and number of shares subject to the option, or the option price or both, in the event of any changes in the outstanding common stock of the Company by reason of stock dividends, stock splits, stock distributions, recapitilizations, reorganization, mergers, consolidations, sales or exchanges of assets, combinations or exchanges of shares, or the like. In the event of any such change in the outstanding common stock, the kind and aggregate number of shares of stock subject to the Plan shall be adjusted if and to the extent determined appropriate by the Board whose determination shall be conclusive. 9. Non-Transferability of Options Any option granted under the Plan may not be transferred and, during the lifetime of the employee to whom granted, may be exercised only by him. 10. No Right to Employment Nothing in the Plan or in any option granted pursuant to the Plan shall confer upon any officer or employee any right to continue in the employ of the Company or of any of its subsidiaries or shall interfere in any way with the right of the Company or any such subsidiary to terminate his employment with or without cause. 11. Amendment, Suspension, Expiration and Termination of Plan The Board may at any time suspend or terminate the Plan and may amend it from time to time in such respects as the Board may deem advisable in order to conform to any change in the law or in any other respect which the Board may deem to be in the best interests of the Company; provided, however, that without the approval of the stockholders of the Company no such amendment shall (a) except as specified in paragraph 8, increase the maximum number of shares for which options may be granted under the Plan, or (b) change the provisions of paragraph 4 relating to eligibility. The Plan shall terminate on September 19, 2005 or at any such earlier time as the Board may determine. Options may be granted under the Plan at any time and from time to time prior to its termination. Any option outstanding under the Plan at the time of the termination of the Plan shall remain in effect until such option shall have been exercised or shall have expired in accordance with its terms. 12. Stockholder Approval The Plan as Amended and Restated shall become effective upon its adoption by the Board but if the Amendment is not ratified by the stockholders of the Company within twelve months after its adoption by the Board the Plan and any options granted thereunder subsequent to September 4, 1997 shall become void. ACETO CORPORATION One Hollow Lane Lake Success, New York 11042-1215 ACETO CORPORATION Proxy Solicited on Behalf of the Board of Directors The undersigned hereby appoints Leonard S. Schwartz and Donald Horowitz, with the full power of substitution, proxies to vote at the annual meeting of stockholders of Aceto Corporation to be held on Thursday, December 4, 1997 at the Crowne Plaza LaGuardia, 104-04 Ditmars Boulevard, E. Elmhurst, New York, and at any adjournments of the meeting, according to the number of votes the undersigned might cast with all powers the undersigned would possess if personally present, as follows: (1) Election of Directors [ ]FOR nominees listed below [ ]WITHHOLD authority (except as marked to the to vote for ALL contrary below) nominees listed below Richard Amitrano, Anthony Baldi, Thomas Brunner, Arnold J. Frankel, Stephen M. Goldstein, Samuel I. Hendler, Donald Horowitz, Robert E. Parsont, Leonard S. Schwartz and Robert A. Wiesen To withhold authority to vote for any individual nominee(s), write name or names here: __________________________________________________________ (2) Proposal to ratify amendment of the Company's 1980 Stock Option Plan. [ ]FOR [ ]AGAINST [ ]ABSTAIN (3) in their discretion with respect to such other business as may properly come before the meeting or any adjournment thereof. PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE AND MAIL IT IN THE ENCLOSED ENVELOPE. NO POSTAGE REQUIRED IF MAILED IN THE UNITED STATES. The shares represented by this proxy will be voted in accordance with the instructions given, but if no instructions are given, the shares will be voted FOR the election of directors as a group, and FOR the proposal to ratify amendment to the Company's 1980 Stock Option Plan. Either of the proxies or their substitutes who are present at the meeting may exercise all powers conferred thereby. Dated: 1997 (Signature of Stockholder) NOTE: Please sign exactly as your name appears on this proxy. If shares are held jointly, each joint owner should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. Proxies executed by a corporation should be signed with the full corporate name by a duly authorized officer. -----END PRIVACY-ENHANCED MESSAGE-----