SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
AMERICAN PACIFIC CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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Notes:
AMERICAN PACIFIC CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held March 13, 2001
Notice is hereby given that the Annual Meeting of the Stockholders of
American Pacific Corporation (the "Company") will be held at the Las Vegas
Country Club, Banquet Room, located at 3000 Joe W. Brown Drive, Las Vegas,
Nevada, on March 13, 2001, at 10:30 a.m. local time, for the following purposes:
1. To elect three Class C Directors to hold office until the 2003 Annual
Meeting of Stockholders and thereafter until their successors are duly
elected and qualified; and
2. To elect three Class A Directors to hold office until the 2004 Annual
Meeting of Stockholders and thereafter until their successors are duly
elected and qualified; and
3. To approve the adoption of the Company's 2001 Stock Option Plan; and
4. To transact such other business as may properly come before the
meeting and any adjournment(s) or postponement(s) thereof.
Reference is made to the accompanying Proxy Statement for more complete
information concerning the foregoing matters. The Board of Directors has fixed
the close of business on Friday, February 2, 2001, as the date as of which the
stockholders who are entitled to notice of, and to vote at, said meeting and any
adjournment(s) or postponement(s) thereof, are to be identified. Only persons
who were stockholders of record as of the close of business on February 2, 2001
are entitled to notice of and to vote at the meeting and any adjournment(s) or
postponement(s) thereof.
All stockholders of the Company are cordially invited to attend the meeting
in person. However, to assure that each stockholder's vote is counted at the
meeting, stockholders are requested to mark, sign, date and return the enclosed
proxy as promptly as possible in the envelope provided. Stockholders who attend
the Annual Meeting may vote in person at the Annual Meeting even if they have
previously returned a proxy. If you receive more than one proxy because your
shares are registered in different names or at different addresses, please sign
and return each such proxy so that all of your shares may be represented at the
Annual Meeting.
By Order of the Board of Directors
David N. Keys, Secretary
February 5, 2001
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
of
AMERICAN PACIFIC CORPORATION
3770 Howard Hughes Parkway, Suite 300
Las Vegas, Nevada 89109
(702) 735-2200
The enclosed proxy is solicited on behalf of the Board of Directors of
American Pacific Corporation, a Delaware Corporation (the "Company"), for use at
the Company's Annual Meeting of Stockholders (the "Annual Meeting") to be held
on Tuesday, March 13, 2001, at 10:30 a.m., local time, or at any adjournment(s)
or postponement(s) thereof. The Annual Meeting will be held at the Las Vegas
Country Club, Banquet Room, located at 3000 Joe W. Brown Drive, Las Vegas,
Nevada. This Proxy Statement was first mailed to Stockholders of the Company on
or about February 5, 2001, accompanied by the Company's Annual Report to
Stockholders for the fiscal year ended September 30, 2000.
At the Annual Meeting, the following matters will be considered and voted
on:
1. Election of three Class C Directors to hold office until the 2003
Annual Meeting of Stockholders and thereafter until their successors
shall have been duly elected and qualified; and
2. Election of three Class A Directors to hold office until the 2004
Annual Meeting of Stockholders and thereafter until their successors
shall have been duly elected and qualified; and
3. Approval of the adoption of the Company's 2001 Stock Option Plan (the
"2001 Plan"); and
4. Such other business as may properly come before the Annual Meeting and
any adjournment(s) or postponement(s) thereof.
The Board of Directors recommends that stockholders vote FOR election of the
directors proposed in Items No. 1 and 2 below and FOR approval of the adoption
of the 2001 Plan proposed in Item No. 3 below. Officers and Directors of the
Company, collectively owning, directly or indirectly, 830,304 shares, or
approximately 11.7 percent, of the Company's $.10 par value common stock (the
"Common Stock") as of February 2, 2001 (the "Record Date"), have indicated that
they intend to vote in favor of election of the directors proposed in Items No.
1 and 2 below and for approval of the adoption of the 2001 Plan proposed in Item
No. 3 below. The Company's principal executive offices are located at 3770
Howard Hughes Parkway, Suite 300, Las Vegas, Nevada 89109, and its telephone
number at that address is (702) 735-2200.
QUORUM AND VOTING RIGHTS
Stockholders of record as of the close of business on the Record Date are
entitled to notice of and to vote at the Annual Meeting. On February 2, 2001,
7,080,955 shares of Common Stock were issued and outstanding. The holder of
each share is entitled to cast one vote on all matters. The presence, in person
or by proxy, of the holders of a majority of the outstanding Common Stock
entitled to vote at the Annual Meeting is necessary to constitute a quorum at
the Annual Meeting.
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SOLICITATION OF PROXIES
The solicitation of Proxies pursuant to this Proxy Statement will be made
primarily by mail. In addition, officers, employees and other representatives
of the Company and its subsidiary corporations, without compensation, may
solicit proxies by telephone, telegraph, facsimile transmission, mail or
personal interview. Arrangements will also be made with banks, brokerage firms
and others to forward solicitation materials to the beneficial owners of shares
held of record by them. The total cost of the solicitation process, including
the reimbursement of the expenses of brokers and nominees, will be borne by the
Company.
VOTING AND REVOCATION OF PROXIES; ADJOURNMENT
Shares represented by valid proxies received by the Company will be voted
in accordance with the specifications made therein by the stockholder. Any
valid proxy that does not specify otherwise will (unless the proxy is validly
revoked) be voted "for" election of the directors proposed in Items No. 1 and 2,
"for" approval of the adoption of the 2001 Plan proposed in Item No. 3 and, in
the discretion of the proxy holders, on such other matters as may properly come
before the Annual Meeting. The election of directors requires the affirmative
vote of 80% of the shares of Common Stock present and voting at the Annual
Meeting. According to the Certificate of Incorporation and Bylaws of the
Company, in the event that nominees of a Class (or Classes) of Directors
standing for election do not receive the affirmative vote of 80% of such shares
present and voting, the incumbent Directors will remain in office until the next
annual meeting, at which time such Class (or Classes) and the next Class (i.e.,
Class B in 2002) will stand for election. In accordance with the Certificate of
Incorporation and Bylaws, the Class C Directors are standing for election at
this time because they received more than 74% but less than 80% of the votes
cast in last year's election. The affirmative vote of a majority of the shares
of Common Stock present and voting at the Annual Meeting will be required to
approve the adoption of the 2001 Plan and to take any other action presented to
the meeting. The Bylaws of the Company require that a quorum consisting of a
majority of the outstanding shares be present at the meeting, either in person
or by proxy, to conduct business.
The Board of Directors does not know of any matters to be considered at the
Annual Meeting other than the Proposals for election of Class C Directors and
Class A Directors and for approval of the adoption of the 2001 Plan described
herein. A stockholder may revoke any proxy given pursuant to this solicitation
by attending the Annual Meeting and voting in person, or by delivering to the
Secretary of the Company at the Company's principal executive offices identified
above prior to the Annual Meeting a written notice of revocation or a duly
executed proxy bearing a later date than that of the previous proxy. The mere
presence of a stockholder at the Annual Meeting will not revoke a proxy
previously given.
In the event that sufficient votes in favor of election of the directors
proposed in Items No. 1 and 2 and for approval of the adoption of the 2001 Plan
proposed in Item No. 3 are not received by the date of the Annual Meeting, the
persons named as proxies may propose one or more adjournments of the Annual
Meeting to permit further solicitation of proxies. Any such adjournments will
require the affirmative vote of the holders of a majority of the Common Stock
present in person or by proxy at the Annual Meeting, whether or not a quorum is
present. The persons named as proxies will vote in favor of any such proposed
adjournments.
Votes cast by proxy or in person at the Annual Meeting will be counted by
the persons appointed by the Company to act as election inspectors for the
meeting. The election inspectors will treat shares represented by proxies that
"withhold authority to vote" as shares that are present and entitled to vote for
purposes of determining the presence of a quorum and the election of directors.
Pursuant to Delaware law, shares voted by brokers as to discretionary matters
only and shares abstaining will be counted as present for the purpose of
determining whether there is a quorum. With respect to the proposal to approve
the adoption of the 2001 Plan, abstentions and shares with respect to which a
registered holder has physically indicated on the proxy that the registered
holder does not have discretionary authority to vote on the matter ("broker non-
votes") will be treated as not present and voting with respect to that matter
and, accordingly, will have no effect on the result. However, according to New
York Stock Exchange rules, brokers will have discretionary authority to vote
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"for" approval of the adoption of the 2001 Plan in the event voting instructions
are not received from their beneficial holders.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth information as of the most recent
practicable date as to those persons known to the Company to own beneficially
five percent or more of the outstanding Common Stock of the Company.
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Name and Address Amount and Nature % of Class
Title of Class of Beneficial Owner of Beneficial Ownership/(1)/ Outstanding
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Common Stock Public School Employees' Retirement 1,875,000/(2)/ 20.9%
System of the Commonwealth of Pennsylvania
Five North 5th Street
Harrisburg, PA 17101
Common Stock Artisan Partners Limited Partnership 1,235,000/(3)/ 17.4%
1000 North Water Street, #1770
Milwaukee, WI 53202
Common Stock State Street Research & Management Co. 748,990/(4)/ 10.6%
One Financial Center
Boston, MA 00211-2690
Common Stock Franklin Advisory Services, Inc. 657,000/(5)/ 9.3%
One Parker Plaza, 16/th/ Floor
Fort Lee, NJ 07024
Common Stock Wachovia Bank, N.A. 542,500/(6)/ 7.7%
100 N. Main Street, MC-37121
Winston Salem, NC 27150
Common Stock Dimensional Fund Advisors, Inc. 537,500/(7)/ 7.6%
1099 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Common Stock Fred D. Gibson, Jr. 439,012/(8)/ 6.1%
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(1) Except as otherwise indicated, each stockholder in the table exercises sole
voting and investment power with respect to the Company's Common Stock
indicated as beneficially owned by such stockholder.
(2) This figure represents the number of shares that can be acquired upon the
exercise of a warrant that was issued to the Public School Employees'
Retirement System of the Commonwealth of Pennsylvania on February 21, 1992.
The exercise price of the warrant is $14.00 per share.
(3) Information with respect to this stockholder was obtained from a Form 13F-
HR filed with the Securities and Exchange Commission on November 13, 2000.
(4) Information with respect to this stockholder was obtained from a Form 13F-
HR filed with the Securities and Exchange Commission on November 13, 2000.
(5) Information with respect to this stockholder was obtained from a Form 13F-
HR filed with the Securities and Exchange Commission on November 13, 2000.
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(6) Information with respect to this stockholder was obtained from a Form 13F-
HR filed with the Securities and Exchange Commission on November 8, 2000.
(7) The following information was obtained directly from the stockholder on
January 11, 2001. Dimensional Fund Advisors, Inc. ("Dimensional"), an
investment advisor registered under Section 203 of the Investment Advisors
Act of 1940, furnishes investment advice to four investment companies
registered under the investment Company Act of 1940, and serves as
investment manager to certain other investment vehicles, including
commingled group trusts. (These investment companies and investment
vehicles are the "Portfolios"). In its role as investment advisor and
investment manager, Dimensional possessed both voting and investment power
over 537,500 shares of American Pacific Corporation Common Stock as of
December 31, 2000. The Portfolios own all such securities, and Dimensional
disclaims beneficial ownership of such securities.
(8) Includes 64,500 shares of Common Stock subject to options granted to Mr.
Gibson pursuant to the Company's employee stock option plans, which options
are exercisable within 60 days after February 2, 2001.
ITEM NO. 1 - ELECTION OF CLASS C DIRECTORS
On November 7, 2000, the Board of Directors nominated the following
persons, all of whom are presently Directors, for re-election to serve in the
class and for the term indicated below, and until their respective successors
have been elected and qualify:
To Serve Until
Name Class of Director Annual Meeting in
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Berlyn D. Miller C 2003
Victor M. Rosenzweig C 2003
Fred D. Gibson, Jr. C 2003
ITEM NO. 2 - ELECTION OF CLASS A DIRECTORS
On November 7, 2000, the Board of Directors nominated the following
persons, all of whom are presently Directors, for re-election to serve in the
class and for the term indicated below, and until their respective successors
have been elected and qualify:
To Serve Until
Name Class of Director Annual Meeting in
---- ----------------- ------------------
Dean M. Willard A 2004
John R. Gibson A 2004
David N. Keys A 2004
The Company's Certificate of Incorporation provides that the Company's
Board of Directors shall be comprised of not less than three nor more than
twelve Directors and shall be divided into three classes. Such classes are to
be as nearly equal in number as possible and the number of Directors comprising
the whole
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Board and comprising each class is to be determined by the Board of Directors.
Pursuant to the Company's mandatory retirement policy for Directors, two of the
Company's incumbent Class A Directors will retire from the Board and not stand
for re-election at the expiration of their terms in March 2001. On November 7,
2000, the Board of Directors determined that, effective upon such retirement,
the number of Directors comprising the whole Board shall be reduced to ten
Directors and that the Board shall consist of three Class A Directors, four
Class B Directors, and three Class C Directors.
The Board of Directors recommends that the stockholders vote "for" each and
all of the above-named nominees. It is intended that the persons named in the
accompanying proxy will vote for the election of those persons, unless the
stockholder giving the proxy withholds authority to vote for one or more of
them. The Board of Directors believes that each of the nominees will be
available and able to serve as a Director, but if for any reason any of them is
not, the persons named as proxy may exercise discretionary authority to vote for
a substitute nominee (or substitute nominees) proposed by the Board of
Directors. However, the Board of Directors does not intend to make any such
substitution. Proxies cannot be voted for a number of persons greater than the
number of Class C and Class A nominees named herein.
Information concerning the Directors of the Company, including the
nominees, is set forth below. The table below indicates the number of shares of
Common Stock beneficially owned by each Director, or that such Director has the
right to vote or the right to acquire within 60 days after February 2, 2001, and
by all of the Directors and executive officers of the Company as a group, as of
February 2, 2001.
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Stock Ownership
Director Amount and Nature of Percent
Name Age Since Title of Class Beneficial Ownership /(1)/ of Class
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NOMINEES FOR ELECTION
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Class C Directors (term of office expired in 2000)
Berlyn D. Miller 62 1993 Common Stock 18,155/(2)/ /(8)/
Victor M. Rosenzweig 62 1988 Common Stock 15,400/(2)/ /(8)/
Fred D. Gibson, Jr. 73 1982 Common Stock 439,012/(3)/ 6.1%
Class A Directors (term of office expires in 2001)
Dean M. Willard 53 1997 Common Stock 354,000/(4)(5)/ 4.9%
John R. Gibson 63 1988 Common Stock 221,473/(6)/ 3.0%
David N. Keys 44 1997 Common Stock 180,166/(7)/ 2.5%
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CONTINUING MEMBERS OF THE BOARD
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Class B Directors (term of office expires in 2002)
Jan H. Loeb 42 1997 Common Stock 19,000/(4)/ /(8)/
Norval F. Pohl 57 1986 Common Stock 16,500/(2)/ /(8)/
C. Keith Rooker 63 1988 Common Stock 29,011/(2)/ /(8)/
Jane L. Williams 62 1993 Common Stock 14,000/(2)/ /(8)/
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RETIRING MEMBERS OF THE BOARD
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Eugene A. Cafiero 74 1997 Common Stock 19,000/(4)/ /(8)/
Thomas A. Turner 75 1986 Common Stock 39,133/(2)/ /(8)/
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All Directors and executive officers
as a group (15 persons) Common Stock 1,494,304/(9)/ 19.3%
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(1) Each Director and executive officer exercises sole voting and investment
power with respect to the Common Stock indicated as beneficially owned by
him.
(2) Includes, with respect to each such Director, 14,000 shares of Common Stock
subject to options, which options are exercisable within 60 days after
February 2, 2001.
(3) Includes, with respect to Mr. Fred D. Gibson, Jr., 64,500 shares of Common
Stock subject to options, which options are exercisable within 60 days
after February 2, 2001.
(4) Includes, with respect to each such Director, 19,000 shares of Common Stock
subject to options, which options are exercisable within 60 days after
February 2, 2001.
(5) Mr. Willard disclaims beneficial ownership of 4,000 shares of Common Stock
which he holds for the benefit of family members except to the extent of
his pecuniary interest therein.
(6) Includes, with respect to Mr. John R. Gibson, 185,000 shares subject to
options, which options are exercisable within 60 days after February 2,
2001.
(7) Includes, with respect to Mr. Keys, 154,000 shares of Common Stock subject
to options, which options are exercisable within 60 days after February 2,
2001.
(8) Less than 1%.
(9) Includes, with respect to all Directors and executive officers as a group,
an aggregate of 664,000 shares of Common Stock subject to options, which
options are exercisable by such persons within 60 days after February 2,
2001.
THE DIRECTORS
Eugene A. Cafiero was elected a Director of the Company in January 1997.
Mr. Cafiero will be retiring from the Board in March 2001 upon the expiration of
his current term. Mr. Cafiero is currently a principal of Steep Rock Associates
LLP, a management consulting firm. From October 1986 until December 1993, Mr.
Cafiero was Chairman, Chief Executive Officer and President of KD Holdings,
Inc., a diversified manufacturing company specializing in electronics. Mr.
Cafiero was previously Chief Executive Officer of Ariadne Australia, Ltd., a
holding company with a diversified investment portfolio; President and Chief
Executive Officer of Mid-American Communications, a long distance telephone
company; and President and Chief Operating Officer, and Vice Chairman of
Chrysler Corporation. Mr. Cafiero also served as a member of the National
Highway Traffic Safety Board during the Nixon Administration.
Fred D. Gibson, Jr. has been a Director of the Company since 1982. Mr.
Gibson served as Chief Executive Officer, Chairman of the Board and President of
the Company and Chairman and Chief Executive Officer of each of the Company's
subsidiaries, from 1985 to July 1997, and Chairman of the Board until March
1998. Mr. Gibson has been a Director of Nevada Power Company (now Sierra
Pacific Resources) and Cashman Equipment Company for more than five years. Mr.
Gibson currently is a private consultant and serves as a consultant to the
Company on an "as requested" basis. Mr. Gibson is the brother of John R.
Gibson.
John R. Gibson has been a Director of the Company since 1988, became Chief
Executive Officer and President of the Company in July 1997 and was appointed
Chairman of the Board in March 1998. Mr. Gibson has also served as the Chief
Executive Officer and President of each of the Company's subsidiary corporations
since July 1997. Mr. Gibson was the Company's Vice President-Engineering &
Operations from March 1992 to July 1997 and has been the President of American
Azide Corporation, a wholly-owned subsidiary of the Company, since 1993. Prior
to that time, Mr. Gibson was the Director of Modernization of USS-POSCO
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Industries, a fabricator of steel products, a position Mr. Gibson held for more
than five years. Mr. Gibson is the brother of Fred D. Gibson, Jr.
David N. Keys was elected a Director of the Company in July 1997. Mr. Keys
is the Company's Executive Vice President, Chief Financial Officer, Secretary
and Treasurer and has been employed by the Company since 1989. Prior to that
time, Mr. Keys, a CPA, CMA and CFM, was with Deloitte, Haskins & Sells (now
Deloitte & Touche LLP) for more than five years. Mr. Keys has been a Director
of ETI International, Inc., a direct marketing organization, since 1998. Mr.
Keys has been a Director of Amfed Financial, Inc., a financial institution (now
Wells Fargo Nevada), for more than five years. In 1999, Mr. Keys was appointed
to the West Coast Advisory Board of Directors of Factory Mutual Insurance
Company (FM Global).
Jan H. Loeb was elected a Director of the Company in January 1997. Mr.
Loeb is a Managing Director of Wasserstein Perella & Co., Inc., a New York-based
investment banking firm. He previously provided analyst coverage of American
Pacific Corporation to institutional investors and retail brokers. Mr. Loeb was
employed by Legg Mason Wood Walker, Inc. from 1991 to 1994, and operated his own
firm, Loeb Financial Services, from 1988 to 1991. In 1998 and 2000, the Company
engaged Wasserstein Perella & Co., Inc., to perform certain financial advisory
services.
Berlyn D. Miller was elected a Director of the Company in November 1993.
Mr. Miller was also a Director of Western Electrochemical Company, the Company's
former principal operating subsidiary, from 1989 until 1995. Mr. Miller was the
Chairman, President and Chief Executive Officer of ACME Electric of Las Vegas,
Nevada, a construction contractor, until 1997, a position he held for more than
five years. Mr. Miller is currently President of Berlyn Miller & Associates, a
Government relations and business consulting firm. He is also co-owner of Acme
Sand and Gravel Co., A-1 Rubber Stamp & Engraving, ASG Contracting and Southwest
Sign Systems.
Norval F. Pohl has been a Director of the Company since 1986. Dr. Pohl was
also a Director of Western Electrochemical Company from 1989 until 1995. In
October 2000, Dr. Pohl was appointed President of the University of North Texas,
where he served as Provost and Executive Vice President from January 1999
through October 2000. He was the Vice President of Finance and Administration
of the University of Nevada Las Vegas from 1994 to 1998, and also served as the
Dean of the College of Business and Economics from 1986 to 1998. Dr. Pohl is
also a Director of the Flagstaff Institute, in Flagstaff, Arizona.
C. Keith Rooker has been a Director of the Company since 1988. Mr. Rooker
was the Executive Vice President of the Company from 1988 to July 1997, and was
also a Vice President of the Company from 1985 to 1988 and the Company's
Secretary and General Counsel from 1985 to July 1997. Mr. Rooker is a Partner
in the Las Vegas, Nevada and Salt Lake City, Utah law firm of Rooker & Gibson.
The Company has retained this law firm in the past and during the current fiscal
year.
Victor M. Rosenzweig has been a Director of the Company since 1988. Mr.
Rosenzweig has been a Partner in the New York, New York law firm of Olshan
Grundman Frome Rosenzweig & Wolosky LLP for more than five years. The Company
has retained this law firm in the past and during the current fiscal year.
Thomas A. Turner has been a Director of the Company since 1986. Mr. Turner
will be retiring from the Board in March 2001 upon the expiration of his current
term. Before his retirement, Mr. Turner was an officer and director of JMA
Architects & Engineers, Inc., of Las Vegas, Nevada, for more than five years.
Dean M. Willard was elected a Director of the Company in January 1997. Mr.
Willard is an executive, business owner and investor. He is Chairman and Chief
Executive Officer of Permatex, Inc. and its parent company PBT Brands, Inc.
Permatex is a leading supplier of functional chemicals to the automotive
aftermarket. Mr. Willard is also Chairman and Chief Executive Officer of
Automotive Performance Group, a public company that holds an 18% interest in the
common stock of PBT Brands, Inc. Mr. Willard serves on the boards of Envision
Development Corporation, Interosa Corporation and Zero.net Corporation,
companies
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focused on internet infrastructure. These companies are related as Zero.net is a
direct investor of Envision Development and Interosa. Envision Development is
also an investor in Interosa. Mr. Willard also serves on the board of Boyds
Corporation a majority owned subsidiary of Automotive Performance Group.
Jane L. Williams was elected a Director of the Company in November 1993.
Ms. Williams was also a Director of Western Electrochemical Company from 1989
until 1995. Ms. Williams is the President, Chairman and Chief Executive Officer
of TechTrans International of Houston, Texas, a provider of technical language
support services, a position she has held since 1993. Before founding TechTrans
International, Ms. Williams was a consultant to businesses in the aerospace
industry for more than five years.
STANDING COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has established several standing
committees, namely, the Executive Committee, the Audit Committee, the Management
and Compensation Committee, the Pension Plan Committee, the Environmental
Oversight Committee, the Nominating Committee and the Strategic Planning
Committee. The membership and functions of these committees are described
below.
Executive Committee. The Executive Committee consists of John R. Gibson,
Chairman, Fred D. Gibson, Jr., Norval F. Pohl, Thomas A. Turner, and Berlyn D.
Miller. The Executive Committee is authorized to exercise the power and
authority of the Board of Directors with respect to the business of the Company
to the extent permitted by the General Corporation Law of the State of Delaware.
The Executive Committee operates on a standby basis when it is impractical for
the Board of Directors to meet or to act by consent in the absence of a meeting.
The Executive Committee held four meetings during the Company's fiscal year
ended September 30, 2000.
Audit Committee. The Audit Committee consists of Berlyn D. Miller,
Chairman, Norval F. Pohl, Victor M. Rosenzweig, Jan H. Loeb, Dean M. Willard and
Jane L. Williams. David N. Keys acts as an ex officio member. See below for
the Report of the Audit Committee for the fiscal year ended September 30, 2000.
The Audit Committee held five meetings during the Company's fiscal year ended
September 30, 2000.
Management and Compensation Committee. The Management and Compensation
Committee consists of Thomas A. Turner, Chairman, Norval F. Pohl, Berlyn D.
Miller, Jane L. Williams, Fred D. Gibson, Jr., Dean M. Willard and C. Keith
Rooker. John R. Gibson acts as an ex officio member. See below for the Report
of the Management and Compensation Committee for the fiscal year ended September
30, 2000. The Management and Compensation Committee held one meeting during the
Company's fiscal year ended September 30, 2000.
Environmental Oversight Committee. The Environmental Oversight Committee
consists of Jane L. Williams, Chairman, Thomas A. Turner, Jan H. Loeb, Eugene A.
Cafiero, Victor M. Rosenzweig and C. Keith Rooker. The Environmental Oversight
Committee oversees the Company's compliance with applicable environmental
standards, statutes and regulations. The Environmental Oversight Committee held
two meetings during the Company's fiscal year ended September 30, 2000.
Nominating Committee. The Nominating Committee consists of Norval F. Pohl,
Chairman, Eugene A. Cafiero, Fred D. Gibson, Jr., Berlyn D. Miller, and C. Keith
Rooker. The function of the Nominating Committee is to identify and propose
candidates to serve as Directors of the Company. Proposed nominees for
membership on the Board of Directors submitted in writing by stockholders to the
Secretary of the Company will be brought to the attention of the Nominating
Committee. The Nominating Committee held one meeting during the Company's
fiscal year ended September 30, 2000.
Special Committee. The Special Committee, consisting of Norval F. Pohl,
Chairman, Eugene A. Cafiero, Jan H. Loeb, Berlyn D. Miller, C. Keith Rooker,
Thomas A. Turner, Jane L. Williams and Dean M. Willard, considered a proposal to
purchase the Company by a financial buyer in combination with senior
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management of the Company. The Special Committee held six meetings during the
Company's fiscal year ended September 30, 2000 and one thereafter. Negotiations
with respect to the proposal were abandoned in October 2000.
Pension Plan Committee. The Pension Plan Committee consists of Victor M.
Rosenzweig, Chairman, John R. Gibson, Fred D. Gibson, Jr., Eugene A. Cafiero,
David N. Keys, Dean M. Willard and Jan H. Loeb. The Pension Plan Committee
administers the Company's defined benefit pension and employee stock ownership
plans and oversees the performance of the managers of pension plan assets. The
Pension Plan Committee held one meeting during the Company's fiscal year ended
September 30, 2000.
Strategic Planning Committee. The Strategic Planning Committee consists of
Eugene A. Cafiero, Chairman, Fred D. Gibson, Jr., Berlyn D. Miller, John R.
Gibson, David N. Keys, and Dean M. Willard. The Strategic Planning Committee
oversees the Company's overall strategic direction and the Company's business
plans. The Strategic Planning Committee held four meetings during the Company's
fiscal year ended September 30, 2000.
A total of eight regularly scheduled and special meetings of the Company's
Board of Directors was held during the Company's fiscal year ended September 30,
2000. Each Director attended at least 75 percent of the total of such meetings
and of the meetings of all committees of the Board of Directors on which such
Director served that were held during the period of time he or she was a
Director.
MANAGEMENT
Executive Officers
The persons who were serving as executive officers of the Company as of
September 30, 2000 are John R. Gibson, David N. Keys, James J. Peveler, James P.
Dyar and Linda G. Ferguson. All officers are elected annually by the Board of
Directors and serve at the pleasure of the Board of Directors, or until their
respective successors have been duly elected and qualify.
For certain information concerning John R. Gibson and David N. Keys, see
"The Directors," above.
James J. Peveler, age 64, is the Company's Vice President and General
Manager-Utah Operations. From 1989 to July 1997, Mr. Peveler was the President
of Western Electrochemical Company. Mr. Peveler is the beneficial owner of
27,308 shares (less than 1%) of the Company's Common Stock (including 24,000
shares subject to options that are exercisable within 60 days after February 2,
2001), with respect to all of which shares he exercises sole investment and
voting power.
James P. Dyar, age 41, is the Company's Vice President. Mr. Dyar is the
beneficial owner of 79,115 shares, or 1.1%, of the Company's Common Stock
(consisting of 79,000 shares subject to options that are exercisable within 60
days after February 2, 2001), with respect to all of which shares he exercises
sole investment and voting power.
Linda G. Ferguson, age 59, is the Company's Vice President-Administration,
and Assistant Secretary. Ms. Ferguson is the sister of Mr. John R. Gibson and
Mr. Fred D. Gibson, Jr. Ms. Ferguson is the beneficial owner of 23,031 shares
(less than 1%) of the Company's Common Stock (consisting of 16,500 shares
subject to options that are exercisable within 60 days after February 2, 2001),
with respect to all of which shares she exercises sole investment and voting
power.
-9-
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning the
compensation paid or accrued by the Company and its subsidiaries to or on behalf
of the Company's Chief Executive Officer and its four most highly compensated
executive officers other than the Chief Executive Officer (the "Named Executive
Officers").
- ---------------------------------------------------------------------------------------------------------------------
Long-Term
Compensation
Annual Compensation/(1)/ Awards
---------------------------------------------------------------------------
Name and Fiscal Other Annual Securities Underlying
Principal Position Year Salary ($) Bonus ($) Compensation ($) Options (#)
- ------------------ ------ ---------- --------- ---------------- -----------
John R. Gibson /(2)/ 2000 308,400 --- --- ---
Chairman of the Board, Chief 1999 286,067 --- --- 45,000
Executive Officer and President 1998 273,400 --- --- ---
David N. Keys 2000 258,400 --- --- ---
Executive Vice President, Chief 1999 236,067 --- --- 34,000
Financial Officer, Secretary and 1998 223,400 --- --- ---
Treasurer
James J. Peveler 2000 189,968 --- --- ---
Vice President and General 1999 181,199 --- --- 5,000
Manager - Utah Operations 1998 170,600 --- --- 5,000
James P. Dyar 2000 175,033 --- --- ---
Vice President 1999 169,650 --- --- 5,000
1998 164,175 --- --- 35,000
Linda G. Ferguson 2000 109,600 --- --- ---
Vice President - Administration, 1999 104,717 --- --- 5,000
Assistant Secretary 1998 101,871 --- --- 4,000
- ---------------------------------------------------------------------------------------------------------------------
(1) The Company provides automobiles for certain of its executive officers.
After reasonable inquiry, the Company has concluded that the aggregate
amount of such compensation for any Named Executive Officer does not
exceed the lesser of either $50,000 or 10 percent of the total of annual
salary and bonus reported for the Named Executive Officers.
(2) The cash compensation reported for Mr. John R. Gibson does not include
compensation paid to Mr. Gibson's sister, Ms. Ferguson or to Mr. Gibson's
son, Jeff Gibson, who is employed in an operating division of the Company.
Employment Agreements
Mr. John R. Gibson and Mr. Keys are employed under employment agreements
entered into in May 1999 and December 1994, respectively, providing for the
compensation disclosed above, as well as any future compensation increases.
Each agreement provides for a term of three years, extending automatically, in
the absence of notice to the contrary, from year to year up to age 70 for Mr.
Gibson and age 65 for Mr. Keys. Each agreement is terminable prior to the
expiration of its term upon the death or disability of the executive or, at the
Company's election, for "cause" (as defined in the agreement) or due to a
material breach by the executive of his obligations under the agreement. In the
event of certain Corporate Capital Transactions (as defined in
-10-
the agreements), Mr. Gibson and Mr. Keys are each entitled to receive all
compensation that would have been payable through the expiration dates of the
agreements.
Stock Options
The following tables provide information with respect to the Named
Executive Officers, concerning options exercised during the Company's fiscal
year ended September 30, 2000, and unexercised options held as of September 30,
2000. No options were granted during the fiscal year ended September 30, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
---------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Number of Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options at
Year-End Fiscal Year-End/(1)/
(#) ($)
---------------------------------------------------------------------
Shares Acquired on Value Realized
Name Exercise (#) ($) Exercisable / Unexercisable Exercisable / Unexercisable
- --------------------------------------------------------------------------------------------------------------------------------
John R. Gibson 7,500 $3,285 192,500 / 0 0 / 0
David N. Keys --- --- 164,000 / 0 0 / 0
James J. Peveler --- --- 30,000 / 0 0 / 0
James P. Dyar 12,500 $6,250 91,500 / 0 0 / 0
Linda G. Ferguson --- --- 16,500 / 0 0 / 0
- --------------------------------------------------------------------------------------------------------------------------------
(1) On September 30, 2000, the closing price of the Company's Common Stock on
the Nasdaq Stock Market(R) was $6.188 per share.
Retirement Benefits
Under the Company's defined benefit pension plan, eligible employees,
including employees who are Directors and executive officers, are entitled to
receive a pension benefit based upon their years of service and their "average
compensation." The term "average compensation" is defined to be the average of
the employee's earnings for the five consecutive years of employment during
which the employee's compensation was the highest, subject to applicable
limitations provided by law. Prior to January 1, 1994, the applicable
limitation on compensation was $200,000, adjusted for inflation. During the
calendar year 1993, the $200,000 figure, adjusted for inflation, amounted to
$235,840. Tax legislation that became effective on January 1, 1994, reduced
this figure to $150,000, subject to adjustment for inflation in future years.
The 2000 limitation on compensation was $170,000. The annual retirement benefit
provided under the plan is two percent of each employee's "average
compensation," plus 0.65 percent of each employee's "average compensation" in
excess of the applicable covered compensation, for each year of service, up to
20. The covered compensation is derived from social security tables and depends
upon each individual's year of birth. The maximum benefit under the defined
benefit pension plan is limited to the lesser of 100 percent of average
compensation or the sum of $90,000, as adjusted for inflation. The $90,000
limitation, adjusted for inflation, amounted to $135,000 for the calendar year
2000. Employees become vested in their pension benefits as they complete years
of service in the employ of the Company or its subsidiary corporations, and are
fully vested after seven years of service with the Company and its subsidiary
corporations.
The following table presents the noncontributory annual benefits payable
for life under the Company's pension plan to employees, assuming normal
retirement at age 65 during the Company's current fiscal year under a single
life annuity. The amounts shown below represent the application of the pension
plan formula to the amounts of compensation and years of service shown. The
amounts shown below do not include social security benefits upon retirement.
Nor does the Company's pension plan give credit for years of service in
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excess of 20. Benefits payable under the pension plan must be in compliance with
the applicable guidelines or maximums prescribed in the Employee Retirement
Income Security Act of 1974, as currently stated or as adjusted from time to
time. The amounts shown below do not anticipate future changes in salary levels
or inflation. All benefits shown are for an employee born in 1935 (age 65 in
2000). Benefits for employees born later may be lower.
PENSION PLAN TABLE
- ------------------
- ----------------------------------------------------------------------------------------------------------------
Years of Service
------------------------------------------------------------------------------
Average Compensation 15 20 25
-------------------- ------- ------- -------
$ 125,000 $46,938 $62,584 $62,584
150,000 56,876 75,834 75,834
175,000 60,851 81,134 81,134
200,000 60,851 81,134 81,134
- ----------------------------------------------------------------------------------------------------------------
The credited years of service under the pension plan as of September 30,
2000 for each of the Company's Named Executive Officers is as follows: John R.
Gibson, 9 years; David N. Keys, 11 years; James J. Peveler, 18 years; James P.
Dyar, 10 years; and Linda G. Ferguson, 15 years.
John R. Gibson and David N. Keys also participate in the American Pacific
Corporation Supplemental Executive Retirement Plan (the "SERP"). The SERP
provides total annual retirement benefits, including annual retirement benefits
provided under the Company's defined benefit pension plan, equal to 60 percent
of average compensation. The SERP defines average compensation as the average
of the employee's earnings for the three consecutive years of employment during
which the employee's compensation was the highest. Vesting in the SERP occurs
over a 10-year period subject to meeting certain age plus years of service
requirements.
Assuming ten years of service and meeting the age plus years of service
requirements, annual benefits payable in the form of a single life annuity under
the SERP at the age of 65 are approximately $99,000 to John R. Gibson and
$69,000 to David N. Keys. These annual SERP benefits are in addition to the
maximum annual benefits payable after 20 years of service reflected in the above
Pension Plan table and do not anticipate future changes in salary levels or
inflation. At September 30, 2000, Mr. Gibson and Mr. Keys were 90 percent and
100 percent vested, respectively, in the above annual SERP benefits.
REPORT OF THE MANAGEMENT AND COMPENSATION COMMITTEE
Executive Compensation Principles
The Company's executive compensation program is based upon guiding
principles designed to align executive compensation with the values, objectives,
and business and financial performance of the Company, and to motivate the
Company's officers and key employees to achieve the Company's goals of providing
the Company's stockholders with a competitive return on their investments, while
at the same time providing the Company's customers with quality products.
Toward that end, the executive compensation program is designed to achieve the
following objectives:
. Attract and retain highly qualified individuals who are capable of
making significant contributions to the long-term success of the Company.
. Promote a performance oriented environment that encourages Company and
individual achievement.
-12-
. Reward executive officers for long-term strategic management and the
enhancement of stockholder value.
. Provide levels of total compensation that are competitive with those
provided by other companies with which the Company may compete for executive
talent.
Executive Compensation Program
The Company's executive compensation program consists of both cash and
equity-based compensation. The Management and Compensation Committee of the
Board of Directors is responsible for establishing and administering the
policies that govern both cash and equity-based compensation. The Management
and Compensation Committee is responsible for reviewing the executive
compensation program on at least an annual basis to ensure conformance to the
Company's executive compensation principles. Annual base salary increases
reflect an individual's performance and contribution to the Company over several
years.
Cash Compensation. The base salaries of the Company's Chief Executive
Officer and other executive officers as a group were established by the
Management and Compensation Committee after considering rates of compensation
then being paid by the Company, as well as salary trends and overall
performance. Salary levels were also influenced by the Company's continuing
focus on cost containment. Consequently, cash compensation paid to executive
officers during the September 30, 2000 fiscal year was influenced more by these
factors than by compensation levels for comparable positions in the industry.
The Company does not have an annual bonus plan. Except as provided in the
Company's 2001 and 1997 Stock Option Plans, the Company has not established a
policy with regard to Section 162(m) of the Internal Revenue Code of 1986, as
amended, because the Company has not paid, and does not currently anticipate
paying, compensation in excess of $1 million per annum to any employee.
Equity-Based Compensation. The Company's stock option plans are designed
to advance the long-term interests of the Company by aligning the long-term
interests of the Company's executive officers with those of the Company's
stockholders by providing executive officers with an opportunity to build a
meaningful equity position in the Company. The Board of Directors or a
committee thereof has in the past made grants of stock options to its executive
officers. The Management and Compensation Committee may recommend additional
grants of stock options in the future. No stock options were granted, re-priced
or modified during the Company's fiscal year ended September 30, 2000.
MANAGEMENT AND COMPENSATION COMMITTEE
Thomas A. Turner, Chairman
Fred D. Gibson, Jr.
Norval F. Pohl
Berlyn D. Miller
Dean M. Willard
Jane L. Williams
C. Keith Rooker
Compensation Of Directors
Directors of the Company (other than Messrs. John R. Gibson, Keys and
Rosenzweig) are compensated at the rate of $2,000 per quarter, plus $700 per
meeting of the Company's Board of Directors attended, and $500 per committee
meeting attended, and are reimbursed for expenses incurred in attending
Directors' meetings. Committee chairmen receive an additional $200 per
committee meeting attended and all non-employee members of the Executive
Committee receive an additional $250 per month. Mr. Rosenzweig
-13-
bills the Company at his customary rates for time spent on behalf of the Company
(whether as a Director or in the performance of legal services for the Company)
and is reimbursed for expenses incurred in attending Directors' meetings.
Compensation Committee Interlocks and Insider Participation
The Directors who served on the Management and Compensation Committee of
the Company during the fiscal year ended September 30, 2000 were John R. Gibson,
the Company's Chairman of the Board, Chief Executive Officer and President
(solely as an ex officio member), Fred D. Gibson, Jr., C. Keith Rooker, Thomas
A. Turner, Norval F. Pohl, Berlyn D. Miller, Jane L. Williams and Dean M.
Willard. (Mr. Fred D. Gibson, Jr. and Mr. C. Keith Rooker are former officers
of the Company.)
Indebtedness of Directors and Executive Officers
On September 28, 1994, Mr. C. Keith Rooker, then the Company's Executive
Vice President, borrowed the sum of $96,875 from the Company. Mr. Rooker used
the amount borrowed to pay the exercise price of 25,000 options previously
granted to him pursuant to the Company's 1988 Incentive Stock Option Plan. Mr.
Rooker's loan is evidenced by an unsecured promissory note that bears interest
at the prime rate and is payable under a schedule set forth in a settlement and
severance agreement with Mr. Rooker. As of December 31, 2000, the balance owing
by Mr. Rooker under the promissory note, including accrued interest, was
$70,077.
In 1994, the Company loaned an aggregate of $552,592 to Fred D. Gibson,
Jr., then the Company's Chairman, President and Chief Executive Officer. Mr.
Gibson's loan is evidenced by an unsecured promissory note that bears interest
at the prime rate and is payable on demand. As of December 31, 2000, the
balance owing by Mr. Gibson under the promissory note, including accrued
interest, was $248,715.
On June 16, 1993, James J. Peveler borrowed the sum of $100,000 from the
Company. On September 27, 1993, Mr. Peveler borrowed an additional $40,000.
Mr. Peveler's loans are evidenced by his unsecured promissory notes payable to
the Company, which bear interest at the prime rate and are payable upon demand.
As of December 31, 2000, the total balance owing by Mr. Peveler in respect of
the two loans, including accrued interest, was $213,257.
Transactions with Management and Others
The Company is the General Partner of Gibson Business Park Associates 1986-
1, a Nevada limited partnership (the "Limited Partnership"). The Company owns a
70 percent interest in the capital and profits of the Limited Partnership. The
remaining 30 percent is owned as follows: 10 percent by Fred D. Gibson, Jr., 10
percent by C. Keith Rooker, five percent by the estate of the late Audrey B.
Gibson (the wife of deceased former officer and Director of the Company James I.
Gibson and sister-in-law to Fred D. Gibson, Jr. and John R. Gibson), two percent
by James B. Gibson (a nephew of Fred D. Gibson, Jr. and John R. Gibson and
former Associate General Counsel of the Company), two percent by Thomas A.
Turner, and one percent by Thomas L. War (a former officer and Director of the
Company).
On July 31, 1990, the Company entered into a lease agreement with 3770
Hughes Parkway Associates Limited Partnership, a Nevada limited partnership
("Hughes Parkway"), pursuant to which the Company leased the third floor of a
three-story building owned by Hughes Parkway. The Company presently utilizes
the third floor of this building as office facilities. Hughes Parkway is a
limited partnership of which Howard Hughes Properties, a Delaware limited
partnership, is the general partner, and of which the Limited Partnership is the
sole limited partner, owning a 33 percent interest in Hughes Parkway. Hughes
Parkway financed the cost of construction of the building through contributions
from its partners and borrowing from an unrelated lender.
-14-
The Limited Partnership purchased its interest in Hughes Parkway in July
1990, by paying the sum of $1,040,490 in cash. The Company contributed 70
percent of this amount and, accordingly, acquired a 70 percent interest in the
Limited Partnership. The remaining 30 percent was contributed by the aforenamed
limited partners in the Limited Partnership. The Limited Partnership and the
limited partners are individually liable with respect to a portion of the
borrowing from the unrelated lender. The partnership agreement for Hughes
Parkway provides that if the lease agreement between the Company and Hughes
Parkway should be terminated due to a default by the Company, Howard Hughes
Properties can purchase the interest of the Limited Partnership in Hughes
Parkway at a discount of as much as 25 percent. The Company has agreed to
indemnify the Limited Partnership on account of any financial loss it may suffer
as a result of this provision. The lease agreement and participation in the
Hughes Parkway transaction were approved by the members of the Board of
Directors who are not limited partners in the Limited Partnership or related
parties.
In July 2000, the Company retained Wasserstein Perella & Co., Inc. to
provide certain financial advisory services. Under this engagement, the Company
paid such firm fees and out-of-pocket expenses aggregating $500,000. Mr. Jan H.
Loeb, a director, is employed by Wasserstein Perella & Co., Inc.
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
returns for the Company's Common Stock, the Wilshire 5000 Index, and the
Wilshire Chemicals Index.
FIVE YEAR CUMULATIVE TOTAL RETURNS
* Company Common Stock
$300 ** Wilshire Chemicals
$250 *** Wilshire 5000
$200
$150
$100
$ 50
$ 0
9/30/95 9/30/96 9/30/97 9/30/98 9/30/99 9/30/00
* Company Common Stock $100 $120 $138 $145 $143 $113
** Wilshire Chemicals $100 $122 $156 $140 $155 $137
*** Wilshire 5000 $100 $119 $164 $170 $215 $253
Total returns assume dividends reinvested on ex-date Fiscal year ending
September 30
INDEPENDENT AUDITORS
The firm of Deloitte & Touche LLP served as the Company's independent
auditors for the fiscal year ended September 30, 2000, and has been reappointed
to serve as the Company's independent auditors for the fiscal year ending
September 30, 2001. See below for the Audit Committee Report for the fiscal
year ended September 30, 2000. A representative of Deloitte & Touche LLP is
expected to attend the Annual Meeting and to have the opportunity to make a
statement if he so desires, and will be available to respond to appropriate
questions from stockholders.
REPORT OF THE AUDIT COMMITTEE
In accordance with its written charter adopted by the Board of Directors
(the "Board") (a copy of which is attached as Appendix A to this Proxy
Statement), the Audit Committee assists the Board in fulfilling its
responsibility for oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of the Company. All of the members
of the Audit Committee are independent (as independence is
-15-
defined in Rule 4200(a)(15) of the National Association of Securities Dealers'
Listing standards). During fiscal 2000, the Committee met five times.
In discharging its responsibility for oversight of the audit process, the
Audit Committee obtained from the independent auditors, Deloitte & Touche LLP, a
formal written statement describing any relationships between the auditors and
the Company that might bear on the auditors' independence consistent with the
Independent Standards Board Standard No. 1, "Independence Discussions with Audit
Committees," discussed with the auditors any relationships that might impact the
auditors' objectivity and independence and satisfied itself as to the auditors'
independence.
The Committee discussed and reviewed with the independent auditors the
communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees", and discussed and reviewed the results of
the independent auditors' examination of the financial statements for the year
ended September 30, 2000.
The Committee reviewed the audited financial statements of the Company as
of and for the fiscal year ended September 30, 2000, with management and the
independent auditors. Management has the responsibility for preparation of the
Company's financial statements and the independent auditors have the
responsibility for examination of those statements.
Based upon the above-mentioned review and discussions with management and
the independent auditors, the Committee recommended to the Board that the
Company's audited financial statements be included in its Annual Report on Form
10-K for the fiscal year ended September 30, 2000, for filing with the
Securities and Exchange Commission.
AUDIT COMMITTEE
Berlyn D, Miller, Chairman
Jan H. Loeb
Norval F. Pohl
Victor M. Rosenzweig
Dean M. Willard
Jane L. Williams
ITEM NO. 3 - APPROVAL OF ADOPTION OF 2001 STOCK OPTION PLAN
The Company does not have the authority to issue any further options under
its existing stock option plans. Accordingly, the Board has unanimously
approved for submission to a vote of the stockholders a proposal to adopt the
Company's 2001 Stock Option Plan (the "2001 Plan"). The purpose of the 2001
Plan is to retain key employees, directors, consultants and advisors to the
Company having experience and ability, to attract new employees, directors,
advisors and consultants whose services are considered valuable, to encourage
the sense of proprietorship and to stimulate the active interest of such persons
in the development and financial success of the Company and its subsidiaries.
The Board believes that grants of options and other forms of equity
participation may become an increasingly important means to retain and
compensate employees, directors, advisors and consultants.
Each option granted pursuant to the 2001 Plan shall be designated at the
time of grant as either an "incentive stock option" or as a "nonqualified stock
option." A summary of the significant provisions of the 2001 Plan are set forth
below. The full text of the 2001 Plan is set forth as Appendix B to this Proxy
Statement. This discussion of the 2001 Plan is qualified in its entirety by
reference to Appendix B.
-16-
Administration of the Plan
The 2001 Plan will be administered by a Committee consisting of two or more
directors who are "Non-Employee Directors" (as such term is defined in Exchange
Act Rule 16b-3) and "Outside Directors" (as such term is defined in Section
162(m) of the Code) (the "Committee"). The Committee determines to whom among
those eligible, and the time or times at which, options will be granted, the
number of shares to be subject to options, the duration of options, any
conditions to the exercise of options, and the manner in and price at which
options may be exercised. In making such determinations, the Committee may take
into account the nature and period of service of eligible persons, their level
of compensation, their past, present and potential contributions to the Company
and such other factors as the Committee in its discretion deems relevant.
The Board is authorized to amend, suspend or terminate the 2001 Plan,
except that it is not authorized without stockholder approval (except with
regard to adjustments resulting from changes in capitalization) to (i) increase
the number of shares that may be issued under the 2001 Plan; (ii) materially
increase the benefits accruing to the option holders under the 2001 Plan; (iii)
materially modify the requirements as to eligibility for participation in the
2001 Plan; (iv) decrease the exercise price of an option to less than 100% of
the Fair Market Value per share of Common Stock on the date of grant thereof, or
(v) extend the term of any option beyond that provided for in Section 5 of the
2001 Plan.
Unless the 2001 Plan is terminated earlier by the Committee, it will
terminate on January 16, 2011.
Common Stock Subject to the 2001 Plan
The 2001 Plan provides that options may be granted with respect to a total
of 350,000 shares of Common Stock. The maximum number of shares of stock that
can be subject to options granted under the 2001 Plan to any individual in any
calendar year shall not exceed 50,000. In the event of any merger,
reorganization, consolidation, recapitalization, stock dividend, or other change
in corporate structure affecting the Common Stock of the Company, the Committee
shall make an appropriate and equitable adjustment in the number and kind of
shares reserved for issuance under the 2001 Plan and in the number and option
price of shares subject to outstanding options granted under the 2001 Plan, to
the end that after such event each option holder's proportionate interest shall
be maintained as immediately before the occurrence of such event. If any option
expires or terminates for any reason, without having been exercised in full, the
unpurchased shares subject to such option will be available again for the
purposes of the 2001 Plan.
Participation
Any employee, officer or director of, and any consultant or advisor to, the
Company or any of its subsidiaries shall be eligible to receive stock options
under the 2001 Plan. Only employees of the Company or its subsidiaries shall be
eligible to receive incentive stock options.
Option Price
The exercise price of each option is determined by the Committee, but may
not be less than 100% of the Fair Market Value (as defined in the 2001 Plan) of
the shares of Common Stock covered by the option on the date the option is
granted. If an incentive stock option is to be granted to an employee who owns
over 10% of the total combined voting power of all classes of the Company's
capital stock, then the exercise price may not be less than 110% of the Fair
Market Value of the Common Stock covered by the option on the date the option is
granted.
Term of Options
The Committee shall, in its discretion, fix the term of each option,
provided that the maximum term of each option shall be 10 years. Incentive
stock options granted to an employee who owns over 10% of the total
-17-
combined voting power of all classes of stock of the Company shall expire not
more than five years after the date of grant. The 2001 Plan provides for the
earlier expiration of options of a participant in the event of certain
terminations of employment or engagement or, if the Committee so determines, in
the event of a change in control of the Company.
Restrictions on Transfer and Exercise
Generally, an option may not be transferred or assigned other than by will
or the laws of descent and distribution and, during the lifetime of the option
holder, may be exercised solely by him. The aggregate Fair Market Value
(determined at the time the incentive stock option is granted) of the shares as
to which an employee may first exercise incentive stock options in any one
calendar year under all incentive stock option plans of the Company and its
subsidiaries may not exceed $100,000. The Committee may impose any other
conditions to exercise as it deems appropriate.
Registration of Shares
The Company may file a registration statement under the Securities Act of
1933, as amended, with respect to the Common Stock issuable pursuant to the 2001
Plan subsequent to the approval of the 2001 Plan by the Company's stockholders.
Rule 16b-3 Compliance
In all cases, the terms, provisions, conditions and limitations of the 2001
Plan shall be construed and interpreted consistent with the provisions of Rule
16b-3 of the Securities Exchange Act of 1934, as amended.
Tax Treatment of Incentive Stock Options
In general, no taxable income for Federal income tax purposes will be
recognized by an option holder upon receipt or exercise of an incentive stock
option and the Company will not then be entitled to any tax deduction. Assuming
that the option holder does not dispose of the option shares before the later of
(i) two years after the date of grant or (ii) one year after the exercise of the
option, upon any such disposition, the option holder will recognize capital gain
equal to the difference between the sale price on disposition and the exercise
price.
If, however, the option holder disposes of his option shares prior to the
expiration of the required holding period, he will recognize ordinary income for
Federal income tax purposes in the year of disposition equal to the lesser of
(i) the difference between the fair market value of the shares at date of
exercise and the exercise price, or (ii) the difference between the sale price
upon disposition and the exercise price. Any additional gain on such
disqualifying disposition will be treated as capital gain. In addition, if such
a disqualifying disposition is made by the option holder, the Company will be
entitled to a deduction equal to the amount of ordinary income recognized by the
option holder provided such amount constitutes an ordinary and reasonable
expense of the Company.
Tax Treatment of Nonqualified Stock Options
No taxable income will be recognized by an option holder upon receipt of a
nonqualified stock option, and the Company will not be entitled to a tax
deduction for such grant.
Upon the exercise of a nonqualified stock option, the option holder will
include in taxable income for Federal income tax purposes the excess in value on
the date of exercise of the shares acquired upon exercise of the nonqualified
stock option over the exercise price. Upon a subsequent sale of the shares, the
option holder will derive short-term or long-term gain or loss, depending upon
the option holder's holding period for the
-18-
shares, commencing upon the exercise of the option, and upon the subsequent
appreciation or depreciation in the value of the shares.
The Company generally will be entitled to a corresponding deduction at the
time that the participant is required to include the value of the shares in his
income.
Withholding of Tax
The Company is permitted to deduct and withhold amounts required to satisfy
its withholding tax liabilities with respect to its employees.
Option Grants
Options to purchase shares of Common Stock have not yet been granted
pursuant to the 2001 Plan, although it is anticipated that options will be
granted in the near future.
Required Vote
The affirmative vote of the holders of a majority of the Common Stock
present (in person or by proxy) and voting is required for approval of the
adoption of the 2001 Plan. An abstention, a specific withholding of authority
to vote or a "broker non-vote" by a registered holder will not be counted in
determining whether the proposal has received the requisite stockholder vote.
However, according to New York Stock Exchange rules, brokers will have
discretionary authority to vote "for" approval of the adoption of the 2001 Plan
in the event voting instructions are not received from their beneficial holders.
Recommendation of the Board of Directors
The Board recommends a vote "FOR" approval of the adoption of the 2001
Plan.
STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
In accordance with Securities and Exchange Commission Rule 14(a)(8), if a
stockholder wishes to have a proposal considered for inclusion in the Company's
2002 Annual Meeting of Stockholders and accompanying proxy solicitation
materials, the proposal must be stated in writing and must be filed with the
Secretary of the Corporation on or before October 8, 2001. The Board of
Directors will review any proposal that is received by that date and will
determine whether it should be included in the Company's 2002 Annual Meeting of
Stockholders and proxy solicitation materials.
The Company has adopted Bylaws establishing procedures for stockholder
proposals (other than those made pursuant to Rule 14(a)(8)) and for the
nomination of directors by stockholders, which, in the case of an annual
stockholders' meeting, require, among other things, notice by a stockholder to
the Company not less than 70 days nor more than 90 days prior to the first
anniversary of the prior year's annual meeting (for the 2002 annual meeting, not
later than January 2, 2002 nor earlier than December 13, 2001). (See the
Company's Report on Form 8-K dated November 9, 1999.)
On May 21, 1998 the Securities and Exchange Commission adopted an amendment
to Rule 14a-4, as promulgated under the Securities Exchange Act of 1934, as
amended. The amendment to Rule 14a-4(c)(1) governs the Company's use of its
discretionary proxy voting authority with respect to a stockholder proposal that
is not addressed in the Company's proxy statement. The amendment provides that
if the Company does not receive notice of the proposal at least 45 days prior to
the first anniversary date of the date of mailing of the prior year's proxy
statement (or date specified in advance notice provisions), then the Company
will be permitted to use its discretionary voting authority when the proposal is
raised at the annual meeting, without any discussion of the matter in the proxy
statement. In accordance with the notice provisions described above,
-19-
the Company will be permitted to use its discretionary voting authority as
outlined above, with respect to the Company's 2002 Annual Meeting of
Stockholders, if the Company is not provided notice of a stockholder proposal
which has not been timely submitted for inclusion in the Company's proxy
statement by January 2, 2002.
OTHER BUSINESS
As of the date of this proxy statement, the Board of Directors does not
intend to present, and has not been informed that any other person intends to
present, any matter for action at the Annual Meeting, other than as set forth
herein and in the Notice of Annual Meeting. If any other matters properly come
before the meeting, it is intended that the holders of the proxies will act in
accordance with their best judgment.
By Order of the Board of Directors
David N. Keys, Secretary
Dated: February 5, 2001
-20-
APPENDIX A
----------
American Pacific Corporation
----------------------------
Audit Committee Charter
-----------------------
(as adopted by the Board of Directors May 9, 2000)
This charter shall be reviewed, updated and approved annually by the Board of
Directors.
Role and Independence
- ---------------------
The audit committee of the Board of Directors assists the Board in fulfilling
its responsibility for oversight of the quality and integrity of the accounting,
auditing and reporting practices of the corporation and other such duties as
directed by the Board. The membership of the committee shall consist of at
least three directors who are generally knowledgeable in financial and auditing
matters, including at least one member with accounting or related financial
management expertise. Each member shall be free of any relationship that, in
the opinion of the Board, would interfere with his or her individual exercise of
independent judgment, and shall meet the director independence requirements for
serving on audit committees as set forth in the corporate governance standards
of NASDAQ. The committee is expected to maintain free and open communication
(including private executive sessions at least annually) with the independent
accountants, the internal auditors (if applicable), and the management of the
corporation. In discharging this oversight role, and its primary
responsibilities as defined below, the committee may investigate any matter
brought to its attention, with full power, upon consultation with the Board, to
retain outside counsel or other experts, as it deems required, for this purpose.
The Committee shall meet at least four times annually, or more frequently as
circumstances dictate and the Board of Directors shall appoint one member of the
audit committee as chairperson. He or she shall be responsible for leadership
of the committee, including preparing and/or approving the agenda, presiding
over the meetings, making committee assignments and reporting to the Board of
Directors. The chairperson will also maintain regular liaison with the CEO,
CFO, and the lead independent audit partner. If the chairperson is not present,
the members of the committee may designate a chairperson by majority vote of the
committee membership.
Responsibilities
- ----------------
The audit committee's primary responsibilities include:
Recommending to the Board the independent accountant to be selected or retained
to audit the financial statements of the corporation. In so doing, the
committee will request from the auditor a written affirmation that the auditor
is in fact independent, discuss with the auditor any relationships that may
impact the auditor's independence, and recommend to the Board any actions
necessary to oversee the auditor's independence.
Overseeing the independent auditor relationship by discussing with the auditor
the nature and rigor of the audit process, receiving and reviewing the audit
report, and providing the auditor full access to the committee (and the Board)
to report on any and all appropriate matters.
Providing guidance and oversight to the internal audit activities of the
corporation including reviewing the organization, plans and results of such
activity.
Appendix A - Page 1
2001 Notice of Annual Meeting of Stockholder & Proxy Statement
Reviewing the audited financial statements and discussing them with management
and the independent auditor. These discussions shall include consideration of
the quality of the company's accounting principals and policies as applied in
its financial reporting, including review of estimates, reserves and accruals,
review of judgmental areas, review of audit adjustments whether or not recorded
and such other inquiries as may be appropriate. Based on the review, the
committee shall make its recommendation to the Board as to the inclusion of the
company's audited financial statements in the Company's annual report on Form
10-K.
Reviewing with management and the independent auditor the quarterly financial
information prior to the Company's filing of the quarterly report on Form 10-Q.
This review may be performed by the Committee or its chairperson.
Discussing with management, the internal auditors (if applicable) and the
external auditors the quality and adequacy of the Company's internal controls.
Discussing with management the status of pending litigation, taxation matters
and other areas of oversight relating to the legal and compliance area as may
appropriate.
Reporting audit committee activities to the full Board and issuing annually a
report to be included in the proxy statement (including appropriate oversight
conclusions) for submission to the shareholders.
Appendix A - Page 2
2001 Notice of Annual Meeting of Stockholder & Proxy Statement
APPENDIX B
----------
AMERICAN PACIFIC CORPORATION
2001 STOCK OPTION PLAN
1. Purpose of the Plan.
This 2001 Stock Option Plan (the "Plan") is intended as an incentive,
to retain key employees, directors, consultants and advisors to AMERICAN PACIFIC
CORPORATION, a Delaware corporation (the "Company"), and any Subsidiary of the
Company within the meaning of Section 424(f) of the United States Internal
Revenue Code of 1986, as amended (the "Code"), having experience and ability, to
attract new employees, directors, consultants and advisors whose services are
considered valuable, to encourage the sense of proprietorship and to stimulate
the active interest of such persons in the development and financial success of
the Company and its Subsidiaries.
It is further intended that certain options granted pursuant to the
Plan shall constitute incentive stock options within the meaning of Section 422
of the Code (the "Incentive Options") while certain other options granted
pursuant to the Plan shall be nonqualified stock options (the "Nonqualified
Options"). Incentive Options and Nonqualified Options are hereinafter referred
to collectively as "Options."
The Company intends that the Plan meet the requirements of Rule 16b-3
("Rule 16b-3") promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and that transactions of the type specified in
subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of
the Company pursuant to the Plan be exempt from the operation of Section 16(b)
of the Exchange Act. Further, the Plan is intended to satisfy the performance-
based compensation exception to the limitation on the Company's tax deductions
imposed by Section 162(m) of the Code. In all cases, the terms, provisions,
conditions and limitations of the Plan shall be construed and interpreted
consistent with the Company's intent as stated in this Section 1.
2. Administration of the Plan.
The Board of Directors of the Company (the "Board") shall appoint and
maintain as administrator of the Plan a Committee (the "Committee") consisting
of two or more directors who are "Non-Employee Directors" (as such term is
defined in Rule 16b-3) and "Outside Directors" (as such term is defined in
Section 162(m) of the Code), which shall serve at the pleasure of the Board.
The Committee, subject to Sections 3 and 5 hereof, shall have full power and
authority to designate recipients of Options, to determine the terms and
conditions of respective Option agreements (which need not be identical) and to
interpret the provisions and supervise the administration of the Plan. The
Committee shall have the authority, without limitation, to designate which
Options granted under the Plan shall be Incentive Options and which shall be
Nonqualified Options. To the extent any Option does not qualify as an Incentive
Option, it shall constitute a separate Nonqualified Option.
Appendix B - Page 1
2001 Notice of Annual Meeting of Stockholder & Proxy Statement
Subject to the provisions of the Plan, the Committee shall interpret
the Plan and all Options granted under the Plan, shall make such rules as it
deems necessary for the proper administration of the Plan, shall make all other
determinations necessary or advisable for the administration of the Plan and
shall correct any defects or supply any omission or reconcile any inconsistency
in the Plan or in any Options granted under the Plan in the manner and to the
extent that the Committee deems desirable to carry into effect the Plan or any
Options. The act or determination of a majority of the Committee shall be the
act or determination of the Committee and any decision reduced to writing and
signed by all of the members of the Committee shall be fully effective as if it
had been made by a majority at a meeting duly held. Subject to the provisions
of the Plan, any action taken or determination made by the Committee pursuant to
this and the other Sections of the Plan shall be conclusive on all parties.
In the event that for any reason the Committee is unable to act or if
the Committee at the time of any grant, award or other acquisition under the
Plan of Options or Stock as hereinafter defined does not consist of two or more
Non-Employee Directors, or if there shall be no such Committee, then the Plan
shall be administered by the Board, and references herein to the Committee
(except in the proviso to this sentence) shall be deemed to be references to the
Board, and any such grant, award or other acquisition may be approved or
ratified in any other manner contemplated by subparagraph (d) of Rule 16b-3;
provided, however, that options granted to the Company's Chief Executive Officer
- -------- -------
or to any of the Company's other four most highly compensated officers that are
intended to qualify as performance-based compensation under Section 162(m) of
the Code may only be granted by the Committee.
3. Designation of Optionees.
The persons eligible for participation in the Plan as recipients of
Options (the "Optionees") shall include employees, officers and directors of,
and consultants and advisors to, the Company or any Subsidiary; provided that
Incentive Options may only be granted to employees of the Company and the
Subsidiaries. In selecting Optionees, and in determining the number of shares to
be covered by each Option granted to Optionees, the Committee may consider the
office or position held by the Optionee or the Optionee's relationship to the
Company, the Optionee's degree of responsibility for and contribution to the
growth and success of the Company or any Subsidiary, the Optionee's length of
service, age, promotions, potential and any other factors that the Committee may
consider relevant. An Optionee who has been granted an Option hereunder may be
granted an additional Option or Options, if the Committee shall so determine.
4. Stock Reserved for the Plan.
Subject to adjustment as provided in Section 7 hereof, a total of
350,000 shares of the Company's Common Stock, $0.10 par value per share (the
"Stock"), shall be subject to the Plan. The maximum number of shares of Stock
that may be subject to options granted under the Plan to any individual in any
calendar year shall not exceed 50,000, and the method of counting such shares
shall conform to any requirements applicable to performance-based compensation
under Section 162(m) of the Code. The shares of Stock subject to the Plan shall
consist of unissued shares or previously issued shares held by any Subsidiary of
the Company, and such amount of shares of Stock shall be and is hereby reserved
for such purpose. Any of such shares of Stock that may remain
Appendix B - Page 2
2001 Notice of Annual Meeting of Stockholder & Proxy Statement
unsold and that are not subject to outstanding Options at the termination of the
Plan shall cease to be reserved for the purposes of the Plan, but until
termination of the Plan the Company shall at all times reserve a sufficient
number of shares of Stock to meet the requirements of the Plan. Should any
Option expire or be canceled prior to its exercise in full or should the number
of shares of Stock to be delivered upon the exercise in full of an Option be
reduced for any reason, the shares of Stock theretofore subject to such Option
may be subject to future Options under the Plan, except where such reissuance is
inconsistent with the provisions of Section 162(m) of the Code.
5. Terms and Conditions of Options.
Options granted under the Plan shall be subject to the following
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) Option Price. The purchase price of each share of Stock
------------
purchasable under any Option shall be determined by the Committee at the time of
grant, but shall not be less than 100% of the Fair Market Value (as defined
below) of such share of Stock on the date the Option is granted; provided,
--------
however, that with respect to an Incentive Option granted to an Optionee who, at
- -------
the time such Incentive Option is granted, owns (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or of any Subsidiary, the purchase price per
share of Stock shall be at least 110% of the Fair Market Value per share of
Stock on the date of grant. The exercise price for each Option shall be subject
to adjustment as provided in Section 7 below. "Fair Market Value" means the
closing price of publicly traded shares of Stock on the principal securities
exchange on which shares of Stock are listed (if the shares of Stock are so
listed), or on the NASDAQ Stock Market (if the shares of Stock are regularly
quoted on the NASDAQ Stock Market), or, if not so listed or regularly quoted,
the mean between the closing bid and asked prices of publicly traded shares of
Stock in the over-the-counter market, or, if such bid and asked prices shall not
be available, as reported by any nationally recognized quotation service
selected by the Company, or as determined by the Committee in a manner
consistent with the provisions of the Code. Anything in this Section 5(a) to
the contrary notwithstanding, in no event shall the purchase price of a share of
Stock be less than the minimum price permitted under the rules and policies of
any national securities exchange on which the shares of Stock are listed.
(b) Option Term. The term of each Option shall be fixed by the
-----------
Committee, but no Option shall be exercisable more than ten years after the date
such Option is granted and in the case of an Incentive Option granted to an
Optionee who, at the time such Incentive Option is granted, owns (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or of any Subsidiary, no
such Incentive Option shall be exercisable more than five years after the date
such Incentive Option is granted.
(c) Exercisability. Subject to Section 5(j) hereof, Options shall be
--------------
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee at the time of grant.
Upon the occurrence of a "Change in Control" (as hereinafter
defined), the Committee may accelerate the vesting and exercisability of
outstanding Options, in whole or in part,
Appendix B - Page 3
2001 Notice of Annual Meeting of Stockholder & Proxy Statement
as determined by the Committee in its sole discretion. In its sole discretion,
the Committee may also determine that, upon the occurrence of a Change in
Control, each outstanding Option shall terminate within a specified number of
days after notice to the Optionee thereunder, and each such Optionee shall
receive, with respect to each share of Company Stock subject to such Option, an
amount equal to the excess of the Fair Market Value of such shares immediately
prior to such Change in Control over the exercise price per share of such
Option; such amount shall be payable in cash, in one or more kinds of property
(including the property, if any, payable in the transaction) or a combination
thereof, as the Committee shall determine in its sole discretion.
For purposes of the Plan, a Change in Control shall be deemed to
have occurred if:
(i) a tender offer (or series of related offers) shall be made
and consummated for the ownership of 30% or more of the outstanding
voting securities of the Company, unless as a result of such tender
offer more than 50% of the outstanding voting securities of the
surviving or resulting corporation shall nevertheless be owned in the
aggregate by the shareholders of the Company (as of the time
immediately prior to the commencement of such offer), any employee
benefit plan of the Company or its Subsidiaries, and their affiliates;
(ii) the Company shall be merged or consolidated with another
corporation, unless as a result of such merger or consolidation more
than 50% of the outstanding voting securities of the surviving or
resulting corporation shall be owned in the aggregate by the
shareholders of the Company (as of the time immediately prior to such
transaction), any employee benefit plan of the Company or its
Subsidiaries, and their affiliates;
(iii) the Company shall sell substantially all of its assets to
another corporation that is not wholly owned by the Company, unless as
a result of such sale more than 50% of such assets shall be owned in
the aggregate by the shareholders of the Company (as of the time
immediately prior to such transaction), any employee benefit plan of
the Company or its Subsidiaries and their affiliates; or
(iv) a Person (as defined below) shall acquire 50% or more of
the outstanding voting securities of the Company (whether directly,
indirectly, beneficially or of record), unless as a result of such
acquisition more than 50% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate by
the shareholders of the Company (as of the time immediately prior to
the first acquisition of such securities by such Person), any employee
benefit plan of the Company or its Subsidiaries, and their affiliates.
For purposes of this Section 5(c), ownership of voting securities
shall take into account and shall include ownership as determined by applying
the provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under
the Exchange Act. In addition, for such purposes, "Person" shall have the
meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof; however, a Person shall not include (A) the
Company or any of its Subsidiaries; (B) a trustee or other fiduciary holding
securities under an employee benefit plan of the
Appendix B - Page 4
2001 Notice of Annual Meeting of Stockholder & Proxy Statement
Company or any of its Subsidiaries; (C) an underwriter temporarily holding
securities pursuant to an offering of such securities; or (D) a corporation
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportion as their ownership of stock of the Company.
(d) Method of Exercise. Options to the extent then exercisable may be
------------------
exercised in whole or in part at any time during the option period, by giving
written notice to the Company specifying the number of shares of Stock to be
purchased, accompanied by payment in full of the purchase price, in cash, or by
check or such other instrument as may be acceptable to the Committee. As
determined by the Committee, in its sole discretion, at or after grant, payment
in full or in part may be made at the election of the Optionee (i) in the form
of Stock owned by the Optionee (based on the Fair Market Value of the Stock on
the trading day before the Option is exercised) that is not the subject of any
pledge or security interest, (ii) in the form of shares of Stock withheld by the
Company from the shares of Stock otherwise to be received with such withheld
shares of Stock having a Fair Market Value on the date of exercise equal to the
exercise price of the Option, or (iii) by a combination of the foregoing,
provided that the combined value of all cash and cash equivalents and the Fair
Market Value of any shares surrendered to the Company is at least equal to such
exercise price and except with respect to (ii) above, such method of payment
will not cause a disqualifying disposition of all or a portion of the Stock
received upon exercise of an Incentive Option. An Optionee shall have the right
to dividends and other rights of a stockholder with respect to shares of Stock
purchased upon exercise of an Option at such time as the Optionee has given
written notice of exercise and has paid in full for such shares and (ii) has
satisfied such conditions that may be imposed by the Company with respect to the
withholding of taxes.
(e) Non-transferability of Options. Options are not transferable and
------------------------------
may be exercised solely by the Optionee during his lifetime or after his death
by the person or persons entitled thereto under his will or the laws of descent
and distribution. The Committee, in its sole discretion, may permit a transfer
of a Nonqualified Option to (i) a trust for the benefit of the Optionee or (ii)
a member of the Optionee's immediate family (or a trust for his or her benefit).
Any attempt to transfer, assign, pledge or otherwise dispose of, or to subject
to execution, attachment or similar process, any Option contrary to the
provisions hereof shall be void and ineffective and shall give no right to the
purported transferee.
(f) Termination by Death. Unless otherwise determined by the
--------------------
Committee at grant, if any Optionee's employment with or service to the Company
or any Subsidiary terminates by reason of death, the Option may thereafter be
exercised, to the extent then exercisable (or on such accelerated basis as the
Committee shall determine at or after grant), by the legal representative of the
estate or by the legatee of the Optionee under the will of the Optionee, for a
period of one year after the date of such death or until the expiration of the
stated term of such Option as provided under the Plan, whichever period is
shorter.
(g) Termination by Reason of Disability. Unless otherwise determined
-----------------------------------
by the Committee at grant, if any Optionee's employment with or service to the
Company or any Subsidiary terminates by reason of total and permanent
disability, any Option held by such Optionee may thereafter be exercised, to the
extent it was exercisable at the time of termination due to Disability (or on
such accelerated basis as the Committee shall determine at or after grant), but
may not be exercised after one year after the date of such termination of
employment or service or the expiration of the stated term of such Option,
whichever period is shorter; provided, however, that, if the
Appendix B - Page 5
Optionee dies within such one year period, any unexercised Option held by such
Optionee shall thereafter be exercisable to the extent to which it was
exercisable at the time of death for a period of one year after the date of such
death or for the stated term of such Option, whichever period is shorter.
(h) Termination by Reason of Retirement. Unless otherwise determined
-----------------------------------
by the Committee at grant, if any Optionee's employment with or service to the
Company or any Subsidiary terminates by reason of Normal or Early Retirement (as
such terms are defined below), any Option held by such Optionee may thereafter
be exercised to the extent it was exercisable at the time of such Retirement (or
on such accelerated basis as the Committee shall determine at or after grant),
but may not be exercised after three months after the date of such termination
of employment or service or the expiration of the stated term of such Option,
whichever period is shorter; provided, however, that, if the Optionee dies
within such three month period, any unexercised Option held by such Optionee
shall thereafter be exercisable, to the extent to which it was exercisable at
the time of death, for a period of one year after the date of such death or for
the stated term of such Option, whichever period is shorter.
For purposes of this paragraph (h) "Normal Retirement" shall mean
retirement from active employment with the Company or any Subsidiary on or after
the normal retirement date specified in the applicable Company or Subsidiary
pension plan or if no such pension plan, age 65, and "Early Retirement" shall
mean retirement from active employment with the Company or any Subsidiary
pursuant to the early retirement provisions of the applicable Company or
Subsidiary pension plan or if no such pension plan, age 55.
(i) Other Termination. Unless otherwise determined by the Committee
-----------------
at grant, if any Optionee's employment with or service to the Company or any
Subsidiary terminates for any reason other than death, Disability or Normal or
Early Retirement, the Option shall thereupon terminate, except that the portion
of any Option that was exercisable on the date of such termination of employment
or service may be exercised for the lesser of three months after the date of
termination or the balance of such Option's term if the Optionee's employment or
service with the Company or any Subsidiary is terminated by the Company or such
Subsidiary without cause (the determination as to whether termination was for
cause to be made by the Committee). The transfer of an Optionee from the employ
of or service to the Company to the employ of or service to a Subsidiary, or
vice versa, or from one Subsidiary to another, shall not be deemed to constitute
a termination of employment or service for purposes of the Plan.
(j) Limit on Value of Incentive Option. The aggregate Fair Market
----------------------------------
Value, determined as of the date the Incentive Option is granted, of Stock for
which Incentive Options are exercisable for the first time by any Optionee
during any calendar year under the Plan (and/or any other stock option plans of
the Company or any Subsidiary) shall not exceed $100,000.
(k) Transfer of Incentive Option Shares. The stock option agreement
-----------------------------------
evidencing any Incentive Options granted under this Plan shall provide that if
the Optionee makes a disposition, within the meaning of Section 424(c) of the
Code and regulations promulgated thereunder, of any share or shares of Stock
issued to him upon exercise of an Incentive Option granted under the Plan within
the two-year period commencing on the day after the date of the grant of such
Incentive Option or within a one-year period commencing on the day after the
date of transfer of the share or
Appendix B - Page 6
2001 Notice of Annual Meeting of Stockholder & Proxy Statement
shares to him pursuant to the exercise of such Incentive Option, he shall,
within 10 days after such disposition, notify the Company thereof and
immediately deliver to the Company any amount of United States federal, state
and local income tax withholding required by law.
6. Term of Plan.
No Option shall be granted pursuant to the Plan on or after January
16, 2011, but Options theretofore granted may extend beyond that date.
7. Capital Change of the Company.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure
affecting the Stock, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares reserved for issuance under the Plan
and in the number and option price of shares subject to outstanding Options
granted under the Plan, to the end that after such event each Optionee's
proportionate interest shall be maintained as immediately before the occurrence
of such event.
8. Purchase for Investment.
Unless the Options and shares covered by the Plan have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or the
Company has determined that such registration is unnecessary, each person
exercising an Option under the Plan may be required by the Company to give a
representation in writing that he is acquiring the shares for his own account
for investment and not with a view to, or for sale in connection with, the
distribution of any part thereof.
9. Taxes.
The Company may make such provisions as it may deem appropriate,
consistent with applicable law, in connection with any Options granted under the
Plan with respect to the withholding of any taxes or any other tax matters.
10. Effective Date of Plan.
The Plan shall be effective on January 16, 2001, provided the Plan is
subsequently approved by majority vote of the Company's stockholders not later
than January 15, 2002.
11. Amendment and Termination.
The Board may amend, suspend, or terminate the Plan, except that no
amendment shall be made that would impair the rights of any Optionee under any
Option theretofore granted without the Optionee's consent, and except that no
amendment shall be made which, without the approval of the stockholders of the
Company would:
(a) increase the number of shares that may be issued under the Plan,
except as is provided in Section 7;
(b) materially increase the benefits accruing to the Optionees under
the Plan;
Appendix B - Page 7
2001 Notice of Annual Meeting of Stockholder & Proxy Statement
(c) materially modify the requirements as to eligibility for
participation in the Plan;
(d) decrease the exercise price of an Option to less than 100% of the
Fair Market Value per share of Stock on the date of grant thereof; or
(e) extend the term of any Option beyond that provided for in Section
5(b).
The Committee may amend the terms of any Option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Optionee without the Optionee's consent. The Committee may also substitute
new Options for previously granted Options, including options granted under
other plans applicable to the participant and previously granted Options having
higher option prices, upon such terms as the Committee may deem appropriate.
12. Government Regulations.
The Plan, and the grant and exercise of Options hereunder, and the
obligation of the Company to sell and deliver shares under such Options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies, national securities exchanges and interdealer
quotation systems as may be required.
13. General Provisions.
(a) Certificates. All certificates for shares of Stock delivered
------------
under the Plan shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, or other
securities commission having jurisdiction, any applicable Federal or state
securities law, any stock exchange or interdealer quotation system upon which
the Stock is then listed or traded and the Committee may cause a legend or
legends to be placed on any such certificates to make appropriate reference to
such restrictions.
(b) Employment Matters. The adoption of the Plan shall not confer
------------------
upon any Optionee of the Company or any Subsidiary any right to continued
employment or, in the case of an Optionee who is a director, continued service
as a director, with the Company or a Subsidiary, as the case may be, nor shall
it interfere in any way with the right of the Company or any Subsidiary to
terminate the employment of any of its employees, the service of any of its
directors or the retention of any of its consultants or advisors at any time.
(c) Limitation of Liability. No member of the Board or the Committee,
-----------------------
or any officer or employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the fullest extent permitted by
law, be fully indemnified and protected by the Company in respect of any such
action, determination or interpretation.
Appendix B - Page 8
2001 Notice of Annual Meeting of Stockholder & Proxy Statement
(d) Registration of Stock. Notwithstanding any other provision in the
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Plan, no Option may be exercised unless and until the Stock to be issued upon
the exercise thereof has been registered under the Securities Act and applicable
state securities laws, or is, in the opinion of counsel to the Company, exempt
from such registration in the United States. The Company shall not be under any
obligation to register under applicable federal or state securities laws any
Stock to be issued upon the exercise of an Option granted hereunder in order to
permit the exercise of an Option and the issuance and sale of the Stock subject
to such Option, although the Company may in its sole discretion register such
Stock at such time as the Company shall determine. If the Company chooses to
comply with such an exemption from registration, the Stock issued under the Plan
may, at the direction of the Committee, bear an appropriate restrictive legend
restricting the transfer or pledge of the Stock represented thereby, and the
Committee may also give appropriate stop transfer instructions with respect to
such Stock to the Company's transfer agent.
14. Governing Law.
The law of the State of Delaware shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard to
such state's conflict of laws rules.
AMERICAN PACIFIC CORPORATION
January 16, 2001
Appendix B - Page 9
2001 Notice of Annual Meeting of Stockholder & Proxy Statement
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AMERICAN PACIFIC CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS IN CONNECTION WITH
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MARCH 13, 2001
The undersigned hereby appoints John R. Gibson and David N. Keys, and each of
them, with full power of substitution and revocation, the attorneys and proxies
of the undersigned to attend and vote all shares of Common Stock of American
Pacific Corporation that the undersigned would be entitled to vote if then
personally present at the Annual Meeting of Stockholders of American Pacific
Corporation, a Delaware corporation, to be held on March 13, 2001 at 10:30 a.m.,
local time, at the Las Vegas Country Club, Banquet Room, located at 3000 Joe W.
Brown Drive, Las Vegas, Nevada, and at any adjournment(s) or postponement(s)
thereof, hereby revoking any proxy heretofore given. The undersigned hereby
acknowledges receipt of the Notice of Annual Meeting and Proxy Statement, each
dated February 5, 2001.
THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED, WILL BE
VOTED FOR THE NOMINEES FOR DIRECTOR PROPOSED IN ITEMS NO. 1 AND 2, FOR THE
--- ---
PROPOSAL IN ITEM NO. 3 AND IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF
THE BOARD OF DIRECTORS ON SUCH OTHER BUSINESS AS MAY COME BEFORE THE MEETING OR
ANY ADJOURNMENT(S) OR POSTPONEMENT(S) THEREOF.
(Continued and to be signed on other side)
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES IN ITEMS NO. 1 AND 2 AND FOR THE PROPOSAL IN ITEM NO. 3.
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[X] Please mark your
votes as in this
example.
Item No. 1: FOR WITHHOLD AUTHORITY
Nominees: FRED D. GIBSON, JR. [_] [_]
To elect Fred D. Gibson, Jr., Berlyn D. Miller and BERLYN D. MILLER
Victor M. Rosenzweig as Class C Directors, each to hold VICTOR M. ROSENZWEIG
office until the 2003 Annual Meeting of Stockholders and
thereafter until their successors have been duly elected
and qualified. For, all nominees except as noted below:
_____________________________________________________________________
_____________________________________________________________________
Item No. 2: FOR WITHHOLD AUTHORITY
Nominees: DEAN M. WILLARD [_] [_]
To elect Dean M. Willard, John R. Gibson and David N. Keys JOHN R. GIBSON
as Class A Directors, each to hold office until the 2004 DAVID N. KEYS
Annual Meeting of Stockholders and thereafter until their
successors have been duly elected and qualified. For, all nominees except as noted below:
_____________________________________________________________________
_____________________________________________________________________
Item No. 3: FOR AGAINST ABSTAIN
[_] [_] [_]
To approve the adoption of the Company's 2001 Stock Option Plan.
Mark box at right if address change has been noted below. [_]
New Address: _______________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
YOUR VOTE IS IMPORTANT TO US. PLEASE COMPLETE, DATE AND SIGN THIS PROXY CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
Signature(s) of Stockholder(s) _________________________ ____________________________________ Date: ____________________________
Note: Please insert the date and sign your name exactly as it appears hereon. If shares are held jointly, each joint owner should
sign. Executors, administrators, trustees, guardians, etc., should so indicate when signing. Corporations should sign full corporate
name by an authorized officer. Partnerships should sign partnership name by an authorized person.
THIS PROXY CARD IS SOLICITED BY THE BOARD OF DIRECTORS.
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