UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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APPLIED EXTRUSION TECHNOLOGIES, INC. |
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Applied
Extrusion Technologies, Inc.
15 Read's Way
New Castle, Delaware 19720
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
January 27, 2004
Notice is hereby given that the Annual Meeting of Stockholders (the "Meeting") of Applied Extrusion Technologies, Inc. will be held at the 36th Floor Conference Center, Ropes & Gray LLP, One International Place, Boston, Massachusetts at 10:30 a.m. on Tuesday, January 27, 2004 for the following purposes:
Stockholders of record at the close of business on December 12, 2003 are entitled to notice of and to vote at the Meeting.
If you are unable to be present personally, please sign and date the enclosed proxy and return it promptly in the enclosed envelope.
| By Order of the Board of Directors, | ||
[Brian P. Crescenzo SIG] |
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| Brian P. Crescenzo Secretary |
December 22, 2003
ANNUAL MEETING OF STOCKHOLDERS
January 27, 2004
PROXY STATEMENT
The enclosed form of proxy is solicited on behalf of the Board of Directors of Applied Extrusion Technologies, Inc. ("AET" or the "Company") to be voted at the Annual Meeting of Stockholders (the "Meeting") to be held at the 36th Floor Conference Center, Ropes & Gray LLP, One International Place, Boston, Massachusetts at 10:30 a.m. on Tuesday, January 27, 2004 or at any adjournment thereof. A proxy may be revoked by a stockholder at any time before it is voted (i) by returning to the Company another properly signed proxy bearing a later date, (ii) by otherwise delivering a written revocation to the Secretary of the Company or (iii) by attending the Meeting or any adjourned session thereof and voting the shares covered by the proxy in person. Shares represented by the enclosed form of proxy properly executed and returned, and not revoked, will be voted at the Meeting.
The expense of soliciting proxies will be borne by the Company. Officers and regular employees of the Company (who will receive no compensation therefor in addition to their regular salaries) may solicit proxies. In addition to the solicitation of proxies by use of the mail, the Company may use the services of its directors, officers and regular employees to solicit proxies personally and by mail, telephone or telegram from brokerage houses and other shareholders. The Company will also reimburse brokers, banks and other custodians, nominees and fiduciaries and other persons for their reasonable charges and expenses in forwarding soliciting materials to their principals.
In the absence of contrary instructions, the persons named as proxies will vote in accordance with the intentions stated below. The holders of record of shares of the common stock, $.01 par value (the "Common Stock"), of the Company at the close of business on December 12, 2003 are entitled to receive notice of and to vote at the Meeting. As of that date, the Company had issued and outstanding 12,833,032 shares of Common Stock, each of which is entitled to one vote on each matter to come before the Meeting. This proxy statement and the enclosed proxy are being mailed to Stockholders on the same date as the date of the Notice of Annual Meeting.
Consistent with state law and under the Company's by-laws, a majority of the shares entitled to vote on a particular matter, present in person or represented by proxy at a meeting, constitutes a quorum as to such matter. Votes cast by proxy or in person at the Meeting will be counted by persons appointed by the Company to act as election inspectors for the Meeting. The majority of votes properly cast shall determine all matters other than elections to office, and the two nominees for election as directors at the Meeting who receive the greatest number of votes properly cast for the election of directors shall be elected directors. The election inspectors will count shares represented by proxies that withhold authority to vote for a nominee for election as a director, or that reflect abstentions or "broker non-votes" (i.e., shares represented at the Meeting held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or persons entitled to vote and (ii) the broker or nominee does not have or does not exercise the discretionary voting power on a particular matter) only as shares that are present and entitled to vote on the matter for purposes of determining the presence of a quorum, but abstentions, broker non-votes and proxies that withhold authority to vote will not be counted as votes properly cast for purposes of determining the outcome of voting on any matter.
The Annual Report to Stockholders for AET's fiscal year ended September 30, 2003 accompanies this proxy statement. The principal executive offices of AET are located at 15 Read's Way, New Castle, Delaware 19720.
ITEM NO. 1
ELECTION OF DIRECTORS
The persons named in the enclosed proxy intend to vote each share as to which a proxy has been properly executed and returned and not revoked in favor of the election as directors of the nominees named below, who are currently directors of the Company, unless authority to vote for the election of such on or more nominees is withheld by marking the proxy to that effect.
Pursuant to the Company's Restated Certificate of Incorporation, as amended, the Board of Directors is divided into three classes, as nearly equal in number as possible, so that each director will serve for three years, with one class of directors being elected each year. Pursuant to the Restated Certificate of Incorporation and By-laws, the nominees are directors standing for reelection and designated as Class III Directors, whose terms expire at the 2004 Annual Meeting. The enclosed proxy cannot be voted for more than two people.
If Item No. 1 is approved, Richard G. Hamermesh and Jim C. Cowart will be elected as Class III Directors for a term of three years expiring at the 2007 Annual Meeting, and until their respective successors are elected and shall qualify to serve.
It is expected that the nominees will be able to serve, but if any nominee is unable to serve, the proxies reserve discretion to vote, or refrain from voting, for a substitute nominee or to fix the number of directors at a lesser number.
| NOMINEES Name, Age (as of January 1, 2004), Business and Current Directorships |
Director Since |
Term Expires |
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|---|---|---|---|---|
RICHARD G. HAMERMESH, 55 — Director of the Company since 1986; since 2000, professor of Management Practice at the Harvard Business School; co-founded in 1987 and served until 2000 as a Managing Partner for the Center for Executive Development, an independent executive education and training firm; and Director of BE Aerospace, Inc., a manufacturer of aircraft cabin interior products. |
1986 |
2004 |
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| JIM C. COWART, 52 — Director of the Company since December 2003; since 1991, Principal of Cowart & Co., LLC, Auriga Partners, Inc. and their predecessors, private capital firms that provide capital market transaction support, strategic planning, competitive analysis and other services; from August 1999 to May 2001, Chairman of QualPro Corporation, an aerospace components manufacturing company; from February 1998 to November 2000, Chairman and Chief Executive Officer of E-Com Architects, Inc., a computer software company; from January 1993 to November 1997, Chairman and Chief Executive Officer of Aurora Electronics Inc.; and since 1989, Director of BE Aerospace, Inc., a manufacturer of aircraft cabin interior products. Previously, Mr. Cowart was a founding general partner of Capital Resource Partners, a private investment capital manager, and he has held various positions in investment banking and venture capital with Lehman Brothers, Shearson Venture Capital and Kidder, Peabody & Co. | 2003 | 2004 |
| CURRENT DIRECTORS Name, Age (as of January 1, 2004), Business and Current Directorships |
Director Since |
Term Expires |
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|---|---|---|---|---|
AMIN J. KHOURY, 64 — Founder and Chairman of the Board of Directors of the Company since 1986; Chief Executive Officer of the Company since October 2002; Founder and Chairman of the Board of Directors of BE Aerospace, Inc., a manufacturer of aircraft cabin interior products; Director of Brooks Automation, Inc., a leader in semiconductor tool and factory automation solutions for the global semiconductor industry; and Director of Synthes-Stratec, one of the world's leading orthopedic trauma companies. |
1986 |
2005 |
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| MARK M. HARMELING, 51 — Director of the Company since 1986; since 2001, partner of TA Realty Associates, a real estate advisory firm; from 1991 to 2000, President of Bay State Realty Advisors, a real estate consulting firm; from 1997 to 1999, an executive of the A. G. Spanos Corporation, a leading developer of multifamily residential complexes; from 1985 to 1991, President of Intercontinental Real Estate Corporation, a real estate holding and development corporation; Director of Universal Holding Corporation, an insurance holding company. | 1986 | 2005 | ||
| NADER A. GOLESTANEH, 43 — Director of the Company since 1986; since 1990, President of Centremark Properties, Inc., a real estate management and development company; and since 1986, attorney in private practice in Boston, Massachusetts. | 1986 | 2006 | ||
| JOSEPH C. DAY, 58 — Director of the Company since 2003; since 2002, Member of the Executive Committee of the Original Equipment Suppliers Association; since 2002, Member of the Board of Trustees of Beaumont Hospital; from 1988 to 2002, Chairman, Chief Executive Officer and Director of Freudenberg- NOK General Partnership, a manufacturer of original equipment and after market automotive components; from 1994 to 2002, Member of the Board of Directors of ASC, Inc.; from 1984 to 2000, Director or Chairman or Chair of Executive Committee of the Wiremold Co.; since 2002, Director, Chair of Executive Committee and Chair of Restructuring Committee of Venture Industries. | 2003 | 2006 |
Board of Directors Meetings and Committees
The Board of Directors is comprised of a majority of independent directors. The Board of Directors has determined that Jim C. Cowart. Joseph C. Day, Nader A. Golestaneh, Richard G. Hamermesh and Mark M. Harmeling are all independent according to the listing standards of The Nasdaq Stock Market, Inc. The Board of Directors held six meetings and acted pursuant to written
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consent on one occasion during the fiscal year ended September 30, 2003. The Board of Directors currently has three standing committees, the Audit Committee, the Stock Option and Compensation Committee (the "Compensation Committee") and the Nominating Committee. During fiscal year 2003, each incumbent director attended at least seventy-five percent of the aggregate of (1) the total number of meetings of the Board of Directors and (2) the total number of meetings held by all committees of the Board of Directors on which he served.
The Audit Committee held seven meetings for the fiscal year ended September 30, 2003. At the beginning of fiscal year 2003, the Audit Committee was composed of Messrs. Hamermesh, Golestaneh and Mr. Joseph J. O'Donnell. On August 12, 2003, prior to the Audit Committee meeting, Mr. O'Donnell tendered his resignation from the Audit Committee. The Board of Directors at the Board meeting that same day subsequently appointed Mr. Day to the Audit Committee. On December 11, 2003, after the Audit Committee meeting, Mr. Golestaneh tendered his resignation from the Audit Committee. The Board of Directors at the Board meeting that same day subsequently appointed Mr. Cowart to the Audit Committee. The Board of Directors has determined that all of the current members of the Audit Committee are independent as such term is defined in the listing standards of The Nasdaq Stock Market, Inc. The Board of Directors has determined that all of the current members of the Audit Committee are "audit committee financial experts" as such term is defined in the applicable regulations of the Securities and Exchange Commission. The relevant experience of each of Messrs. Cowart, Day and Hamermesh is disclosed in Item 1 of this Proxy Statement under the caption "Item No. 1—Election of Directors." On December 11, 2003, the Board of Directors adopted a new written charter for the Audit Committee, which is attached as Appendix A to this Proxy Statement.
The Compensation Committee, which for the fiscal year ended September 30, 2003 was composed of Messrs. Golestaneh and Harmeling, acted pursuant to written consent on two occasions during such fiscal year. The Compensation Committee provides recommendations to, and may act on behalf of, the Board of Directors regarding compensation matters, and administers the Company's stock option and compensation plans.
The Company established a Nominating Committee in December 2003. The Nominating Committee is composed of Messrs. Cowart, Day, Golestaneh, Hamermesh and Harmeling, all of whom are considered independent according to the listing standards of The Nasdaq Stock Market, Inc. On December 11, 2003, the Board of Directors adopted a written charter for the Nominating Committee, a copy of which is available on the Company's website at www.aetfilms.com.
The Nominating Committee does not have a policy with regard to the consideration of any director candidate recommended by a stockholder of the Company. The Board of Directors has determined that it is appropriate to not have such a policy given the infrequency of such recommendations being submitted to the Board of Directors. However, the Nominating Committee will consider any director candidate recommended by a stockholder of the Company when such recommendation is submitted in accordance with the Company's Bylaws, the procedures described in this Proxy Statement under "Stockholder Proposals" and the applicable rules of the Securities and Exchange Commission.
The Nominating Committee has identified certain qualifications that a director nominee must possess before it recommends said nominee for a position on the Board of Directors. The Nominating Committee believes that director nominees should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the stockholders of the Company. The Nominating Committee will also ensure that the composition of the Board of Directors at all times adheres to independence requirements of The Nasdaq Stock Market, Inc. and reflects a range of talents, ages, skills, character, diversity and expertise, particularly in the areas of management, domestic and international markets, leadership and corporate governance, the OPP films industry and related industries sufficient to provide sound and prudent guidance with respect to the operations and interests of the Company.
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The Nominating Committee identifies qualified director nominees from among recommendations made by members of the Board of Directors. The Nominating Committee evaluates such director nominees based on the qualifications described above.
Communications with Stockholders of the Company
The Board of Directors does not currently have a process by which stockholders of the Company may send communications to the Board of Directors. The Board of Directors believes that it is appropriate to not to have such a process because it provides any interested stockholder the opportunity to communicate with the members of the Board of Directors at the annual meeting of stockholders.
Director Attendance at the Annual Meeting
While the Company does not have a policy requiring the members of the Board of Directors to attend its annual meetings of stockholders, most of its directors do attend the annual meeting. Five of the Company's six directors attended last year's annual meeting.
ITEM NO. 2
ADOPTION OF 2004 STOCK OPTION AND INCENTIVE PLAN
Persons named in the enclosed proxy intend to vote each share as to which a proxy has been properly executed and returned and not revoked in favor of the adoption of the 2004 Stock Option and Incentive Plan.
General
On December 11, 2003, the Board of Directors unanimously voted to adopt the 2004 Stock Option and Incentive Plan (the "2004 Plan") and to recommend approval of the 2004 Plan by the stockholders of the Company.
The following is a summary of the material features of the 2004 Plan. It may not contain all of the information important to you. We urge you to read the entire 2004 Plan, a copy of which is attached as Annex B to this Proxy Statement.
The 2004 Plan has been established to advance the interests of the Company by providing the Company with the ability to attract and retain highly qualified employees, directors and other service providers who are in a position to make significant contributions to the success of the Company and to reward such persons for their contributions. The 2004 Plan is administered by the Board of Directors or a committee of the Board of Directors (the "Administrator") and provides for the grant of stock-based and other incentive awards (the "Awards") to key employees, directors and other individual or entities providing services to the Company.
Currently, employees, consultants and advisors receive stock options to purchase shares of Common Stock pursuant to the Company's 1994 Stock Option Plan (the "1994 Plan"). The 1994 Plan specifies that no option shall be granted under that plan after ten years from the date on which the plan was adopted by the Board of Directors. The pending expiration of the authority to grant options under the 1994 Plan has made it necessary to adopt the 2004 Plan. In addition, the Board of Directors decided that the 2004 Plan will permit the Company to grant a full range of incentive awards, including grants of restricted stock and deferred stock which will more closely align the participants' interests with those of the stockholders. Since the authority to grant options under the 1994 Plan will expire in 2004, if the stockholders of the Company do not approve the 2004 Plan, the Company will not have the ability to attract, retain and reward highly qualified employees, directors and other service providers with stock-based incentive awards.
Description of the 2004 Plan
A total of 1,000,000 shares of Common Stock have been reserved for issuance under the 2004 Plan. The Administrator, which will initially be the Compensation Committee, will select participants in the 2004 Plan from among the key employees and directors of, and other individuals or entities providing services to, the Company who are in a position to make significant contributions to the
4
success of the Company. The Administrator will, in its discretion, determine eligibility for, and grant Awards to, such participants and will determine the terms and conditions of each Award.
Pursuant to the 2004 Plan, the Administrator will be permitted to make Awards in the form of stock options, stock appreciation rights, restricted or unrestricted stock, deferred stock, other securities that are convertible into and exchangeable for Common Stock, any of the foregoing forms of Awards subject to certain performance criteria, and cash made in connection with other Awards in order to defray the tax cost of the Award to the participant. The maximum number of shares of Common Stock for which stock options may be granted to any participant in any calendar year and the maximum number of shares of Common Stock subject to stock appreciation rights granted to any participant in any calendar year will each be 250,000. The maximum benefit that will be paid to any participant under other awards in any calendar year will be, to the extent paid in shares, 250,000, and to the extent paid in cash, an amount equal to the amount required to reimburse such person, on an after-tax basis, for any federal, state and local income tax costs incurred by such person with respect to an Award, but only to the extent of a combined federal, state and local tax rate of 50%.
The Administrator will determine the exercise price, if any, of each Award requiring exercise. In the case of any stock option intended to qualify as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code, as amended (the "Code"), or any stock option or stock appreciation right intended to qualify as performance-based for purposes of Section 162(m) of the Code, the exercise price of such Award will not be less than the fair market value of the Common Stock subject to the Award determined as of the date of the grant. The Administrator may determine the required or permitted form of any payment required upon the exercise of an Award, including by cash or check, by delivery of shares of Common Stock, by delivery of a promissory note, or by delivery of an unconditional and irrevocable undertaking by a broker to pay the exercise price.
The Administrator may determine the times at which an Award will vest or become exercisable and the terms on which an Award requiring exercise will remain exercisable. Upon the termination of a participant's employment relationship or other service relationship with the Company, unless otherwise agreed, an Award requiring exercise will cease to be exercisable and will terminate and all Awards to the extent not already vested will be forfeited, except that all stock options and stock appreciation rights will remain exercisable for up to three months after the termination of the participant's employment and for up to one year after the participant's death.
The Administrator may amend the 2004 Plan or any outstanding Award at any time, provided that no such amendment will, without the consent of the participant, alter the terms of an Award so as to adversely affect the participant's rights under the Award. In addition, the Administrator will not effect any amendment that requires the approval of the stockholders of the Company pursuant to the listing standards of the Nasdaq Stock Market, Inc. without receiving the requisite approval of the stockholders of the Company.
In the event of a merger, consolidation or sale of all or substantially all of the assets or stock of the Company (a "Covered Transaction"), the Administrator may provide for the acquiring or surviving entity to assume or grant new awards in substitution for all or a portion of the outstanding Awards. In the absence of such assumption or substitution and except as otherwise provided in the Award, each Award requiring exercise will become fully exercisable in advance of the Covered Transaction to allow such participant the opportunity to participate as a stockholder in the Covered Transaction.
Certain Federal Income Tax Consequences
The following discussion of certain federal income tax consequences associated with participation in the 2004 Plan is based on the law as in effect on the date of this Proxy Statement. It does not purport to cover federal employment tax or other federal tax consequences that may be associated with the 2004 Plan nor does it cover state, local or non-United States taxes.
Incentive Stock Options. In general, a participant realizes no taxable income upon the grant or exercise of an incentive stock option, or ISO. However, the exercise of an ISO may result in an alternative minimum tax liability to the participant. With certain exceptions, a disposition of shares purchased under an ISO within two years from the date of grant or within one year after exercise
5
produces ordinary income to the participant (and a deduction to the Company) equal to the value of the shares at the time of exercise less the exercise price. Any additional gain recognized in the disposition is treated as a capital gain for which the Company is not entitled to a deduction. If the participant does not dispose of the shares until after the expiration of these one-and two-year holding periods, any gain or loss recognized upon a subsequent sale is treated as a long-term capital gain or loss for which Company is not entitled to a deduction.
Nonstatutory Stock Options. In general, in the case of a nonstatutory stock option, or NSO, the participant has no taxable income at the time of grant but realizes income in connection with exercise of the option in an amount equal to the excess (at the time of exercise) of the fair market value of the shares acquired upon exercise over the exercise price; a corresponding deduction is available to the Company; and upon a subsequent sale or exchange of the shares, any recognized gain or loss after the date of exercise is treated as capital gain or loss for which the Company is not entitled to a deduction.
In general, an ISO that is exercised by the participant more than three months after termination of employment is treated as an NSO. ISOs are also treated as NSOs to the extent they first become exercisable by an individual in any calendar year for shares having a fair market value (determined as of the date of grant) in excess of $100,000.
The Administrator may award stock options that are exercisable for restricted stock. Under Section 83 of the Code, a participant who exercises an NSO for restricted stock will generally have income only when the stock vests. The income will equal the fair market value of the stock at that time less the exercise price. However, the participant may make a so-called "83(b) election" in connection with the exercise to recognize taxable income at that time. Assuming no other applicable limitations, the amount and timing of the deduction available to the Company will correspond to the income recognized by the participant. The application of Section 83 to ISOs exercisable for restricted stock is less clear.
Under the so-called "golden parachute" provisions of the Code, the accelerated vesting of Awards in connection with a Covered Transaction may be required to be valued and taken into account in determining whether participants have received compensatory payments, contingent on the occurrence of the Covered Transaction, in excess of certain limits. If these limits are exceeded, a substantial portion of amounts payable to the participant, including income recognized by reason of the grant, vesting or exercise of Awards under the 2004 Plan, may be subject to an additional 20% federal tax and may be nondeductible to the Company.
Recommendation
The Board of Directors recommends voting to approve the 2004 Plan because the 2004 Plan enhances the ability of the Company to attract and retain highly qualified employees, directors and other service providers who can make significant contributions to the success of the Company and to reward such persons for their contributions.
An affirmative vote of a majority of the shares present, in person or by proxy, and entitled to vote at the Annual Meeting is required to approve the 2004 Incentive Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR ITEM 2.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and notes thereto set forth certain information with respect to the beneficial ownership of the Company's Common Stock as of December 12, 2003 by (i) each person who is known to the Company to beneficially own more than 5% of the outstanding shares of Common Stock of the Company, (ii) each of the chief executive officer, and the Company's three other most highly compensated executive officers at the end of fiscal year 2003, who earned more than $100,000 (collectively, the "Named Executive Officers"); (iii) each director of the Company, and (iv) all Named Executive Officers and directors of the Company as a group. Except as otherwise indicated, each of the stockholders named below has sole voting and investment power with respect to the shares of Common Stock beneficially owned:
| |
Common Stock Beneficially Owned |
|||||
|---|---|---|---|---|---|---|
| Names |
Number of Shares |
Percent of Outstanding Shares(1) |
||||
| Ingalls & Snyder | 1,495,500 | 11.65 | % | |||
| 61 Broadway New York, NY 10006 |
||||||
Royce & Assoc. Inc. |
1,139,300 |
8.88 |
% |
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| 1414 Avenue of the Americas New York, NY 10019 |
||||||
T. Rowe Price Associates, Inc. |
1,100,000 |
(2) |
8.57 |
% |
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| 100 E. Pratt Street Baltimore, MD 21202 |
||||||
Goldsmith & Harris, Inc. |
994,900 |
7.75 |
% |
|||
| 80 Pine Street New York, NY 10005 |
||||||
Dimensional Fund Advisors Inc. |
944,200 |
7.36 |
% |
|||
| 1299 Ocean Avenue, 11th Floor Santa Monica, CA 90401 |
||||||
| Amin J. Khoury*† | 678,750 | (3) | 5.29 | % | ||
| David N. Terhune* | 569,829 | (4) | 4.44 | % | ||
| Brian P. Crescenzo* | 43,668 | (5) | ** | |||
| Terry E. Smith* | 42,474 | (6) | ** | |||
| Joseph J. O'Donnell† | 61,250 | (7) | ** | |||
| Mark M. Harmeling† | 61,250 | (8) | ** | |||
| Richard G. Hamermesh† | 82,125 | (9) | ** | |||
| Joseph C. Day† | 0 | ** | ||||
| Nader A. Golestaneh† | 61,250 | (10) | ** | |||
| Jim C. Cowart† | 0 | ** | ||||
| All directors and executive officers as a group (10 persons) | 1,600,596 | (11) | 12.47 | % | ||
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(iii) 11,842 shares held by the 1996 AET Employee Stock Purchase Plan, and (iv) 5,093 shares held by the AET Savings and Profit Sharing Plan, in each case for the benefit of Mr. Terhune.
Report of the Audit Committee of the Board of Directors
During fiscal year ended September 30, 2003, the Audit Committee was composed of Messrs. Hamermesh, O'Donnell and Golestaneh until August 12, 2003 at which time Mr. O'Donnell tendered his resignation from the Audit Committee. At the subsequent Board of Directors meeting, also on August 12, 2003, Mr. Joseph C. Day was appointed to the Audit Committee to fill Mr. O'Donnell's vacancy. Each of the members of the Audit Committee is independent (as defined in the listing standards of The Nasdaq Stock Market, Inc.).
The Audit Committee has reviewed and discussed with management the financial statements for fiscal year 2003 audited by Deloitte & Touche LLP, the Company's independent auditors. The Audit Committee has discussed with Deloitte & Touche LLP various matters related to the financial statements, including those matters required to be discussed by SAS 61 (Codification of Statements on Auditing Standards, AU 380). The Audit Committee has also received the written disclosures and the letter from Deloitte & Touche LLP required by Independence Standards Board Standard No. 1 (Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees), and has discussed with Deloitte & Touche LLP its independence.
Based upon such review and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company's Annual Report on Form 10-K for the fiscal year ending September 30, 2003 for filing with the Securities and Exchange Commission.
With respect to the above matters, the Audit Committee submits this report.
| AUDIT COMMITTEE | ||
| Richard G. Hamermesh Joseph C. Day Nader A. Golestaneh |
8
EXECUTIVE COMPENSATION
Report of the Stock Option and Compensation Committee of the Board of Directors
The Stock Option and Compensation Committee (the "Compensation Committee"), which is responsible for review and approval of compensation matters relating to executive officers of the Company and administering the Company's stock option plans, makes the following report on executive compensation for fiscal 2003.
The Company's executive compensation program is designed to recruit, retain, reward and motivate talented executives who are capable of leading the Company in achieving its strategic and financial objectives in the competitive and rapidly changing oriented polypropylene industry.
The Company relies primarily on four compensation components to motivate executive performance: annual salary, incentive cash bonuses, retirement benefits, and stock-based incentive compensation. Each of the executive officers of the Company has an employment agreement that establishes an annual base salary at a level the Company believes is at least comparable to companies in its industry and consistent with the range for comparable companies. To determine salary ranges for its executives, the Company utilizes a variety of compensation surveys generated by one or more independent consulting firms with expertise in compensation matters, and examines the compensation levels of executives with similar responsibilities in comparable organizations. Annual base salary of executives is targeted at levels which, together with incentive bonuses, would provide annual cash compensation to individual executives that is within the range of prevailing market compensation levels, with a significant portion of the executive's total cash compensation tied to whether corporate and/or divisional performance for the year in question was above, below, or consistent with the Compensation Committee's expectations.
In addition to base salary, each executive officer is eligible to receive an incentive cash bonus at the end of each fiscal year based upon corporate performance, that officer's individual performance, and in certain cases group performance. Corporate performance is measured by the Company's strategic and financial performance in that fiscal year, with particular reference to operating earnings and net income for the year compared with targets set forth in the Company's annual Business Plan approved by the Board of Directors at the beginning of each fiscal year. Because the Compensation Committee believes that short-term fluctuations in stock price do not necessarily reflect the underlying strength or future prospects of the Company, the Compensation Committee does not emphasize year-to-year changes in stock price in its evaluation of corporate performance for the purpose of determining executive compensation. Individual performance is measured by the strategic and financial performance of the particular officer's operational responsibility in comparison to targeted performance criteria.
The Compensation Committee believes that long-term stock price appreciation will reflect the Company's achievement of its strategic goals and objectives. Accordingly, the Company seeks to create long-term performance incentives for its key employees by aligning their economic interests with the interests of the Company's long-term shareholders through the Company's stock-based incentive compensation program. Stock options are granted to key employees at a price equal to the fair market value on the date of grant, and awards are based on the performance of such employees and anticipated contributions by such employees in helping the Company achieve its strategic goals and objectives. Stock option grants are also made by reference to the number of stock options an employee already holds.
The compensation of Amin J. Khoury, the Company's Chief Executive Officer, was determined using the methods described above. Pursuant to his amended and restated employment agreement. Mr. Khoury's salary for fiscal year 2003 was $543,000 and he did not receive a bonus. Mr. Khoury received options to purchase 100,000 shares of Common Stock.
With respect to the above matters, the Compensation Committee submits this report.
| STOCK OPTION AND COMPENSATION COMMITTEE | ||
| Mark M. Harmeling Nader A. Golestaneh |
9
The following tables set forth information with respect to the compensation of the Named Executive Officers earned during fiscal 2003, 2002 and 2001:
| |
|
Annual Compensation |
Long-Term Compensation |
|
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Name and Principal Position |
Year |
Salary($)(1) |
Bonus($)(1) |
Other Annual Compensation($) |
Stock Options(#) |
Restricted Stock Awards(5) |
All Other Compensation($) |
||||||||
| Amin J. Khoury Chairman of the Board |
2003 2002 2001 |
543,000 538,500 524,500 |
— — 350,000 |
— — — |
100,000 — 150,000 |
15,484 15,484 15,484 |
(2) (2) (2) |
||||||||
David N. Terhune President and Chief Operating Officer |
2003 2002 2001 |
407,000 403,750 393,375 |
— — 350,000 |
— — — |
75,000 — 150,000 |
25,952 34,457 27,272 |
(3) (3) (3) |
||||||||
Brian P. Crescenzo Vice President Finance, Secretary and Treasurer |
2003 2002 2001 |
172,500 158,333 148,400 |
32,000 — — |
— — — |
25,000 — 25,000 |
36,913 |
35,654 30,113 16,843 |
(4) (4) (4) |
|||||||
Terry E. Smith Vice President of Operations |
2003 2002 2001 |
222,000 205,833 197,267 |
41,400 — — |
— — — |
35,000 — 25,000 |
42,186 |
44,785 38,263 21,688 |
(4) (4) (4) |
|||||||
OPTION GRANTS IN LAST FISCAL YEAR
| |
Individual Grants |
|
|
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term(2) |
|||||||||||
| |
|
Percent of Total Options Granted to Employees in Fiscal Year(1) |
|
|
||||||||
| Name |
Options Granted(#) |
Exercise Price |
Expiration Date |
|||||||||
| 5% ($) |
10% ($) |
|||||||||||
| Amin J. Khoury | 100,000 | 20 | % | 3.00 | 10/22/12 | 188,688 | 478,123 | |||||
| David N. Terhune | 75,000 | 15 | % | 3.00 | 10/22/12 | 141,501 | 358,592 | |||||
| Brian P. Crescenzo | 25,000 | 5 | % | 3.00 | 10/22/12 | 47,167 | 119,531 | |||||
| Terry E. Smith | 35,000 | 7 | % | 3.00 | 10/12/12 | 66,034 | 167,343 | |||||
10
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
| Name |
Shares Acquired on Exercise (#) |
Realized ($) |
Number of Unexercised Options At FY-End (#) Exercisable/ Unexercisable |
Value of Unexercised Options In-the-Money at FY-End ($) Exercisable/ Unexercisable(1) |
||||
|---|---|---|---|---|---|---|---|---|
| Amin J. Khoury | — | — | 537,500/187,500 | $13,688/$13,688 | ||||
| David N. Terhune | — | — | 437,500/162,500 | $13,688/$13,688 | ||||
| Brian P. Crescenzo | — | — | 12,500/37,500 | $1,825/$1,825 | ||||
| Terry E. Smith | — | — | 12,500/47,500 | $1,825/$1,825 |
Compensation of Directors
Directors of the Company who are not employees of the Company (the "Eligible Directors") receive compensation of $12,500 per quarter, and Eligible Directors who are also committee members receive an additional $2,500 per quarter for each committee on which they serve. In addition, Eligible Directors are entitled to participate in the Company's 2001 Stock Option Plan for Directors (the "2001 Directors' Plan"). Under the 2001 Directors' Plan, each Eligible Director is awarded an option covering 10,000 shares of Common Stock on June 30 of each year the plan is in effect, provided he or she is an Eligible Director on that date. In addition, each Eligible Director, excluding those individuals who are currently directors of the Company, is awarded an initial grant covering 25,000 shares of Common Stock as of the date of his or her first election as a director.
The exercise price of all options granted under the 2001 Directors' Plan may not be less than 100% of the fair market value of the Common Stock on the date of the grant. Options expire 10 years after the date of grant and become exercisable, subject to certain conditions which accelerate vesting, as follows: 25% on the first anniversary of the date of grant and an additional 25% each anniversary thereafter.
Employment Contracts and Termination of Employment Arrangements
Amin J. Khoury. On August 1, 2002, Mr. Khoury and the Company entered into an amended and restated employment agreement pursuant to which he currently serves as Chairman of the Board of Directors of the Company. Effective as of September 30, 2002, Mr. Khoury was also elected as the Chief Executive Officer of the Company. The employment agreement became effective as of April 1, 2002 and extends through March 31, 2005, subject to automatic renewals for consecutive one-year periods until either party gives the other 90 days' written notice of its intent not to renew. Under the agreement, Mr. Khoury currently receives an annual base salary of $543,000, and any annual incentive bonus payable to Mr. Khoury is based on criteria established annually by the Company, with the maximum not to exceed 100% of his then current salary. If the Company terminates Mr. Khoury's employment other than for death, disability or cause (as defined in the agreement), or if Mr. Khoury terminates his employment for good reason (as defined in the agreement), the Company will make a lump sum payment to Mr. Khoury in an amount equal to the aggregate amount of salary and average bonus (as defined in the agreement) that would have been payable to Mr. Khoury through the later of (i) the date that is three years from the date of termination or (ii) the expiration date of the agreement (the "Benefits Termination Date"), and provide certain other benefits to Mr. Khoury until such Benefits Termination Date. If Mr. Khoury is terminated as a result of his incapacity, he will be entitled to receive health, pension, retirement and certain other benefits until the Benefits Termination Date. If Mr. Khoury's employment is terminated by Mr. Khoury for good reason or by the Company for any reason other than for cause, Mr. Khoury will be deemed to have been employed through the expiration date of the agreement for purposes of all benefit and stock option vesting. Upon a change of control (as defined in the agreement) of the Company, all outstanding and unvested options held by
11
Mr. Khoury would immediately vest, Mr. Khoury would be deemed to be fully vested with respect to all benefits associated with the Company's 1999 Supplemental Executive Retirement Plan, and the Company would not be permitted to relocate Mr. Khoury without his consent. Mr. Khoury is prohibited from engaging in any activity that is competitive with the Company without the Company's written consent for a period of two years following the Benefits Termination Date or the date of the termination of his employment if he is terminated by the Company for cause or if he terminates his employment for any reason other than good reason. If any benefits are subject to the tax imposed by Section 4999 of the Internal Revenue Code, the Company will make a lump sum payment to Mr. Khoury in amount to pay such tax on an after-tax basis.
David N. Terhune. On August 1, 2002, Mr. Terhune and the Company entered into an amended and restated employment agreement that was effective as of April 1, 2002 and extends through March 31, 2005, subject to automatic renewals for consecutive one-year periods until either party gives the other 90 days' written notice of its intent not to renew. Effective as of September 30, 2002, Mr. Terhune was promoted to President of the Company. Under the agreement, Mr. Terhune currently receives an annual base salary of $407,000, and any annual incentive bonus payable to Mr. Terhune is based on criteria established annually by the Company, with the maximum not to exceed 100% of his then current salary. If the Company terminates Mr. Terhune's employment other than for death, disability or cause (as defined in the agreement), or if Mr. Terhune terminates his employment for good reason (as defined in the agreement), the Company will make a lump sum payment to Mr. Terhune in an amount equal to the aggregate amount of salary and average bonus (as defined in the agreement) that would have been payable to Mr. Terhune through the later of (i) the date that is three years from the date of termination or (ii) the expiration date of the agreement (the "Benefits Termination Date"), and provide certain other benefits to Mr. Terhune until such Benefits Termination Date. If Mr. Terhune is terminated as a result of his incapacity, he will be entitled to receive health, pension, retirement and certain other benefits until the Benefits Termination Date. If Mr. Terhune's employment is terminated by Mr. Terhune for good reason or by the Company for any reason other than for cause, Mr. Terhune will be deemed to have been employed through the expiration date of the agreement for purposes of all benefit and stock option vesting. Upon a change of control (as defined in the agreement) of the Company, all outstanding and unvested options held by Mr. Terhune will immediately vest, Mr. Terhune would be deemed to be fully vested with respect to all benefits associated with the Company's 1999 Supplemental Executive Retirement Plan and, upon termination for any reason, would be entitled to withdraw his full supplemental retirement benefit as if he were 60 years of age, and the Company would not be permitted to relocate Mr. Terhune without his consent. Mr. Terhune is prohibited from engaging in any activity that is competitive with the Company without the Company's written consent for a period of two years following the Benefits Termination Date or the date of the termination of his employment if he is terminated by the Company for cause or if he terminates his employment for any reason other than good reason. If any benefits are subject to the tax imposed by Section 4999 of the Internal Revenue Code, the Company will make a lump sum payment to Mr. Terhune in amount to pay such tax on an after-tax basis.
Brian P. Crescenzo. On April 1, 2003, Mr. Crescenzo and the Company entered into an amended and restated employment agreement that was effective as of April 1, 2003 and extends through March 31, 2006, subject to automatic renewals for consecutive one-year periods until either party gives the other 90 days' written notice of its intent not to renew. Mr. Crescenzo currently holds the position of Vice President Finance, Secretary and Treasurer. Under the agreement, Mr. Crescenzo currently receives an annual base salary of $190,000, and any annual incentive bonus payable to Mr. Crescenzo is based on criteria established annually by the Company. If the Company terminates Mr. Crescenzo's employment other than for death, disability or cause (as defined in the agreement), or if Mr. Crescenzo terminates his employment for good reason (as defined in the agreement), the Company will make a lump sum payment to Mr. Crescenzo in an amount equal to the aggregate amount of salary that would have been payable to Mr. Crescenzo through the expiration date of the agreement (the "Benefits Termination Date"), and provide certain other benefits to Mr. Crescenzo until such Benefits
12
Termination Date. If Mr. Crescenzo is terminated as a result of his incapacity, he will be entitled to receive health, pension, retirement and certain other benefits until the Benefits Termination Date. If Mr. Crescenzo's employment is terminated by Mr. Crescenzo for good reason or by the Company for any reason other than for cause, Mr. Crescenzo will be deemed to have been employed through the expiration date of the agreement for purposes of all benefit and stock option vesting. Upon a change of control (as defined in the agreement) of the Company, all outstanding and unvested options held by Mr. Crescenzo will immediately vest. Mr. Crescenzo is prohibited from engaging in any activity that is competitive with the Company without the Company's written consent for a period of two years following the Benefits Termination Date or the date of the termination of his employment if he is terminated by the Company for cause or if he terminates his employment for any reason other than good reason.
Terry E. Smith. On April 1, 2003, Mr. Smith and the Company entered into an amended and restated employment agreement that was effective as of April 1, 2003 and extends through March 31, 2006, subject to automatic renewals for consecutive one-year periods until either party gives the other 90 days' written notice of its intent not to renew. Mr. Smith currently holds the position of Vice President Operations. Under the agreement, Mr. Smith currently receives an annual base salary of $234,000, and any annual incentive bonus payable to Mr. Smith is based on criteria established annually by the Company. If the Company terminates Mr. Smith's employment other than for death, disability or cause (as defined in the agreement), or if Mr. Smith terminates his employment for good reason (as defined in the agreement), the Company will make a lump sum payment to Mr. Smith in an amount equal to the aggregate amount of salary that would have been payable to Mr. Smith through the expiration date of the agreement (the "Benefits Termination Date"), and provide certain other benefits to Mr. Smith until such Benefits Termination Date. If Mr. Smith is terminated as a result of his incapacity, he will be entitled to receive health, pension, retirement and certain other benefits until the Benefits Termination Date. If Mr. Smith's employment is terminated by Mr. Smith for good reason or by the Company for any reason other than for cause, Mr. Smith will be deemed to have been employed through the expiration date of the agreement for purposes of all benefit and stock option vesting. Upon a change of control (as defined in the agreement) of the Company, all outstanding and unvested options held by Mr. Smith will immediately vest. Mr. Smith is prohibited from engaging in any activity that is competitive with the Company without the Company's written consent for a period of two years following the Benefits Termination Date or the date of the termination of his employment if he is terminated by the Company for cause or if he terminates his employment for any reason other than good reason.
In addition to the foregoing, the employment agreements between the Company and each of Messrs. Khoury and Terhune entitle these executives to benefits provided pursuant to the Company's 1999 Supplemental Executive Retirement Plan, a nonqualified deferred compensation plan adopted by the Company's Board of Directors in 1999. A participant qualifies for benefits under this plan after having been employed by the Company for at least ten years, not less than four of which must occur after adoption of the plan, or upon termination of employment as a result of death or incapacity. Benefit payments begin upon the later of the participant's sixtieth birthday or the last date of employment by the Company.
Participants receive a monthly benefit under the plan, which is paid for ten years. The aggregate amount of these payments is based on a percentage of the greater of the participant's base salary at the time of termination or average compensation over a specified time period (as defined by the plan), and is reduced by any amounts received under disability insurance policies paid or reimbursed by the Company. This percentage, which cannot exceed 75%, is based on the performance of the Company's Common Stock during the participant's employment and is presently equal to 53.6%. At the present benefit level, the plan would pay monthly benefits of $29,859, and $18,073 to Messrs. Khoury, and Terhune, respectively, upon retirement. Following a participant's death, the participant's designee will receive the present value of benefits otherwise remaining to be paid in a discounted lump sum payment. Upon a change of control of the Company, a vested participant may elect to receive a
13
discounted lump sum payment, and if the Company fails to meet certain minimum financial criteria, a participant will receive the aggregate of all benefits payable to him under the plan without discount.
The Company must make payments into a trust sufficient to fund accrued and vested benefits under the plan and, upon a change in control, must contribute an amount equal to all benefits payable under this plan, whether vested or not. The trust's assets may be used only to pay benefits under the plan or, if the Company is insolvent, to make payments to the Company's creditors.
Messrs. Crescenzo and Smith participate in the Company's Executive Deferred Compensation Retirement Plan, a non-qualified deferred compensation plan that was amended and restated and adopted by the Board of Directors in 2001. The participants in this plan are selected from among the group of highly compensated or managerial employees of the Company by a committee appointed by the Chief Executive Officer. Each participant can elect to defer a designated portion of his regular salary and any bonus each year. On June 30 of each year, the Company will credit to such participant's account an amount equal to 15% for each participant who is a Senior Vice President or Vice President, and 7.5% for each participant who is not a Senior Vice President or Vice President, of such participant's salary plus bonus received in the twelve-month period ending on the applicable June 30. Each participant will be fully vested in any amount deferred by such participant and will be fully vested in the amounts credited by the Company after being employed by the Company for five years.
Upon the termination of the participant's employment, the participant shall receive payment of all vested amounts in his account in five annual installments with the first such installment to be made as soon as reasonably practicable following the termination of employment. At least 13 months prior to termination, the participant can also elect to receive payment of all amounts in his or her account in a single lump sum payment or in three or ten annual installments. Currently, Mr. Crescenzo would receive five annual installments of approximately $14,948 upon termination of his employment and Mr. Smith would receive a single payment of approximately $94,012 upon termination of his employment. In addition, if the Company fails to meet certain minimum financial criteria, a participant will receive the aggregate of all benefits payable to him or her under the plan without discount.
The Company must make payments into a trust sufficient to fund the accrued and vested benefits under the plan. The trust's assets may be used only to pay benefits under the plan, or, if the Company is insolvent, to make payments to the Company's creditors.
Plan Category |
Number of securities to be issued upon exercise of outstanding options, warrants and rights |
Weighted-average exercise price of outstanding options, warrants and rights |
Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in column (a)) |
|||||
|---|---|---|---|---|---|---|---|---|
| |
(a) |
(b) |
(c) |
|||||
| Equity compensation plans approved by security holders(1) | 3,035,312 | $ | 5.90 | 874,438 | ||||
| Equity compensation plans not approved by security holders(2) | 0 | 0 | 0 | (2) | ||||
| Total | 3,035,312 | $ | 5.90 | 874,438 | ||||
| Equity Compensation Plan Information | ||||||||
14
Performance Graph
The following graph compares the yearly percentage change in the Company's cumulative total shareholder return on its Common Stock with the cumulative total return on the Nasdaq Stock Market—US Index, the Dow Jones Containers & Packaging Index and the Standard & Poors Manufacturing (Diversified Industry) Index from September 30, 1998 through September 30, 2003, the last trading day of fiscal 2003. The cumulative total shareholder return is based on $100 invested in Common Stock of the Company and in the stocks comprising the respective indices on September 30, 1998 (including reinvestment of dividends).
The stock prices on the Performance Graph are not necessarily indicative of future stock price performance. Each of the Reports of the Compensation Committee and the Audit Committee of the Board of Directors and the Performance Graph shall not be deemed incorporated by reference by any general statement incorporating this proxy statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such acts.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's directors and certain of its officers, and persons who own more than ten percent of a registered class of the Company's equity securities, to file with the Securities and Exchange Commission ("SEC") initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities
15
of the Company. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations, including written representations of its directors and officers that no other reports were required, during the fiscal year ended September 30, 2003, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with by those parties, with the following exceptions:
Deloitte & Touche LLP ("D&T") has been selected to audit the financial statements of the Company for the fiscal year ending September 30, 2004, and to report the results of their examination.
A representative of D&T is expected to be present at the Meeting and will be afforded the opportunity to make a statement if he or she desires to do so and to respond to appropriate questions from stockholders.
The Audit Committee received the following information regarding the fees of D&T for the fiscal year ended September 30, 2003, and have determined that the provision of these services is compatible with maintaining the independence of the independent auditors.
Audit Fees
The aggregate fees billed by D&T for professional services rendered for the audit of the Company's annual financial statements for the fiscal year ended September 30, 2003 and for the review of financial statements included in the Company's quarterly reports on Form 10-Q for the fiscal year 2003 were $283,980.
Audit Related Fees
During fiscal year 2003 the aggregate fees billed by D&T for audit related services totaled $29,697 which consisted primarily of auditing the Company's 401(k) Plan and asset valuation services.
Tax Fees
The aggregate fees billed by D&T during fiscal year 2003 for tax related services totaled $44,843.
All Other Fees
During fiscal year 2003, all other fees of D&T totaled $62,835 which primarily consisted of miscellaneous expenses and educational seminars.
16
STOCKHOLDER PROPOSALS
Proposals of stockholders submitted for consideration at the 2005 Annual Meeting of Stockholders must be received by the Company no later than October 6, 2004 in order to be included in the Company's proxy statement for the 2005 Annual Meeting. In addition, if a stockholder wishes to present a proposal at the Company's 2005 Annual Meeting that will not be included in the Company's proxy statement and fails to notify the Company by no later than December 20, 2004, then the proxies solicited by the Board of Directors for the 2005 Annual Meeting will include discretionary authority to vote on the stockholder's proposal in the event that it is properly brought before the meeting.
OTHER BUSINESS
The Board of Directors knows of no business that will come before the meeting for action except as described in the accompanying Notice of Meeting. However, as to any such business, the persons designated as proxies will have discretionary authority to act in their best judgment.
FORM 10-K
A copy of AET's annual report on Form 10-K filed with the Securities and Exchange Commission is available without charge by writing to: Applied Extrusion Technologies, Inc., Attention: Brian P. Crescenzo, Vice President Finance, Secretary and Treasurer, 15 Read's Way, New Castle, Delaware 19720.
17
APPLIED EXTRUSION
TECHNOLOGIES, INC.
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
APPLIED EXTRUSION TECHNOLOGIES, INC.
(NASDAQ NMS—AETC)
| DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL | ZAPEC1 |
| ý | Please mark votes as in this example. |
PLEASE DO NOT FOLD THIS PROXY.
| 1. | Election of Director. The undersigned hereby GRANTS authority to elect the following nominee: |
|||||||||||||
| MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW | o | |||||||||||||
| Nominee: (01) | Richard G. Hamermesh | |||||||||||||
| FOR THE NOMINEE |
o | o | WITHHELD FROM THE NOMINEE |
|||||||||||
| (02) | Jim C. Cowart | |||||||||||||
| FOR THE NOMINEE |
o | o | WITHHELD FROM THE NOMINEE |
|||||||||||
| Please sign exactly as name(s) appear(s) hereon. When signing as attorney, executor, administrator, trustee, or guardian, please sign your full title as such. Each joint owner should sign. | ||||||||||||||
| Signature: | Date: | Signature: | Date: | |||||||||||
| DETACH HERE IF YOU ARE RETURNING PROXY CARD BY MAIL | ZAPEC2 |
ANNUAL MEETING OF
APPLIED EXTRUSION TECHNOLOGIES, INC.
January 27, 2004
The undersigned hereby constitutes and appoints Messrs. David N. Terhune and Brian P. Crescenzo either of them, with power of substitution to each, proxies to vote and act at the Annual Meeting of Stockholders of Applied Extrusion Technologies, Inc. to be held on January 27, 2004 at the Conference Center, 36th Floor, Ropes & Gray, One International Place, Boston, Massachusetts 02110 at 10:30 a.m., and at any adjournments thereof, upon and with respect to the number of shares of Common Stock, par value $.01 per share, that the undersigned would be entitled to vote if personally present. The undersigned instructs such proxies, or their substitutes, to vote in such manner as they may determine on any matters which may come before the meeting, all as indicated in the accompanying Notice of Meeting and Proxy Statement, receipt of which is acknowledged, and to vote on the following as specified by the undersigned. All proxies heretofore given by the undersigned in respect of said meeting are hereby revoked.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. Unless otherwise specified in the boxes provided on the reverse side hereof, the proxy will be voted IN FAVOR of the nominee for director and in the discretion of the named proxies as to any other matter that may come before this meeting or any adjournment thereof.
| SEE REVERSE SIDE |
CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SEE REVERSE SIDE |