Edgar Filing: ACETO CORP

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

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ACETO CORPORATION
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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ACETO CORPORATION
ONE HOLLOW LANE
LAKE SUCCESS, NEW YORK 11042-1215
(516) 627-6000

October 25, 2002

Dear Fellow Shareholders:

I take pleasure in inviting each of you to attend Aceto Corporation's
Annual Meeting of Shareholders on Thursday, December 5, 2002 at 10:00 a.m. at
the Company's offices, One Hollow Lane, Lake Success, New York. I am pleased to
provide you with your Company's Annual Report and the Proxy Statement attached
to this letter.

I am also pleased that Ira S. Kallem and Hans C. Noetzli have each been
nominated to be elected to our Board for the first time. Mr. Kallem, a CPA, is
an accountant with Wiener, Frushtick & Straub, Certified Public Accountants, and
Mr. Noetzli is the Chairman of Schweizerhall, Inc. and has more than 30 years of
experience in the fine chemicals industry.

At this year's Annual Meeting, you will be asked to re-elect five
Directors and elect Messrs. Kallem and Noetzli as Directors for the first time.

Please use this opportunity to take part in our affairs by voting on
the business to come before this meeting. You may vote your shares at the Annual
Meeting by marking your votes on the enclosed proxy card, signing and dating it,
and mailing it in the enclosed envelope.

I look forward to seeing you at the annual meeting.

Sincerely,

Leonard S. Schwartz
Chairman of the Board and
Chief Executive Officer

ACETO CORPORATION
ONE HOLLOW LANE
LAKE SUCCESS, NEW YORK 11042-1215
(516) 627-6000

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To our Shareholders:

The Annual Meeting of Shareholders of Aceto Corporation will be held on
Thursday, December 5, 2002, at 10:00 a.m. at the Company's offices indicated
above, for the following purposes:

1. To elect a Board of Directors to serve for the ensuing year;

2. To ratify the adoption of the Company's 2002 Stock Option
Plan;

3. To ratify the appointment of KMPG LLP as the Company's
independent auditors for the current fiscal year; and

4. To transact any other business that may properly come before
the meeting.

Shareholders of record at the close of business on September 16, 2002
are entitled to receive notice of and to vote at the Annual Meeting and at any
continuation or adjournment thereof.

By Order of the Board of Directors

Douglas Roth
Chief Financial Officer and Secretary

Lake Success, New York
October 25, 2002

ACETO CORPORATION
ONE HOLLOW LANE
LAKE SUCCESS, NEW YORK 11042-1215
(516) 627-6000

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PROXY STATEMENT
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GENERAL INFORMATION

INFORMATION ABOUT PROXY SOLICITATION

This Proxy Statement is furnished to the holders of the common stock,
$.01 par value per share (the "Common Stock"), of Aceto Corporation, a New York
corporation (the "Company") in connection with the solicitation of proxies on
behalf of the Board of Directors of the Company for use at the Annual Meeting of
Shareholders to be held on Thursday, December 5, 2002 at 10:00 a.m. (Eastern
Standard Time), at the Company's offices, One Hollow Lane, Suite 201, Lake
Success, New York 11042, and at any adjournment thereof. The purposes of the
meeting and the matters to be acted upon are set forth in the accompanying
Notice of Annual Meeting of Shareholders. At present, the Board of Directors
knows of no other business which will come before the meeting.

The Notice of Annual Meeting, Proxy Statement, and form of proxy will
be mailed to Shareholders on or about October 25, 2002. The Company will bear
the cost of its solicitation of proxies. The original solicitation of proxies by
mail may be supplemented by personal interview, telephone, telegram, and telefax
by the directors, officers and employees of the Company. Arrangements will also
be made with brokerage houses and other custodians, nominees and fiduciaries for
the forwarding of solicitation material to the beneficial owners of stock held
by such persons, and the Company may reimburse such custodians, nominees and
fiduciaries for reasonable out-of-pocket expenses incurred by them in connection
therewith.

REVOCABILITY AND VOTING OF PROXY

A form of proxy for use at the meeting and a return envelope for the
proxy are enclosed. Shareholders may revoke their proxies at any time before
being voted. Shares of Common Stock represented by executed and unrevoked
proxies will be voted in accordance with the instructions specified thereon. If
no instructions are given, the proxies will be voted FOR the election of
management's seven nominees for election as directors; FOR ratification of the
adoption of the Company's 2002 Stock Option Plan; and FOR ratification of the
appointment of KPMG LLP as the Company's independent auditors for the fiscal
year ending June 30, 2003.

RECORD DATE AND VOTING RIGHTS

Only stockholders of record at the close of business on September 16,
2002 are entitled to notice of and to vote at the meeting or any adjournment
thereof. On September 16, 2002, the Company had outstanding 6,539,709 shares of
Common Stock, each of which is entitled to one vote upon matters presented at
the meeting.

Votes cast at the meeting will be tabulated by persons appointed as
inspectors of election of the meeting. The inspectors of election will treat
shares of Common Stock represented by a properly signed and returned proxy as
"present" at the meeting for purposes of determining a quorum, without regard to
whether the proxy is marked as casting a vote or abstaining. Likewise, the
inspectors of election will treat shares of Common Stock represented by "broker
non-votes" as present for purposes of determining a quorum.

Under New York law, (i) a plurality of the votes cast at the Annual
Meeting is necessary to elect directors, and (ii) the affirmative vote of a
majority of the votes cast at the Annual Meeting is required to ratify the
adoption of the Company's 2002 Stock Option Plan and to ratify the appointment
of KPMG LLP as the Company's independent auditors for the current fiscal year.

Shares represented by proxies designated as broker non-votes will be
counted for purposes of determining a quorum. Broker non-votes occur when a
broker nominee (which has voted on one or more matters at a meeting) does not
vote on one or more other matters at a meeting because it has not received
instructions to so vote from the beneficial owner and does not have
discretionary authority to so vote. Shares represented by proxies designated as
broker non-votes, however, will not be treated as being cast for purposes of
determining the outcome of a vote on any matter.

A list of shareholders entitled to vote at the Annual Meeting will be
available at the Company's office, One Hollow Lane, Lake Success, New York
11042, during business hours, for a period of 10 days prior to the Annual
Meeting for examination by any shareholder. Such list will also be available at
the Annual Meeting.

QUORUM

The presence, either in person or by proxy, of the holders of a
majority of the shares of common stock outstanding on September 16, 2002 is
necessary to constitute a quorum at the Annual Meeting.

ACTIONS TO BE TAKEN AT THE ANNUAL MEETING

PROPOSAL ONE

ELECTION OF DIRECTORS
NOMINEES

The Company's Board of Directors consists of seven Directors, each one
of which serves for a one year term and until their successors are duly elected
and qualified. At this year's Annual Meeting, five persons are standing for
reelection. In addition, Ira S. Kallem and Hans C. Noetzli have each been
nominated to be elected to the Board.

Proxies not marked to the contrary will be voted "FOR" the election of
the following seven persons:

NAME AGE POSITION DIRECTOR SINCE
------ ----- ------------------------ ------------------

Leonard S. Schwartz (1) 56 Chairman, President and CEO 1991
Samuel I. Hendler (1) 80 Director 1990
Robert A. Wiesen (1)(2) 51 Director 1994
Stanley H. Fischer (1) 59 Director 2000
Albert L. Eilender (1)(2)(3) 59 Director 2000
Ira S. Kallem (3) 54 Nominee for Director -
Hans C. Noetzli (3) 61 Nominee for Director -

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(1) Member of the Executive Compensation Committee
(2) Member of the current Audit Committee
(3) Will be a member of the Audit Committee if elected as a Director

BIOGRAPHICAL INFORMATION ABOUT NOMINEES

LEONARD S. SCHWARTZ. Mr. Schwartz has served as Chairman and Chief
Executive Officer of the Company since July 1, 1997 and President since July 1,
1996. After joining the Company in 1969, Mr. Schwartz, a chemist by training,
developed the Company's industrial chemicals business and had a key role in the
management of the Company's subsidiaries.

SAMUEL I. HENDLER. Mr. Hendler has been engaged in the private practice
of law in New York since 1949 and has been retained as counsel to the Company
for more than 50 years. Mr. Hendler is Secretary, a director and counsel to
Pneumercator Company, Inc., a privately held company based in Farmingdale, New
York. Mr. Hendler is a member of the Corporation Law Committee and the
Securities Banking Law Committee of the Nassau County Bar Association.

ROBERT A. WIESEN. Mr. Wiesen is an attorney and partner in the law firm
of Clifton Budd & DeMaria. He joined this law firm in 1979 subsequent to his
employment with the National Labor Relations Board. He has handled matters for
the Company relating to labor and employment law for over ten years and he has
written and lectured on labor law.

STANLEY H. FISCHER. Mr. Fischer is President of Fischer and Burstein
P.C., a law firm. Mr. Fischer received a J.D. degree from New York University
School of Law. He has been a practicing attorney for

more than 30 years and has advised and represented corporate entities in matters
relative to internal matters, mergers, acquisitions, real estate and litigation.
He is a member of the American Bar Association, the New York Bar Association,
the Association of the Bar of the City of New York, the Association of Trial
Lawyers of America, New York State Trial Lawyers and the Nassau County Bar. He
is a member of various professional committees including the International Law
Section of the New York State Bar.

ALBERT L. EILENDER. Mr. Eilender is the sole owner of Waterways
Advisory Services, a firm specializing in advising companies on developing and
evaluating options relative to mergers, acquisitions and strategic partnerships
in the Chemical Industry. He has more than 30 years of diverse Senior Level
experience in the Specialty Chemicals and Pharmaceutical industry and has had
direct P&L responsibility for managing businesses up to $300 million, with
significant experience in mergers, acquisitions and joint ventures, both
domestically and internationally. He has also served on the boards of numerous
industry trade associations during his career.

IRA S. KALLEM. Mr. Kallem has been a managing accountant, part-time, at
Wiener, Frushtick & Straub, Certified Public Accountants, since September 2000.
In June 1994, Mr. Kallem co-founded Mateo Express, Inc., an international money
transfer company and served as Chief Financial Officer and Director until May
2002. Previously, he was a Senior Partner at Shine & Company, Certified Public
Accountants.

HANS C. NOETZLI. Mr. Noetzli is the Chairman of Schweizerhall, Inc., a
wholly owned subsidiary of Schweizerhall Holding AG, Basel, Switzerland. Mr.
Noetzli holds a degree in Business Administration. He has more than 30 years
experience in the Fine Chemicals Industry. Prior to assuming his present
position, he served in many executive functions of the Alusuisse-Lonza Group,
among them as CEO of Lonza Inc. for 16 years and was a member of the Executive
Committee of the worldwide Alusuisse-Lonza Group located in Zurich, Switzerland.
He also served on the Board of Directors of the Chemical Manufacturing
Association, the Swiss-American Chamber of Commerce, New York, as well as other
industry associations. Currently, he is a member of the Board of Directors of
IRIX Pharmaceuticals, Inc., a privately owned developer and manufacturer of
active pharmaceutical ingredients.

INFORMATION ABOUT THE BOARD OF DIRECTORS, COMMITTEES OF THE BOARD AND SENIOR
EXECUTIVES.

During the Company's fiscal year ended June 30, 2002, the Board of
Directors held four meetings. Each Director, other than Hans-Peter Schaer,
attended more than seventy-five percent (75%) of the Board meetings and meetings
of the Board committees on which he served. The Company does not have a standing
nominating committee, the functions of which are performed by the entire Board.

During the Company's fiscal year ended June 30, 2002, the Executive
Compensation Committee of the Board met four times. The Executive Compensation
Committee has the power to establish base salaries and annual incentives, and to
recommend grants of stock options and other long-term incentives.

During the Company's fiscal year ended June 30, 2002, the Audit
Committee of the Board met four times. The Audit Committee has the
responsibility of recommending the engagement of independent auditors and
reviewing and considering actions of management in matters relating to audit
functions. The Committee reviews, with independent auditors, the scope and
results of its audit engagement, the system of internal controls and procedures
and reviews the effectiveness of procedures intended to prevent violations of
laws. The Board of Directors has adopted a written charter for the Audit
Committee. The Audit Committee has recommended the selection of KPMG LLP as
independent auditors for the fiscal year ended June 30, 2003.

No director or senior executive of the Company is related to any other
director or senior executive. None of the Company's officers or nominees for
director hold any directorships in any other public company. If the nominees are
elected, the Company's Executive Committee will be comprised of Messrs. Schwartz
(Chairman), Eilender, Fischer, Hendler and Wiesen, and the Company's Audit
Committee will be comprised of Messrs. Eilender (Chairman), Noetzli and Kallem.

STATEMENT ON CORPORATE GOVERNANCE

We regularly monitor developments in the area of corporate governance.
We are studying the new federal laws affecting this area, including the
Sarbanes-Oxley Act of 2002, as well as rules proposed by the SEC and the
National Association of Securities Dealers. We will comply with all the
applicable new rules and will implement other corporate governance "best
practices" as we deem appropriate.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Pursuant to Section 16 of the Exchange Act, the Company's Directors and
executive officers and beneficial owners of more than 10% of the Company's
Common Stock are required to file certain reports, within specified time
periods, indicating their holdings of and transactions in the Common Stock and
derivative securities. Based solely on a review of such reports provided to the
Company and written representations from such persons regarding the necessity to
file such reports, the Company is not aware of any failures to file reports or
report transactions in a timely manner during the Company's fiscal year ended
June 30, 2002.

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION LONG TERM COMPENSATION

NAME AND YEAR SALARY BONUS RESTRICTED OPTIONS/ ALL OTHER
PRINCIPAL POSITION STOCK SARS COMPENSATION(1)
AWARDS

Leonard S. Schwartz 2002 $354,332 $584,527 $26,073 10,000 $65,642
President, Chairman 2001 340,704 495,000 90,000 - 64,865
and Chief Executive 2000 339,715 519,246 65,754 - 63,515
Officer

Frank DeBenedittis 2002 203,625 196,622 8,378 4,000 37,827
Senior Vice President 2001 186,520 160,613 9,387 2,500 36,406
2000 184,896 147,334 11,250 - 34,595

Vincent Miata 2002 202,129 160,000 - 4,000 35,502
Senior Vice President 2001 172,908 170,000 - 2,500 35,725
2000 172,407 170,000 - - 34,400

Axel Mueller (2) 2002 202,003 120,000 30,000 3,000 27,030
Vice President, International 2001 50,001 30,000 7,500 2,500 3,047

Michael Feinman 2002 164,836 78,006 16,994 4,000 27,367
President, Aceto Agricultural 2001 157,207 95,862 4,138 2,500 27,488
Chemicals Corp. 2000 150,604 66,375 2,625 - 23,427

(1) Represents contributions to retirement plans

(2) Dr. Mueller's employment with the Company commenced March 26, 2001

STOCK OPTION GRANTS IN LAST FISCAL YEAR

The following table contains information regarding the grant of stock
options in the fiscal year ended June 30, 2002 to the named executives.

POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES OF
UNDERLYING GRANTED TO EXERCISE OR STOCK PRICE
OPTIONS GRANTED EMPLOYEES BASE PRICE EXPIRATION APPRECIATION FOR
NAME (# OF SHARES) IN FISCAL YEAR ($/SH) DATE OPTION TERM (1)
-------- ----------------- ---------------- ------------- ------------ ----------------------
5% 10%
---------- ----------

Leonard S. Schwartz 10,000 (2) 8% $9.84 12/06/11 $61,883 $156,824
Frank DeBenedittis 4,000 (2) 3% 9.84 12/06/11 24,753 62,730
Vincent Miata 4,000 (2) 3% 9.84 12/06/11 24,753 62,730
Axel Mueller 3,000 (2) 2% 9.84 12/06/11 18,565 47,047
Michael Feinman 4,000 (2) 3% 9.84 12/06/11 24,753 62,730
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(1) The dollar amounts illustrate value that might be realized upon
exercise of the options immediately prior to the expiration of their
term, covering the specific compounded rates of appreciation set by the
Securities and Exchange Commission (5% and 10%) and are not, therefore,
intended to be forecasts by Aceto of possible future appreciation of
the stock price of Aceto.
(2) On December 6, 2001, the Company granted non-qualified stock options to
Messrs. Schwartz, DeBenedittis, Miata, Mueller and Feinman to purchase
common stock of the Company under the Company's 1998 Omnibus Equity
Award Plan. All of these options vest one year from the date of grant.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES

The following table contains information regarding the exercise of
stock options by the named executives in the fiscal year ended June 30, 2002 and
the value of unexercised options held by such persons on June 30, 2002.

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT FY-
SHARES OPTIONS AT FY-END (#) END (1)
ACQUIRED ------------------------ -----------------------------
ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
---------- ---------- ---------------- ------------------------ -----------------------------

Leonard S. Schwartz 7,500 $16,650 165,000 130,000 $301,350 $207,400
Frank DeBenedittis 3,000 5,610 23,500 4,000 28,195 3,280
Vincent Miata - - 23,500 4,000 28,195 3,280
Michael Feinman - - 17,250 4,000 21,715 3,280
Axel Mueller - - 2,500 3,000 5,088 2,460

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(1) The dollar value of each exercisable and unexercisable option was
calculated by multiplying the number of shares of common stock
underlying the option by the difference between the exercise price of
the option and the closing price of the Company's common stock on June
30, 2002 ($10.66).

COMPENSATION OF DIRECTORS

Directors of the Company who are not also employees receive $20,000 per
year for serving on the Board of Directors plus $1,000 for each committee
meeting attended. Directors of the Company who are also employees are not
compensated for their services as Directors.

On December 6, 2001, the Company granted each of Messrs. Eilender,
Hendler, Schaer, Schlesinger, Wiesen and Fischer 2,000 non-qualified stock
options pursuant to the 1998 Omnibus Equity Award Plan. Each option vests one
year from the date of grant, is exercisable at $9.84 and expires 10 years from
the date of grant.

EMPLOYMENT AGREEMENTS

On March 26, 2001, in conjunction with Aceto's acquisition of
Schweizerhall Pharma, a subsidiary of the Company entered into an employment
contract with Dr. Axel Mueller. The contract has a term of three years, with an
initial salary of $200,000 plus annual increases at a rate equal to that which
other senior Aceto executives receive and a minimum annual bonus of $125,000
(including restricted stock awards). In addition, Dr. Mueller received an option
for 2,500 shares of Aceto's common stock at 100% of the Fair Market value at
that date. Dr. Mueller is also to be provided with an automobile for his use.

The Company has no other employment agreements with its senior
executives.

LIMITS ON LIABILITY AND INDEMNIFICATION

The Company's Articles of Incorporation eliminate the personal
liability of its directors to the Company and its shareholders for monetary
damages for breach of the directors' fiduciary duties in certain circumstances.
The Articles of Incorporation further provide that the Company will indemnify
its officers and directors to the fullest extent permitted by law. The Company
believes that such indemnification covers at least negligence and gross
negligence on the part of the indemnified parties. Insofar as indemnification
for liabilities under the Securities Act may be permitted to directors,
officers, and controlling persons of the Company pursuant to the foregoing
provisions or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.

Members of the Executive Compensation Committee, with the exception of
Leonard S. Schwartz, have never served as officers or employees of the Company
or any of our subsidiaries. During the last fiscal year, none of our senior
executives served on the Board of Directors or Compensation Committee of any
other entity whose officers served either on our Board of Directors or
Compensation Committee.

REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE

The Executive Committee of the Board of Directors, whose members are Leonard S.
Schwartz (Chairman), Stanley H. Fischer, Samuel I. Hendler, Albert L. Eilender
and Robert A. Wiesen, functions as the Executive Compensation Committee, and
makes recommendations to the Board with respect to the remuneration of the
Company's executive officers.

The Company's compensation policy has been designed to enable the Company to
attract, retain and motivate executives whose enthusiasm and abilities will
contribute to the growth of its business and result in maximum profitability to
the Company and its stockholders, by providing salaries and benefits competitive
with those offered by other companies in the chemical industry. The executive
compensation program includes base salary, annual incentive compensation (cash
bonuses), and long term incentive compensation (awards under the Company's Stock
Option Plans).

Base salaries are set at levels competitive with the chemical industry. Because
of the way the Company operates its business, the contributions of its
executives significantly affect corporate profitability. Bonuses (which can
exceed base salary) are paid to reflect the extent of such contributions. The
Chief Executive Officer (CEO) also is the Chairman of the Board, President and
Chief Operating Officer of the Company. The bonuses paid to the CEO and to the
Secretary/Treasurer, who is the Chief Financial Officer (CFO), are intended to
reflect the Company's overall performance (excluding extraordinary events).

The four highest paid executives, other than the CEO, are each responsible for
the performance of one of the Company's principal profit centers. Internally
generated performance records are kept on a monthly and yearly basis for these
profit centers, and each center's profitability is compared in the current year
to the previous year. Other factors considered in determining the bonuses of
individual executives are the individual's own performance and the overall
performance of the Company. The Executive Compensation Committee determines each
bonus primarily based on this data, also taking into account the long term
contributions of each individual.

CHIEF EXECUTIVE OFFICER'S COMPENSATION

The CEO's compensation was determined on the basis of the same factors utilized
to compensate other executives, taking into consideration total compensation
comparisons of top executives of corporations considered to be in the Company's
peer group.

Submitted September 5, 2002 by members of the Executive Compensation Committee

Leonard S. Schwartz, Chairman
Albert L. Eilender
Stanley H. Fischer
Samuel I. Hendler
Robert A. Wiesen

REPORT OF THE AUDIT COMMITTEE

We operate in accordance with a written charter adopted by the Board of
Directors, a copy of which was disseminated to stockholders as Appendix 1 to the
Proxy Statement for the December 7, 2000, annual meeting of stockholders. We met
with KPMG LLP ("KPMG"), the independent auditors both with and without
management present, to review the scope and results of the audit engagement, the
system of internal controls and procedures, and the effectiveness of procedures
intended to prevent violations of laws and regulations. We reviewed all services
performed by KPMG for the Company in the fiscal year ended June 30, 2002, within
and outside the scope of the quarterly reviews and annual auditing functions.

We received the following information concerning the fees of the
independent auditors for the fiscal year ended June 30, 2002, and considered
whether the provision of these services is compatible with maintaining the
independence of the independent auditors:

(a) AUDIT FEES (including review of 10-Qs) . . . . . . . . . . . . . . . . . $267,000;

(b) FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES . . . . . . $ -0-;

(c) ALL OTHER FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 343,000
for advisory services related principally to tax consultation
services, business consulting services and transaction support services.

We reviewed and discussed the audited financial statements for the
fiscal year ending June 30, 2002, with management, and discussed with KPMG the
matters required to be discussed by SAS 61(Codification of Statements on
Auditing Standards, AU Sec. 380) as amended. We also received the written
disclosures and letter from KPMG required by Independence Standards Board
Standard No. 1, which letter states that they are independent accountants with
respect to the Company. We discussed with KPMG their independence. Based on our
review and discussions, we 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 June 30, 2002, for filing with the Securities
and Exchange Commission.

We have reviewed our charter and determined that it continues to state
appropriate guiding principles for us.

Our committee is composed solely of members who are independent and
have the expertise to serve on the Audit Committee pursuant to all relevant
criteria including Rule 4200(a)(15) of the NASD listing standards.

Submitted September 5, 2002 by members of the Audit Committee

John H. Schlesinger, Chairman
Albert L. Eilender
Robert A. Wiesen

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of September 16, 2002, the number
and percentage of shares of outstanding Common Stock owned by each named senior
executive, and director and each person that to the best of the Company's
knowledge owns more than 5% of the Company's issued and outstanding Common
Stock, and all named officers and directors as a group:

NAME AND ADDRESS OF NUMBER OF SHARES EXERCISABLE STOCK TOTAL BENEFICIAL PERCENT (4)
BENEFICIAL OWNER (1) BENEFICIALLY OWNED OPTIONS (3) OWNERSHIP
(EXCLUDING STOCK
OPTIONS) (2)
---------------------------- -------------------- ------------------- ------------------ -------------

Leonard S. Schwartz 63,406 165,000 228,406 3.4%

Frank DeBenedittis 7,527 23,500 31,027 *

Vincent Miata 12,704 23,500 36,204 *

Michael Feinman 3,701 17,250 20,951 *

Axel Mueller 3,624 2,500 6,124 *

Samuel I. Hendler 5,622 4,000 9,622 *

Robert A. Wiesen 301 4,000 4,301 *

Stanley H. Fischer -- 2,000 2,000 *

Albert L. Eilender 3,000 1,000 3,000 *

T. Rowe Price Associates, Inc. 686,800(5) 686,800 10.5%
100 East Pratt Street
Baltimore, MD 21202

Schweizerhall Holding AG 600,000(6) 600,000 9.2%
229-245/P.O Box CH-4013
Basel, Switzerland

Eubel Brady & Suttman Asset 494,916(7) 494,916 7.6%
Management, Inc.
Mark E. Brady
Robert J. Suttman
Ronald L. Eubel
William Hazel
Bernie Holtgrieve
777 Washington
Village Drive
Dayton, OH 45459

Private Capital Management 493,784(8) 493,784 7.6%
3003 Tamiami Trail
North Naples, FL 34103

Dimensional Fund Advisors Inc. 428,208(9) 428,208 6.5%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401

Delphi Management 349,200(10) 349,200 5.3%
50 Rowes Wharf
Suite 540
Boston, MA 02110

All named officers and 99,885 242,750 342,635 5.1%
directors as a group

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* Less than 1%.
(1) Unless otherwise indicated, the business address of each person is in
care of the Company, One Hollow Lane, Lake Success, New York 11042.
(2) Unless otherwise indicated, each person has sole voting and dispositive
power over the shares shown as owned by him.
(3) For purposes of the table, a person is deemed to have "beneficial
ownership" of any shares which such person has the right to acquire
within 60 days after the record date. Any share which such person has
the right to acquire within 60 days after such date is deemed to be
outstanding for the purpose of computing the percentage ownership of
such person, but it is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person.
(4) Based on 6,539,709 shares issued and outstanding as of the record date.
(5) Based on information provided by T. Rowe Price Associates, Inc., a
registered investment adviser which furnishes investment advice to
investment companies and individual and institutional clients. T. Rowe
Price Associates has the sole dispositive power for the entire holding
of 686,800 shares and sole voting power for 48,800 shares. The total
shares held of 686,800 shares are owned by various individual and
institutional investors, including the T. Rowe Price Small-Cap Value
Fund, Inc. (which owns 575,000 shares representing 8.8% of the shares
outstanding), which T. Rowe Price Associates (Price Associates) serves
as investment advisor with power to direct investments and/or power to
vote the securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
(6) Includes 400,000 shares issued to Schweizerhall Holding AG, a
corporation organized under the laws of Switzerland, in connection with
the Company's March 26, 2001 acquisition of the Schweizerhall Pharma
distribution division of Schweizerhall Holding AG, and 200,000 shares
issued to Schweizerhall, Inc., a New Jersey corporation and wholly
owned subsidiary of Schweizerhall Holding

AG, in connection with the Company's March 26, 2001 acquisition of
certain assets relating to the pharmaceutical ingredients business of
Schweizerhall, Inc.
(7) Based on information provided by Eubel Brady & Suttman Asset
Management, Inc., a registered investment adviser, as of September 19,
2002.
(8) Based on information provided by Private Capital Management, a
registered investment adviser which furnishes investment advice to
investment companies and individual and institutional clients. Private
Capital Management has shared voting and dispositive power with respect
to all these shares.
(9) Based on information provided by Dimensional Fund Advisors Inc.
("Dimensional"), an investment adviser 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 an 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 investment and voting power over 428,208 shares of Aceto
Corporation stock as of June 30, 2002. The Portfolios own all
securities reported in this statement, and Dimensional disclaims
beneficial ownership of such securities.
(10) Based on information provided by Delphi Management Inc., as of
September 19, 2002

PERFORMANCE GRAPH

The following graph compares on a cumulative basis the yearly
percentage change, assuming dividend reinvestment, over the last five fiscal
years in (a) the total shareholder return on our common stock with (b) the total
return on the Standard & Poors 500 Index and (c) the total return on a published
line-of-business index - the Dow Jones Chemicals Index (the "Peer Group").

The following graph assumes that $100 had been invested in each of the
Company, the Standard & Poors 500 Index and the Peer Group on June 30, 1997.

5-YEAR CUMULATIVE TOTAL RETURN COMPARISION
AMONG ACETO CORPORATION,
THE S&P 500 INDEX AND THE DOW JONES CHEMICALS INDEX

ACETO DOW JONES
CORPORATION S&P INDEX CHEMICALS
June 30, 1997 100 100 100
June 30, 1998 170 130 110
June 30, 1999 123 160 114
June 30, 2000 121 171 85
June 30, 2001 114 146 96
June 30, 2002 125 120 103

ASSUMES $100 INVESTED ON JUNE 30, 1997
ASSUMES DIVIDEND REINVESTMENT
FISCAL YEAR ENDING JUNE 30, 2002

The preceding sections entitled "Executive Compensation" and
"Performance Graph" do not constitute soliciting material for purposes of SEC
Rule 14a-9, will not be deemed to have been filed with the

SEC for purposes of Section 18 of the Securities Exchange Act of 1934, and are
not to be incorporated by reference into any other filing that we make with the
SEC.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Stanley H. Fischer, a director of the Company, is President of Fischer
and Burstein, P.C., a law firm which serves as counsel to the Company on various
corporate matters. During fiscal 2002, the Company paid $162,057 to Fischer and
Burstein, P.C. for legal services rendered to the Company.

Samuel I. Hendler, a director of the Company, also serves as legal
counsel to the Company on various corporate matters. During fiscal 2002, the
Company paid $75,505 to Mr. Hendler for legal services rendered to the Company.

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE SEVEN
DIRECTORS.

PROPOSAL TWO

RATIFY THE ADOPTION OF THE COMPANY'S 2002 STOCK OPTION PLAN.

We are asking you to ratify the adoption of the Company's 2002 Stock
Option Plan ("Plan") which will enable us to grant stock options, either in
incentive stock options or non-qualified stock options, restricted stock awards
or other stock based awards ("Awards") totaling up to 500,000 shares of our
common stock. The Board has adopted the Plan, subject to your ratification at
the Annual Meeting.

SUMMARY OF THE PLAN

We summarize below certain key provisions of the Plan. Because it is a
summary, it may not contain all the information that is important to you. Before
you decide how to vote, you should review the full text of the Plan, which we
have included as Exhibit A.

DESCRIPTION OF THE 2002 STOCK OPTION PLAN

PURPOSES AND ELIGIBILITY

The purposes of the Plan are to attract, retain and motivate eligible
participants to compensate them for their contributions to our growth and
profits and to encourage them to own Aceto common stock. The Aceto Corporation
2002 Stock Option Plan authorizes the issuance of certain awards to such
individuals. Eligible participants are employees (including officers and
directors of the company or its affiliates), non-employee directors, advisors,
consultants or independent contractors to the Company or its affiliates.

SHARES AVAILABLE, OVERALL LIMIT

A total of 500,000 shares of common stock will be authorized for
issuance under the Plan. We will adjust the number of shares available for
issuance under the Plan if there are changes in our capitalization, including
(but not limited to) stock dividends, stock splits, a merger, reorganization or
similar transactions. We may issue new shares or treasury shares or both.
Treasury shares are shares that we previously issued and subsequently
repurchased and are holding in our treasury.

ADMINISTRATION

The Plan will be administered by the Board. The Executive Committee of
the Board will make recommendations to the Board as to which participants from
among the eligible participants shall receive awards and determines the form,
terms and conditions of awards. The Board makes all awards under the Plan, and
has sole discretion with regard to any award.

AWARDS GENERALLY

The Plan authorizes the following awards based upon Aceto common stock:
stock options; restricted stock; or other stock-based awards the Committee
determines to be consistent with the purposes of the Plan and the interests of
Aceto. The Board determines vesting, exercisability, payment and other
restrictions that apply to an award. Vesting means the individual has the right
to the award.

CHANGE IN CONTROL

A change in control of Aceto (generally a merger or consolidation into
another company or a "person" becoming beneficial owner of 20% or more of
Aceto's voting stock without concurrence of the Board) will cause all
outstanding awards to vest, become immediately exercisable, and have all
restrictions lifted. (The change in control provision could be viewed as having
an anti-takeover consequence, in that it could have a deterrent effect against a
hostile takeover).

STOCK OPTIONS

All stock options issued will be either incentive stock options or
non-qualified stock options. The exercise price per share shall be not less than
the fair market value of Aceto common stock on the date of grant and may not be
exercisable less than six months from the date it is granted. The exercise price
of a stock option may be paid in cash or previously owned stock or both, or such
other means as the committee may prescribe.

Under the Plan, options to purchase the Company's Common Stock may take
the form of incentive stock options ("ISOs") under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") or non-qualified stock options
("NQSOs"). As required by Section 422 of the Code, the aggregate fair market
value (as defined in the Plan) of shares of Common Stock (determined as of the
date of grant of the ISO) with respect to which ISOs granted to an employee
which first become exercisable may not exceed $100,000 in any calendar year. The
foregoing limitation does not apply to NQSOs.

Initially, each option will be exercisable over a period, determined by
the Board in its discretion, of up to ten years from the date of grant. Options
may be exercisable during the option period at such time, in such amounts, and
in accordance with such terms and conditions and subject to such restrictions as
are determined by the Board and set forth in option agreements evidencing the
grant of such options. The Board may grant options with vesting schedules based
on the Company's publicly traded share price exceeding predetermined levels for
designated periods of time and/or the passage of time so that the option becomes
fully exercisable in installments.

The exercise price of options granted pursuant to the Plan is
determined by the Board, in its discretion; provided that the exercise price of
an ISO may not be less than 100% of the fair market value (as

defined in the Plan) of the shares of the Company's Common Stock on the date of
grant. The exercise price of options granted pursuant to the Plan is subject to
adjustment as provided in the Plan to reflect stock dividends, splits, other
recapitalizations or reclassifications or changes in the market value of the
Company's Common Stock. In addition, the Plan provides that, in the event of a
proposed change in control of the Company (as defined in the Plan), the Board is
to take such actions as it deems appropriate to effectuate the purposes of the
Plan and to protect the grantees of options, which action may include (i)
acceleration or change of the exercise dates of any option; (ii) arrangements
with grantees for the payment of appropriate consideration to them for the
cancellation and surrender of any option; and (iii) in any case where equity
securities other than Common Stock are proposed to be delivered in exchange for
or with respect to Common Stock, arrangements providing that any option shall
become one or more options with respect to such other equity securities.
Further, in the event the Company dissolves and liquidates (other than pursuant
to a plan of merger or reorganization), then notwithstanding any restrictions on
exercise set forth in the Plan or any grant agreement pursuant thereto (i) each
grantee shall have the right to exercise his option at any time up to ten days
prior to the effective date of such liquidation and dissolution; and (ii) the
Board may make arrangements with the grantees for the payment of appropriate
consideration to them for the cancellation and surrender of any option that is
so canceled or surrendered at any time up to ten days prior to the effective
date of such liquidation and dissolution. The Board also may establish a
different period (and different conditions) for such exercise, cancellation, or
surrender to avoid subjecting the grantee to liability under Section 16(b) of
the Exchange Act.

Except as permitted pursuant to Rule 16b-3 under the Exchange Act, and
in any event in the case of an ISO, an option is not transferable except by will
or the laws of descent and distribution. In no case may the options be exercised
later than the expiration date specified in the option agreement.

RESTRICTED STOCK AWARDS

Restricted Stock awards may be awarded to an eligible participant in
lieu of a portion of cash bonus earned by the participant. These restricted
shares will vest over a period of years as determined by the Board at the time
of grant and will not be transferable until vested. In addition, awards of
Restricted Stock may have a premium paid in additional shares when fully vested.
There may be other restrictions as the Board may determine.

OTHER EQUITY AWARDS

The Board upon recommendation of the Committee has the authority to
specify the terms and provisions of other forms of equity-based awards or
equity-related awards not described above which the Committee determines to be
consistent with the purposes of the Plan and the interests of Aceto.

STOCK OWNERSHIP GUIDELINES

One of the objectives of the Plan is that certain designated employees
be stockholders. The Plan contains guidelines for stock ownership, relative to
the positions and base salaries of the employees involved. Restricted Stock
awards can be used to satisfy these requirements.

TERMINATION

No awards shall be made after ten years from September 5, 2002,
assuming the adoption of the Plan is ratified by the Company's shareholders.

AMENDMENT

We may amend or terminate the Plan at any time. However, we must obtain
stockholder approval to increase the maximum number of shares issuable or reduce
the exercise price of a stock option.

Also, we may not amend or terminate the 2002 Stock Option Plan without
an employee's consent if it would adversely affect an employee's rights to
previously-granted awards.

FEDERAL INCOME TAX CONSEQUENCES

The following is a brief summary of certain Federal income tax aspects
of awards under the Plan based upon the Federal income tax laws in effect on the
date hereof. This summary is not intended to be exhaustive and does not describe
state or local tax consequences.

INCENTIVE STOCK OPTIONS. An optionee will not realize taxable income
upon the grant of an ISO. In addition, an optionee will not realize taxable
income upon the exercise of an ISO, provided that such exercise occurs no later
than three months after the optionee's termination of employment with the
Company (one year in the event of a termination on account of disability).
However, an optionee's alternative minimum taxable income will be increased by
the amount that the fair market value of the shares acquired upon exercise of an
ISO, generally determined as of the date of exercise, exceeds the exercise price
of the option. If an optionee sells the shares of Common Stock acquired upon
exercise of an ISO, the tax consequences of the disposition depend upon whether
the disposition is qualifying or disqualifying. The disposition of the shares is
qualifying if made more than two years after the date the ISO was granted and
more than one year after the date the ISO was exercised. If the disposition of
the shares is qualifying, any excess of the sale price of the shares over the
exercise price of the ISO would be treated as long-term capital gain taxable to
the option holder at the time of the sale. If the disposition is not qualifying,
i.e., a disqualifying disposition, the excess of the fair market value of the
shares on the date the ISO was exercised over the exercise price would be
compensation income taxable to the optionee at the time of the disposition, and
any excess of the sale price of the shares over the fair market value of the
shares on the date the ISO was exercised would be capital gain.

Unless an optionee engages in a disqualifying disposition, the Company
will not be entitled to a deduction with respect to an ISO. However, if an
optionee engages in a disqualifying disposition, the Company generally will be
entitled to a deduction equal to the amount of compensation income taxable to
the optionee.

NON-QUALIFIED STOCK OPTIONS. An optionee will not realize taxable
income upon the grant of an NQSO. However, when the optionee exercises the NQSO,
the difference between the exercise price of the NQSO and the fair market value
of the shares acquired upon exercise of the NQSO on the date of exercise is
compensation income taxable to the optionee. The Company generally will be
entitled to a deduction equal to the amount of compensation income taxable to
the optionee.

THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF THE ADOPTION OF THE
2002 STOCK OPTION PLAN.

PROPOSAL THREE

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

The Company has engaged KPMG LLP as its principal independent public
accountants to perform the audit of the Company's financial statements for the
fiscal year ending June 30, 2003. KPMG LLP has audited the Company's financial
statements since 1971. Management recommends that KPMG LLP be ratified as the
principal accounting firm to be utilized by the Company throughout the year
ending June 30, 2003.

The Company anticipates that representatives of KPMG LLP will attend
the Annual Meeting for the purpose of responding to appropriate questions. At
the Annual Meeting, the representatives of KPMG LLP will be afforded an
opportunity to make a statement if they so desire.

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE SELECTION OF KPMG
LLP AS THE COMPANY'S AUDITORS FOR THE 2003 FISCAL YEAR.

SHAREHOLDER PROPOSALS

All shareholder proposals which are intended to be presented at the
2003 Annual Meeting of Shareholders of the Company must be received by the
Company no later than June 19, 2003, for inclusion in the Board of Directors'
proxy statement and form of proxy relating to the meeting.

OTHER BUSINESS

The Board of Directors knows of no other business to be acted upon at
the meeting. However, if any other business properly comes before the meeting,
it is the intention of the persons named in the enclosed proxy to vote on such
matters in accordance with their best judgment.

The prompt return of the proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend the
meeting, please sign the proxy and return it in the enclosed envelope.

BY ORDER OF THE BOARD OF DIRECTORS

Douglas Roth
Chief Financial Officer and Secretary

Dated: October 25, 2002

EXHIBIT A
ACETO CORPORATION
2002 STOCK OPTION PLAN

SECTION 1. PURPOSE.

Aceto Corporation, Inc. ("Aceto" or the "Company") hereby establishes
the Aceto Corporation 2002 Stock Option Plan. The purposes of the Aceto
Corporation 2002 Stock Option Plan (the "Plan"), are to attract, retain and
motivate Eligible Participants, as defined below, to compensate them for their
contributions to the Company's growth and profit and to encourage them to own
the Company's common stock, thereby promoting the interests of the Company and
its stockholders.

SECTION 2. DEFINITIONS.

As used in the Plan, the following terms shall have the meanings set
forth below:

"Affiliate" shall mean (i) any entity that, directly or indirectly, is
controlled by the Company; (ii) a subsidiary of the Company; and (iii) any
entity in which the Company has a significant equity or business interest, in
each case as determined by the Board.

"Award" shall mean any Option, Restricted Stock Award, or other
stock-based Award.

"Award Agreement" shall mean any written instrument or document
evidencing any Award, which may, but need not be, executed by an Eligible
Participant.

"Board" shall mean the Board of Directors of the Company.

"Change in Control" shall be deemed to have occurred if: (i) any
"person" as such term is used in Sections 13(d) and 14(d) of the Exchange Act
(other than the Company, any trustee or other fiduciary holding securities under
any employee benefit plan of the Company,) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the voting power of the
Company's then outstanding securities; (ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors, and any new director (other than a director designated by a person
who has entered into an agreement with the Company to effect a transaction
described in clause (i), (iii), or (iv) of this paragraph) whose election by the
Board of Directors or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of the two year period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute at least a majority of the Board of Directors; (iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation that would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; provided,
however, that a merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no person acquires more than
20% of the combined voting power of the Company's then outstanding securities
shall not constitute a change in Control of

the Company; or (iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets. If any of the
events enumerated in clauses (i) through (iv) occur the Board shall determine
the effective date of the Change in Control resulting therefrom, for purposes of
the Plan.

"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder.

"Committee" shall mean a committee of the Board designated by the Board
to make recommendations to the Board with regard to Awards. Until otherwise
determined by the Board, the Executive Committee of the Board (which serves as
the Executive Compensation Committee) shall be the Committee under the Plan.

"Common Stock" shall mean shares of the Company's common stock, $.01
par value.

"Eligible Participant" shall mean an employee of the Company or any
Affiliate. Such term shall also mean any non-employee director, adviser,
consultant or independent contractor to the Company or any Affiliate, and any
reference to employment or termination of employment under the Plan shall be
deemed to apply to such director, adviser, consultant or independent contractor,
for the purpose of the Plan only, as if the services of such person constitute
employment services.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

"Executive Officer" shall mean, at any time, an individual who is an
executive officer of the Company within the meaning of Exchange Act Rule 3b-7
promulgated and interpreted by the SEC under the Exchange Act, or any successor
rule or regulation thereto as in effect from time to time, or who is an officer
of the Company within the meaning of Exchange Act Rule 16a-1(f) as promulgated
and interpreted by the SEC under the Exchange Act, or any successor rule or
regulation thereto as in effect from time to time.

"Fair Market Value" of a share of the Company's Common Stock for any
purpose on a particular date shall be the last reported sale price per share of
Common Stock on the principal stock exchange on which the Common Stock is
traded, or if such exchange was closed on such day, or if it was open but no
such sale took place on such day, then on the preceding day that the Common
Stock was traded on such exchange.

"Incentive Stock Option" shall mean an Option which meets the
requirements of Section 422 of the Code.

"Non-Qualified Stock Option" shall mean an Option which does not meet
the requirements of Section 422 of the Code.

"Option" shall mean an Incentive Stock Option or Non-Qualified Stock
Option.

"Participant" shall mean any Eligible Participant selected by the Board
to receive an Award under the Plan.

"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, government
or political subdivision thereof or other entity.

"QDRO" shall mean a domestic relations order meeting such requirements
as the Committee shall determine, in its sole discretion.

"Restricted Stock" shall mean any Share granted under Section 7 of the
Plan.

"SEC" shall mean the Securities and Exchange Commission or any
successor thereto and shall include the staff thereof.

"Shares" shall mean shares of the Common Stock, $ .01 par value, of the
Company.

SECTION 3. ADMINISTRATION.

(a) Authority of Committee. The Committee shall, subject to the terms
of the Plan and applicable law, make recommendations to the Board with regard to
(i) designation of Participants; (ii) the type or types of Awards to be granted
to an Eligible Participant; (iii) the number of Shares to be covered by Awards;
(iv) terms and conditions of Awards; and (v) unless otherwise expressly provided
in the Plan, designations, determination, interpretations, and suggested
decisions with respect to the Plan or any Award.

(b) Authority of Board. All Awards under the Plan shall be made by the
Board, which shall have full authority to accept, reject or modify any
recommendations of the Committee. All designations, determinations,
interpretations, and other decisions under or with respect to the Plan or any
Award shall be within the sole discretion of the Board, may be made at any time
and shall be final, conclusive, and binding upon all Persons, including the
Company, any Affiliate, any Participant, any holder or beneficiary of any Award,
and any stockholder.

SECTION 4. SHARES AVAILABLE FOR AWARDS.

(a) Shares Available. Subject to adjustment as provided in Section
4(b), the number of Shares with respect to which Awards may be granted under the
Plan shall be five hundred thousand (500,000). If, after the effective date of
the Plan, any Shares covered by an Award granted under the Plan are forfeited,
or if such an Award terminates or is canceled without the delivery of shares,
then the Shares covered by such Award, or the number of Shares otherwise counted
against the aggregate number of Shares with respect to which Awards may be
granted, to the extent of any such forfeiture, termination or cancellation,
shall again become Shares with respect to which Awards may be granted. In the
event that any Option or other Award granted hereunder is exercised through the
delivery of Shares or in the event that withholding tax liabilities arising from
such Award are satisfied by the withholding of Shares by the Company, the number
of Shares available for Awards under the Plan shall be increased by the number
of Shares so surrendered or withheld.

(b) Adjustments. In the event that any dividend (other than regular
dividends) or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares, or other similar corporate transaction or
event affects the Shares such that an adjustment is appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then adjustment shall be made, in such
manner as shall be equitable, of (i) the number of Shares with respect to which
Awards may be granted, (ii) the number of Shares subject to outstanding Awards,
and (iii)

the grant or exercise price with respect to any Award, provided, that with
respect to any Award no such adjustment shall be made to the extent that such
adjustment would be inconsistent with the Plan's meeting the requirements of
Section 162(m) of the Code, as from time to time amended.

(c) Sources of Shares Deliverable under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.

SECTION 5. ELIGIBILITY.

Any employee (including an officer, Executive Officer or director) of
the Company or any Affiliate, including any non-employee director, advisor,
consultant or independent contractor to the Company or any Affiliate, shall be
an Eligible Participant. To the extent the Board deems it necessary, appropriate
or desirable to comply with foreign law or practice and to further the purpose
of this Plan, the Board may, without amending this Plan, (i) establish rules
applicable to Awards granted to Participants who are foreign nationals, are
employed outside the United States, or both, including rules that differ from
those set forth in this Plan, and (ii) grant Awards to such Participants in
accordance with those rules.

SECTION 6. STOCK OPTIONS - TERMS AND CONDITIONS.

All Options granted under the Plan shall be either Incentive Stock
Options or Non-Qualified Stock Options and shall be evidenced by Award
Agreements which shall be subject to applicable provisions of the Plan and such
other provisions as they may contain including:

(a) Price. The exercise price per Share shall not be less than 100% of
the Fair Market Value of a Share on the date of Award.

(b) Period. The Board, upon recommendation of the Committee may
establish the term of any Option award under the Plan, provided, however, that
an Option shall expire no later than 10 years from the date of Award, and may
not be exercisable less than six months from the date it is granted.

(c) Time of Exercise. The Board, upon recommendation of the Committee,
may grant Options to Participants with vesting schedules based on the Company's
publicly traded share price exceeding predetermined levels for designated
periods of time, and/or the passage of time, such that the Option becomes fully
exercisable in a series of installments. The Board, upon recommendation of the
Committee, may also establish other conditions of exercise and may accelerate
the exercisability of any Option granted to a Participant under the Plan.

(d) Payment. No Shares shall be delivered pursuant to any exercise of
an Option until payment in full of the option price in cash, or its equivalent,
or by exchanging Shares owned by the optionee (which are not the subject of any
pledge or other security interest), or by a combination of the foregoing,
provided that the combined value of all cash and cash equivalents and the Fair
Market Value of any such Shares so tendered to the Company as of the date of
such tender is at least equal to such option price.

(e) Exercise. An Option, or portion thereof, shall be exercised by
delivery of a written notice of exercise to the Company. A Participant shall not
have any of the rights or privileges of the holder of Common Stock until such
time as Shares of Common Stock are issued or transferred to the Participant.

(f) Restrictions on Incentive Stock Options. The aggregate Fair Market
Value (determined as of the Grant Date) of shares of Common Stock with respect
to which all Incentive Stock Options first become exercisable by any grantee in
any calendar year under this or another plan of the Company and its Affiliates
may not exceed $100,000 or such other amount as may be permitted from time to
time under Section 422 of the Code. To the extent that such aggregate Fair
Market Value shall exceed $100,000, or other applicable amount, such Options
(taking Options into account in the order in which they were granted) shall be
treated as Non-Qualified Stock Options. In such case, the corporation may
designate the shares of Common Stock that are to be treated as stock acquired
pursuant to the exercise of any Incentive Stock Option by issuing a separate
certificate for such shares and identifying the certificate as Incentive Stock
Option shares in the stock transfer records of the Company.

The exercise price of any Incentive Stock Option granted to a grantee
who owns (within the meaning of Section 422(b)(6) of the Code, after the
application of the attribution rules in Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of shares of the
Corporation or its Parent or Subsidiary corporations (within the meaning of
Sections 422 and 424 of the Code) shall be not less than 110% of the Fair Market
Value of the Common Stock on the grant date and the term of such Option shall
not exceed five years.

(g) Other Terms and Conditions. Options may contain such other
provisions, not inconsistent with the provisions of the Plan, as the Committee
shall determine appropriate from time to time. No Option shall be an Incentive
Stock Option unless so designated by the Committee at the time of grant or in
the Grant Agreement evidencing such Option.

SECTION 7. RESTRICTED STOCK

(a) Grant by Company. The Board, upon recommendation of the Committee,
shall have authority to determine the Participants to whom Shares of Restricted
Stock (including Premium Shares, as defined below) shall be granted, the number
of Shares of Restricted Stock to be granted to each Participant, and the other
terms and conditions of such Awards.

(b) Participant Election. Each Participant may elect Restricted Stock
in lieu of a portion of any annual cash bonus earned by such Participant up to
20% of such annual cash bonus. Such election is a one-time election to be made
annually during a Trading Window, as defined in the Company's Trading Policy,
with the right to amend the election in writing up to a maximum of two times per
fiscal year during Trading Windows only. Such Restricted Stock will vest ratably
over a period of years as determined by the Board. Such Restricted Stock may
have a premium in shares (the "Premium Shares") greater than the portion of the
bonus to be paid in Restricted Shares, as determined by the Board, which Premium
Shares shall be delivered to the Participant when the Award is fully vested,
provided that the Participant is in the employ of the Company when vesting
occurs.

(c) Transfer Restrictions. The Company shall deliver certificates for
Restricted Shares to the Participant or the Participant's legal representative
upon the lapse of all restrictions applicable to such shares of Restricted
Stock.

(d) Payment. Each share of Restricted Stock shall be paid in Shares,
upon the lapse of the restrictions applicable thereto, or otherwise in
accordance with the applicable Award Agreement.

(e) Rights of Ownership. The Participant shall have all rights of
ownership to the Restricted Stock, including voting rights, dividends and other
distributions paid on or in respect of any Shares of Restricted Stock, except
for rights of transfer, which shall not exist until vesting has occurred.

SECTION 8. TERMINATION OF EMPLOYMENT.

(a) In the event a Participant (other than a Non-Employee Director)
shall cease to be employed by the Corporation while he is holding one or more
Options, each outstanding Option which is exercisable on the date of such
termination shall expire at the earlier of the expiration of its term or one
year, unless the Board determines otherwise.

Unless otherwise determined by the Board, any portion of an Option held
by a Participant (other than a Non-Employee Director) that is not exercisable on
the date such Participant's employment terminates shall expire as of such
termination date.

(b) Restricted Stock. In the event of a Participant's retirement,
permanent and total disability, or death, or in cases of special circumstances,
the Board may, when it finds that a waiver would be in the best interest of the
Company, waive in whole or in part, any or all remaining restrictions with
respect to such Participant's entitlement to shares of Restricted Stock,
including any Premium Shares. In the event of a Participant's death while in the
employ of the Company, any or all remaining restrictions with respect to such
Participant's entitlement to shares of restricted stock shall be deemed waived
by the Board.

SECTION 9. TERMINATION OF SERVICE AS A DIRECTOR

(a) In the event a Director shall cease to serve as a Director of the
Corporation while he or she is holding one or more Options, each outstanding
Option which is exercisable as of the date of such termination shall expire at
the earlier of the expiration of its term or one year, unless the Board
determines otherwise.

Unless otherwise determined by the Board, any portion of an Option held
by a Director which has not become exercisable as of the date a Director ceases
to serve as a Director of the Corporation shall terminate as of such date.

SECTION 10. CHANGE IN CONTROL.

Notwithstanding any other provision of the Plan to the contrary, upon a
Change in Control all outstanding Awards shall vest, become immediately
exercisable or payable and have all restrictions lifted as may apply to the type
of Award.

SECTION 11. AMENDMENT AND TERMINATION.

(a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time; provided
that no such amendment, alteration, suspension discontinuation or termination
shall be made without stockholder approval to: increase the number of shares
issuable; reduce the exercise price of Options or extend the termination period
of the Plan. The Board, however, may not amend or terminate the Plan without a
Participant's consent insofar as it would adversely affect a Participant's
rights to previously granted Awards.

(b) Cancellation. Any Award granted hereunder may be canceled with the
approval and agreement of the Participant in consideration of a cash payment or
alternative Award made to the holder of such canceled Award equal in value to
the Fair Market Value of such canceled Award.

SECTION 12. GENERAL PROVISIONS

(a) Nontransferability. No Award shall be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a Participant, except
by will or the laws of descent and distribution or pursuant to a QDRO.

(b) No Rights to Awards. No Participant or other Person shall have any
claim to be granted any Award, and there is no obligation for uniformity of
treatment of Participants, or holders or beneficiaries of Awards. The terms and
conditions of Awards need not be the same with respect to each recipient.

(c) Share Certificates. All certificates for Shares or other securities
of the Company delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restrictions as
the Board may deem advisable under the Plan or the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which such Shares or other securities are then listed, and any applicable
Federal or state laws, and a legend or legends may be put on any such
certificates to make appropriate reference to such restrictions.

(d) Withholding. A Participant may be required to pay to the Company
and the Company shall have the right and is hereby authorized to withhold from
any Award, from any payment due or transfer made under any Award or under the
Plan or from any compensation or other amount owing to a Participant the amount
(in cash, or Shares), of any applicable withholding taxes in respect of an
Award, its exercise, or any payment or transfer under an Award or under the Plan
and to take such other action as may be necessary in the opinion of the Company
to satisfy all obligations for the payment of such taxes.

(e) Award Agreements. Each Award hereunder shall be evidenced by an
Award Agreement that shall be delivered to the Participant and shall specify the
terms and conditions of the Award and any rules applicable thereto.

(f) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate. Further, the Company or an Affiliate may at any time
dismiss a Participant from employment, free from any liability or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any Award
Agreement.

(g) Rights as Stockholder. No holder of an Award of stock options or
beneficiary of any such Award shall have any rights as a stockholder with
respect to such options until he or she has exercised such option and

become the holder of Shares. In connection with each grant of Restricted Stock
hereunder, the applicable Award shall be entitled to the rights of a stockholder
in respect of such Restricted Stock, except for such transfer restrictions as
may be applicable thereto.

(h) Governing Law. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan and any Award Agreement shall
be determined in accordance with the laws of the State of New York.

(i) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any applicable law, such provision shall be construed or deemed
amended to conform to the applicable laws, or if it cannot be construed or
deemed amended without, in the determination of the Board, materially altering
the intent of the Plan or the Award, such provision shall be stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.

(j) Other Laws. The Company may refuse to issue or transfer any Shares
or other consideration under an Award if, it determines that the issuance or
transfer of such shares might violate any applicable law or regulation or
entitle the Company to recover the same under Section 16(b) of the Exchange Act,
and any payment tendered to the Company by a Participant, other holder or
beneficiary in connection with the exercise of such Award shall be promptly
refunded to the relevant Participant, holder, or beneficiary. Without limiting
the generality of the foregoing, no Award granted hereunder shall be construed
as an offer to sell securities of the Company, and no such offer shall be
outstanding, unless the Board has determined that any such offer, if made, would
be in compliance with all applicable requirements of the U.S. federal securities
laws any other laws to which such offer, if made, would be subject.

(k) No Trust Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company and a Participant or any other Person. To the
extent that any Person acquires rights pursuant to an Award, such rights shall
be no greater than the rights of any unsecured general creditor of the Company.

(l) No Obligation to Exercise Options. The granting of an Option shall
impose no obligation upon the Participant to exercise such Option.

(m) Plan Expenses. Any expenses of administering this Plan shall be
borne by the Company.

(n) No Warranty of Tax Effect. Except as may be contained in any Award
Agreement, no opinion shall be deemed to be expressed or warranties made as to
the effect of foreign, federal, state, or local tax on any Awards.

SECTION 13. RESTATEMENT OF SHARE OWNERSHIP GUIDELINES.

(a) Applicability. The Board established the one-time Share ownership
guidelines in connection with its adoption of the Company's 1998 Omnibus Equity
Award Plan. These guidelines are restated in paragraph 13 (d) below. These
guidelines are applicable to the Chief Executive Officer of the Company ("CEO")
and to managerial Participants designated by the Board (together, "Designated
Participants").

(b) Measurement. Share ownership guidelines are in terms of the Fair
Market Value of Shares to be owned relative to the positions held and the base
salaries of the Designated Participants. Ownership levels and guidelines will be
reviewed (and if advisable modified) by the Board (upon recommendation of the
Committee) periodically, based on internal reports and overall operations of the
Company.

(c) Targeted Levels. Designated Participants will either from inception
of the Company's 1998 Omnibus Equity Award Plan or commencement of employment
have five years to reach the targeted guideline levels of Share ownership set
forth in Paragraph 13 (d) below (except, that if a Designated Participant's Base
Salary is increased from under $100,000 to $100,000 or more, such Participant
will have only three years from the date of the increase in Base Salary to reach
the targeted guideline level of share ownership), which levels can be changed,
modified, or suspended by the Board. Restricted Stock awarded to a Participant
shall be included in calculating Shares owned.

(d) Guidelines. The one-time share ownership guidelines are as follows:

(i) The CEO shall at all times own Shares with a Fair
Market Value equal to two times his or her Base
Salary.
(ii) All other Designated Participants with a Base Salary
of less than $100,000 shall at all times own Shares
with a Fair Market Value equal to one-half his or her
Base Salary.
(iii) All other Designated Participants with a Base Salary
of $100,000 or more shall at all times own Shares
with a Fair Market Value equal to his or her Base
Salary.

SECTION 14. EFFECTIVE DATE; TERMINATION DATE

The Plan is effective as of September 5, 2002, the date on which the
Plan was adopted by the Board, subject to approval of the shareholders within
twelve months of such date. Unless previously terminated, the Plan shall
terminate on the close of business on September 5, 2012, ten years from its
effective date. Subject to other applicable provisions of the Plan, all Options
granted under the Plan prior to termination of the Plan shall remain in effect
until such Options have been satisfied or terminated in accordance with the Plan
and the terms of such Options.

ACETO CORPORATION
ONE HOLLOW LANE
LAKE SUCCESS, NEW YORK 11042-1215

ACETO CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

The undersigned, revoking all previous proxies, hereby constitutes and appoints
Leonard S. Schwartz and Douglas Roth, and each of them, proxies with full power
of substitution to vote for the undersigned all shares of Common Stock of Aceto
Corporation which the undersigned would be entitled to vote if personally
present at the Annual Meeting of the Stockholders to be held on December 5, 2002
at the Company's offices, One Hollow Lane, Suite 201,Lake Success, New York
11042, at 10:00 a.m., Eastern Standard Time, and at any adjournment thereof,
upon the matters described in the accompanying Proxy Statement and upon any
other business that may properly come before the meeting or any adjournment
thereof. Said proxies are directed to vote or refrain from voting as checked on
the reverse side upon the matters listed on the reverse side, and otherwise in
their discretion.

PLEASE INDICATE HOW YOUR STOCK IS TO BE VOTED.IF NO SPECIFIC VOTING INSTRUCTIONS
ARE GIVEN,THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS RECOMMENDED BY
THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL
NOMINEES "IN ITEM 1 AND "FOR " ITEMS 2 AND 3.

ACETO CORPORATION
P.O. BOX 11199
NEW YORK, N.Y. 10203-0199

(1) Election of Directors
FOR all nominees listed below *EXCEPTIONS WITHHOLD AUTHORITY to vote

Nominees: Leonard S. Schwartz , Samuel I. Hendler, Robert A. Wiesen, Stanley H.
Fischer, Albert L. Eilender, Ira S. Kallem and Hans C. Noetzli.

(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX ABOVE AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED
BELOW.)
*Exceptions
________________________________________________________________________________

(2) Ratify adoption of the Company's 2002 Stock Option Plan
.
FOR AGAINST ABSTAIN

(3) Ratify the appointment of KPMG LLP as the Company's independent
auditors for the current fiscal year.

FOR AGAINST ABSTAIN

(4) In their discretion with respect to such other business as may properly
come before the meeting or any adjournment thereof.

Change of Address Mark Here

(PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED POSTAGE PREPAID
ENVELOPE.)

NOTE: Please sign exactly as your name appears on this proxy. If shares are held
jointly, each joint owner should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. Proxies
executed by a corporation should be signed with the full corporate name by a
duly authorized officer.
Dated: , 2002
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(Signature of Stockholder)

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