Form 10-Q

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Dxbs47n6Y7HXbhB9X5S+iWyXDbgZYbaz8eCqqXkmUPXMQoikgjvHD8GHwXICKw5y iZ0ROgz082tQpN5bVv5gVg== 0001193125-08-111209.txt : 20080512 0001193125-08-111209.hdr.sgml : 20080512 20080512132512 ACCESSION NUMBER: 0001193125-08-111209 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20080331 FILED AS OF DATE: 20080512 DATE AS OF CHANGE: 20080512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN VANGUARD CORP CENTRAL INDEX KEY: 0000005981 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE CHEMICALS [2870] IRS NUMBER: 952588080 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13795 FILM NUMBER: 08822177 BUSINESS ADDRESS: STREET 1: 4695 MACARTHUR COURT CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 9492601200 MAIL ADDRESS: STREET 1: 4695 MACARTHUR COURT CITY: NEWPORT BEACH STATE: CA ZIP: 92660 FORMER COMPANY: FORMER CONFORMED NAME: AEROCON INC DATE OF NAME CHANGE: 19720620 10-Q 1 d10q.htm FORM 10-Q Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2008

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission file number 001-13795

AMERICAN VANGUARD CORPORATION


Delaware		95-2588080
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification Number)

4695 MacArthur Court, Newport Beach, California		92660
(Address of principal executive offices)		(Zip Code)

(949) 260-1200

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):


Large Accelerated Filer ¨		Accelerated Filer x		Non-Accelerated Filer ¨		Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $.10 Par Value—26,479,452 shares as of May 8, 2008.

AMERICAN VANGUARD CORPORATION

INDEX


		Page Number
PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Consolidated Statements of Operations for the three months ended March 31, 2008 and 2007	1

	Consolidated Balance Sheets as of March 31, 2008 and December 31, 2007	2

	Consolidated Statements of Cash Flows for the three months ended March 31, 2008 and 2007	4

	Notes to Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18

Item 4.	Controls and Procedures	18

PART II—OTHER INFORMATION		19

Item 1.	Legal Proceedings	19

Item 6.	Exhibits	23

SIGNATURES		24

PART I. FINANCIAL INFORMATION

Item 1.

FINANCIAL STATEMENTS

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share amounts)

(Unaudited)


	For the three months ended March 31
	2008			2007
Net sales	$	40,934		$	40,906
Cost of sales		23,198			22,489

Gross profit		17,736			18,417
Operating expenses		13,946			12,999

Operating income		3,790			5,418
Interest expense		1,015			1,895
Interest income		—			(5	)
Interest capitalized		(50	)		(16	)

Income before income tax		2,825			3,544
Income tax expense		1,092			1,418

Net income	$	1,733		$	2,126

Earnings per common share—basic	$	.07		$	.08

Earnings per common share—assuming dilution	$	.06		$	.08

Weighted average shares outstanding—basic		26,464			26,163

Weighted average shares outstanding—assuming dilution		27,466			27,330

See notes to consolidated financial statements.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

ASSETS (note 7)


	Mar. 31, 2008		Dec. 31, 2007
	(Unaudited)		(Note)
Current assets:
Cash and cash equivalents	$	2,289	$	3,201
Receivables:
Trade		64,342		55,925
Other		630		645

		64,972		56,570

Inventories		90,284		63,455
Prepaid expenses		3,658		2,214

Total current assets		161,203		125,440
Property, plant and equipment, net		38,284		36,330
Land held for development		211		211
Intangible assets		92,470		85,318
Other assets		1,293		1,282

	$	293,461	$	248,581

(Continued)

See notes to consolidated financial statements.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

LIABILITIES AND STOCKHOLDERS’ EQUITY


	Mar. 31, 2008			Dec. 31, 2007
	(Unaudited)			(Note)
Current liabilities:
Current installments of long-term debt	$	4,106		$	4,106
Accounts payable		20,505			13,796
Accrued program costs		20,425			24,191
Accrued expenses and other payables		6,579			6,355
Income taxes payable		1,886			1,848

Total current liabilities		53,501			50,296
Long-term debt, excluding current installments		96,628			56,155
Deferred income taxes		2,391			2,391

Total liabilities		152,520			108,842

Commitments and contingent liabilities (Notes 7 and 11)
Stockholders’ Equity:
Preferred stock, $.10 par value per share; authorized 400,000 shares; none issued		—			—
Common stock, $.10 par value per share; authorized 40,000,000 shares; issued 28,706,248 shares at March 31, 2008 and 28,650,829 shares at December 31, 2007		2,871			2,865
Additional paid-in capital		37,293			36,551
Accumulated other comprehensive income		108			64
Retained earnings		103,414			103,004

		143,686			142,484
Less treasury stock, at cost, 2,226,796 shares at March 31, 2008 and December 31, 2007		(2,745	)		(2,745	)

Total stockholders’ equity		140,941			139,739

	$	293,461		$	248,581

Note: The balance sheet at December 31, 2007 has been derived from the audited financial statements at that date.

See notes to consolidated financial statements.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

For The Three Months Ended March 31, 2008 and 2007

(Unaudited)


Increase (decrease) in cash	2008			2007
Cash flows from operating activities:
Net income	$	1,733		$	2,126
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		2,762			2,098
Stock-based compensation expense related to stock options and employee stock purchases		235			264
Changes in assets and liabilities associated with operations:
Increase in receivables		(8,185	)		(3,217	)
Decrease in provision for doubtful accounts		(217	)		—
Increase in inventories		(26,829	)		(3,035	)
(Increase) Decrease in prepaid expenses and other assets		(1,483	)		382
Increase (Decrease) in accounts payable		6,859			(3,543	)
Decrease in other current liabilities		(4,977	)		(818	)

Net cash used in operating activities		(30,102	)		(5,743	)

Cash flows from investing activities:
Capital expenditures		(3,631	)		(680	)
Acquisitions of intangible assets		(8,209	)		(1,576	)
Net decrease in other non-current assets		—			25

Net cash used in investing activities		(11,840	)		(2,231	)

Cash flows from financing activities:
Net borrowings under line of credit agreement		41,500			9,000
Principal payments on long-term debt		(1,027	)		(526	)
Proceeds from the issuance of common stock (exercise of stock options and sale of stock under ESPP)		513			418

Net cash provided by financing activities		40,986			8,892

Net (decrease) increase in cash		(956	)		918
Cash and cash equivalents at beginning of year		3,201			1,844
Effect of exchange rate changes on cash		44			100

Cash and cash equivalents as of March 31	$	2,289		$	2,862

Supplemental schedule of non-cash investing and financial activities:

On March 10, 2008, the Company announced that the Board of Directors declared a cash dividend of $0.05 per share. The dividend was distributed on April 15, 2008, to stockholders of record at the close of business on March 31, 2008. Cash dividends paid April 15, 2008 totaled approximately $1,323,000.

On March 13, 2007, the Board of Directors declared a cash dividend of $0.04 per share. The dividend was distributed on April 13, 2007 to stockholders of record at the close of business on March 30, 2007. Cash dividends paid April 13, 2007 totaled $1,047,000.

During the quarter ended March 31, 2008, the Company completed the purchase of certain assets which totaled $350,000 of which $200,000 was paid in cash during the period. The balance is due in March 2009.

See notes to consolidated financial statements.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Columnar Numbers in thousands except for Note 10 and share data)

(Unaudited)

1. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation, have been included. Operating results for the three months ended March 31, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

2. Property, plant and equipment at March 31, 2008 and December 31, 2007 consists of the following:


	March 31, 2008		December 31, 2007
Land	$	2,441	$	2,441
Buildings and improvements		6,804		6,791
Machinery and equipment		68,542		66,257
Office furniture, fixtures and equipment		5,284		5,054
Automotive equipment		269		269
Construction in progress		6,291		5,186

		89,631		85,998
Less accumulated depreciation		51,347		49,668

	$	38,284	$	36,330

3. Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. The components of inventories consist of the following:


	March 31, 2008		December 31, 2007
Finished products	$	82,783	$	56,860
Raw materials		7,501		6,595

	$	90,284	$	63,455

4. Based on similar economic and operational characteristics, the Company’s business is aggregated into one reportable segment. Selective enterprise information is as follows:


	Three Months Ended March 31
	2008		2007
Net sales:
Crop	$	35,111	$	32,349
Non-crop		5,823		8,557

	$	40,934	$	40,906

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

5. On March 10, 2008 the Company announced that the Board of Directors declared a cash dividend of $0.05 per share. The dividend was distributed on April 15, 2008, to stockholders of record at the close of business on March 31, 2008. Cash dividends paid April 15, 2008 totaled approximately $1,323,000.

6. Statement of Financial Accounting Standards (“SFAS”) No. 128, Earnings Per Share (“EPS”) requires dual presentation of basic EPS and diluted EPS on the face of all income statements. Basic EPS is computed as net income divided by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects potential dilution that could occur if securities or other contracts, which, for the Company, consists of options to purchase shares of the Company’s common stock are exercised.

The components of basic and diluted earnings per share were as follows:


	Three Months Ended March 31,
	2008		2007
Numerator:
Net income	$	1,733	$	2,126

Denominator:
Weighted averages shares outstanding		26,464		26,163
Assumed exercise of stock options		1,002		1,167

		27,466		27,330

7. Substantially all of the Company’s assets not otherwise specifically pledged as collateral on existing loans and capital leases are pledged as collateral under the Company’s credit agreement with its banks. For further information, refer to the consolidated financial statements and footnotes thereto (specifically note 2) included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

8. Reclassification—Certain items may have been reclassified (if appropriate), in the prior period consolidated financial statements to conform with the March 31, 2008 presentation.

9. Total comprehensive income includes, in addition to net income, changes in equity that are excluded from the consolidated statements of operations and are recorded directly into a separate section of stockholders’ equity on the consolidated balance sheets.

Comprehensive income and its components consist of the following:


	Three Months Ended March 31,
	2008		2007
Net income	$	1,733	$	2,126
Foreign currency translation adjustment		44		100

Comprehensive income	$	1,777	$	2,226

10. Stock Based Compensation Expense—The Company accounts for stock-based awards to employees and directors in accordance with Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

Payment,” (“SFAS 123(R)”) which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to the Employee Stock Purchase Plan (“employee stock purchases”) based on estimated fair values.

During the three months ended March 31, 2008, the Company granted a 10-year option to an employee to acquire 6,779 shares of common stock at an exercise price of $14.75. The option vests over three equal annual installments. The option was valued using the Black-Scholes option-pricing model at $6.48 per share and the company recognized a corresponding expense of $43,907 when granted. Assumptions used to value the option were: expected term of 10 years, expected volatility of 50%, expected annual dividends of 0.5%, and a risk-free interest rate of 2.45%.

During the three months ended March 31, 2007, the Company granted a 10-year option to an employee to acquire 6,349 shares of common stock at an exercise price of $15.75. The option was immediately vested on the date of grant. The option was valued using the Black-Scholes option-pricing model at $6.48 per share and the company recognized a corresponding expense of $41,141 when granted. Assumptions used to value the option were: expected term of 5 years, expected volatility of 41%, expected annual dividends of 0.5%, and a risk-free interest rate of 4.65%.

During the three months ended March 31, 2008, employees and directors exercised options to acquire 36,900 shares of common stock. Cash received upon exercise was $90,945 or $2.46 per share. At the time of exercise, total intrinsic value of the options exercised was approximately $445,760 (or $12.08 per share). During the three months ended March 31, 2007, employees exercised options to acquire 67,360 shares of common stock. Cash received upon exercise was $193,864 or $2.88 per share. At the time of exercise, total intrinsic value of the options exercised was approximately $871,149 (or $12.93 per share).

There were options to acquire 9,400 shares that were terminated during the three months ended March 31, 2008, which had an exercise price of $14.74. The shares were vested when terminated. There were no options terminated in the three months ended March 31, 2007.

As of March 31, 2008, the Company had approximately $72,000 of unamortized stock-based compensation expenses, which will be recognized over the weighted-average period of 0.7 years. This projected expense will change if any stock options are granted or cancelled prior to the respective reporting periods or if there are any changes required to be made for estimated forfeitures. Stock based compensation expense recognized consisted of the following:


	Three months ended March 31,
	2008		2007
Expense related to employee stock options	$	70	$	140
Expense related to director stock awards		75		79
Expense related to employee stock awards		50		—
Expense related to employee stock purchases		40		45

Total SFAS 123(R) expense	$	235	$	264

11. Legal Proceedings—On occasion, the Company and/or AMVAC Chemical Corporation (“AMVAC”), a wholly-owned subsidiary of the Company, are involved as either a plaintiff or defendant to claims and legal actions incidental to their operations.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

A. DBCP Cases

A number of suits have been filed against AMVAC, alleging injury from exposure to the agricultural chemical 1,2-dibromo-3-chloropropane (“DBCP”). DBCP was manufactured by several chemical companies, including Dow Chemical Company and Shell Oil Company and was approved by the U.S. EPA to control nematodes. DBCP was also applied on banana farms in Latin America. The U.S. EPA suspended registrations of DBCP in October 1979, except for use on pineapples in Hawaii. The EPA suspension was partially based on 1977 studies by other manufacturers that indicated a link between male sterility and exposure to DBCP among their factory production workers producing the product.

Thus far there are approximately 90 lawsuits filed by former banana workers in which AMVAC has been named as a party. These claims are all in various stages and allege injury from exposure to DBCP, including claims for sterility. Most of the cases are unserved suits pending in Nicaragua. All but one of the suits in Nicaragua have been filed pursuant to Public Law 364, an October 2000 Nicaraguan statute that contains substantive and procedural provisions that Nicaragua’s Attorney General previously expressed as unconstitutional. In October 2003, the Nicaragua Supreme Court issued an advisory opinion, not in connection with any litigation, that Public Law 364 is constitutional. The suits pending in Nicaragua that name AMVAC have been filed on behalf of 3,592 claimants. Each of the Nicaraguan plaintiffs claims $1 million in compensatory damages and $5 million in punitive damages. In all of these cases, AMVAC is a joint defendant with Dow Chemical and Dole Food Company, Inc. AMVAC contends that the Nicaragua courts lack jurisdiction over AMVAC and that Public Law 364 violates international due process of law. AMVAC also contends that the plaintiffs will have difficulty in proving that they were exposed to or injured by any DBCP manufactured by AMVAC. In the two cases pending before Nicaraguan courts in which AMVAC has been served, the court has denied AMVAC’s objection to jurisdiction, which is being appealed.

There are a number of domestic cases pending against AMVAC involving claims relating to DBCP exposure in which there has been recent activity. With respect to one such lawsuit, Tellez et al. v. Dole Food Company, Inc., et al, which involved 13 Nicaraguan plaintiffs who were field workers claiming sterility and had been filed in the Los Angeles Superior Court on March 26, 2004, AMVAC entered into a settlement with the 13 plaintiffs without any admission of liability for payment of $300,000 in total; that settlement was approved by the court on April 24, 2007. The case proceeded to a jury trial against the Dole Food and Dow Chemical defendants commencing July 19, 2007 for 12 plaintiffs (as one was transferred to the Mejia case) and, on November 5, 2007, the jury found for the defendants on the claims of six of the plaintiffs and found for the plaintiffs on the other six for a total award of approximately $3.3 million. For five of the six plaintiffs, the jury allocated 80% of the liability to Dole on fraudulent concealment and strict liability causes of action and 20% to Dow (and 40% on the other plaintiff) on strict products liability. In further deliberations, the same jury awarded $500,000 in punitive damages to each of five plaintiffs as against the Dole entities for fraudulent concealment for a total of an additional $2.5 million. On March 7, 2008, the trial court in Tellez granted Dole’s motion for judgment notwithstanding the verdict as to punitive damages thereby reversing the award of punitive damages ($2.5 million) against Dole. In reaching its decision, the court found that any award of punitive damages as against Dole would be violative of the Due Process Clause of the Fourteenth Amendment as the claimed injuries to plaintiffs and Dole’s acts occurred outside of California. The court also reversed the finding of strict products liability against Dole. As this case impacts the other DBCP suits, the Company is monitoring these developments.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

Plaintiffs in Mejia filed a second amended complaint on January 22, 2008, and the case has been set for trial for March 16, 2009. The court has advised that discovery will be limited to 20 plaintiffs and any others beyond that number must be transferred to another case. Discovery has not yet begun in this case. It is too early to provide any evaluation of the likelihood of an unfavorable outcome at this time. At a status conference on February 8, 2008, the court ordered that the parties in this case and all the other DBCP cases filed in Los Angeles must engage in global mediation sessions that are to include all cases.

On October 6, 2006, AMVAC was served with seven suits filed in the Los Angeles County Superior Court and one suit in the United States District Court in Los Angeles that include a total of 668 residents of the Ivory Coast as plaintiffs. Each plaintiff claims personal injuries from exposure to DBCP on banana or pineapple plantations in that country. AMVAC denies any liability as none of its product was designated or marked for shipment to the Ivory Coast or anywhere in Africa. The suits name AMVAC, Dow Chemical, Shell Oil Company, and Dole Food as defendants. On defendants’ motion to dismiss all federal claims (under the Alien Tort Claims Act) for failure to state a claim, the federal court dismissed the federal lawsuit with prejudice on August 22, 2007. Plaintiffs subsequently appealed the dismissal to the Ninth Circuit Court of Appeal, which is pending. The seven state court suits have been declared complex and have been assigned to the same judge who is handling both the Tellez and Mejia cases in the complex case management program. Limited discovery has been permitted to focus on preliminary issues as to which DBCP product was used in the Ivory Coast and which defendants, if any, belong in these cases. The plaintiffs’ attorney is unwilling to dismiss any defendant at this time. A further status conference is scheduled for June 16, 2008.

In October 1997, Amvac was served with complaints in which it was named as a defendant, filed in the Circuit Court, First Circuit, State of Hawaii and in the Circuit Court of the Second Circuit, State of Hawaii (two identical suits) entitled Patrickson, et. al. v. Dole Food Co., et. al., alleging damages sustained from injuries caused by plaintiffs’ exposure to DBCP while applying the product in their native countries. The ten named plaintiffs are citizens of four countries—Guatemala, Costa Rica, Panama, and Ecuador. Punitive damages are sought against each defendant. The plaintiffs were banana workers and allege that they were exposed to DBCP in their native countries from 1959 through at least 1997. The case was also filed as a class action on behalf of other workers so exposed in these four countries. The plaintiffs allege sterility and other injuries. On September 12, 2006, the court transferred venue from Maui County to Oahu. On February 16, 2007, the case was assigned to a judge in Oahu. Preliminary issues are class certification and/or the possible addition of class members as individual defendants. Written discovery to defendants was conducted on venue-related issues. The court held a status conference on April 16, 2007 and tentatively set the case for trial for February 16, 2009. The plaintiffs have filed a preliminary motion for class certification which is scheduled for June 4, 2008 and will be vigorously opposed by all defendants.

While it is anticipated that additional lawsuits of this nature may be filed in the US as well as in Nicaragua, as to all existing DBCP suits, AMVAC has denied liability and asserted substantial defenses. Further, with respect to existing DBCP suits, it is not possible to make a judgment on the likelihood of there being an adverse judgment against AMVAC or whether any such judgment could have a material adverse effect on the Company’s financial condition and operating results.

B. Other Matters

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

Georgia plaintiffs seek damages, including punitive damages, in an unspecified amount for personal injuries and diminution in property value allegedly arising from the airborne release of propyl mercaptan and ethoprop from a waste treatment facility operated by PSC Recovery Services (“PSC”) in Fairburn, Georgia. Plaintiffs, residents living in the vicinity of the PSC plant, allege trespass, nuisance and negligence on behalf of defendants in handling, storing and treating waste which was generated by AMVAC’s Axis, Alabama facility. After having completed class certification discovery, and prior to a ruling from the court on certification of the class, the parties engaged in mediation on September 19, 2007 before a neutral mediator. Working in conjunction with their insurance carriers at the mediation, defendants AMVAC and PSC have agreed in principle to settle the matter with a settlement class of approximately 2,000 households for payment of cash consideration. The settlement process involves multiple steps to be taken over several months and requires both preliminary and final court approval. As currently proposed, the settlement would not have an adverse effect upon the Company’s financial performance. However, the settlement is not yet final, members of the settlement class remain free to opt out of the settlement and to preserve their individual rights, and it is not anticipated that the settlement will include mutual releases between co-defendants. In addition, each co-defendant’s insurance carrier has reserved all rights under applicable insurance policies, including rights to subrogation and contribution. On a related note, on April 16, 2007, AMVAC executed a draft consent order (including an agreement to pay a civil penalty with the option to perform a supplemental environmental project in partial payment thereof) with the Alabama Department of Environmental Management (“ADEM”) for resolution of alleged violations of hazardous waste regulations arising from AMVAC’s storage of washwater and other materials that were returned to AMVAC by PSC in connection with activities that are the subject of the McLendon litigation; the consent order has been finalized, and ADEM has approved AMVAC’s proposed supplemental environmental project.

On May 30, 2007, AMVAC’s registered agent was served with a summons, complaint and motion for preliminary injunction by Aceto Agricultural Chemicals Corporation (“Aceto”) in a matter entitled Aceto Agricultural Chemicals Corporation v. AMVAC Chemical Corporation, which was filed in the U.S. District Court for the Northern District of Georgia, Atlanta Division as Case No. 1:07-CV-1236-CC. In this action, plaintiff seeks damages and injunctive relief for alleged antitrust violations arising from AMVAC’s purchase of the patent relating to the EZ Load^® closed delivery system. Aceto, which has sold a generic version of the insecticide phorate through the EZ Load system, was licensee under a license with the former patent holder which permitted Aceto to use the EZ Load system through August 1, 2007. Aceto seeks, among other things, to enjoin AMVAC from asserting its patent rights following the expiration of Aceto’s license. AMVAC believes that this case has no merit and plans to defend it vigorously. The hearing on plaintiff’s motion for a preliminary injunction concluded on October 26, 2007, and, on December 17, 2007, the court entered an order under which is denied plaintiff’s motion for preliminary injunction, finding that Aceto had not met its burden of establishing a likelihood of success on the merits of any claim. Plaintiff has filed a notice of appeal of the court’s order. It is too early in this case, however, to make an assessment of the likelihood of there being an adverse judgment against AMVAC or whether such judgment could have an adverse effect upon the Company’s financial performance.

In a related action, on May 1, 2008, AMVAC filed a complaint and motion for a temporary restraining order against Aceto Agricultural Chemicals Corporation (“Aceto”) with the U.S. District Court for the Northern District of Georgia, Atlanta Division in a matter entitled Amvac Chemical Corporation v. Aceto Agricultural Chemicals Corporation. In its complaint, AMVAC alleges that Aceto has infringed against AMVAC’s patent and trademark relating to the EZ Load closed delivery system by selling product through such system since August 1, 2007 without having a license to the EZ Load intellectual property. In the action AMVAC seeks both injunctive relief and damages. On May 2, 2008, AMVAC sought and obtained a temporary restraining order (“TRO”) prohibiting Aceto from, among other things, selling any product through the EZ Load system. In reaching its decision to grant a TRO, the court found that there is a substantial likelihood of success on the merits of AMVAC’s claim for patent infringement. AMVAC has made a motion for a preliminary injunction; however, the court has not yet set a hearing date for the motion.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

On March 14, 2008, AMVAC’s registered agent was served with a summons and complaint for damages arising from breach of warranty, negligence and strict liability in a matter entitled East Coast Growers & Packers, Inc. v. UAP Distribution, Inc (Cir. Ct., 10^th Jud. Dst. Polk County, FL No. 53-2008 CA-002373-0000-LK). In East Coast, plaintiff, a tomato grower, alleges damages of about $1.2 million from reduced crop yield due to clogging of application equipment by contaminated or defective insecticide. On April 11, 2008, defendants removed the action to U.S. District Court for the Middle District of Florida, Tampa Division (No. 8:08-CV-00701-T30 EAJ). AMVAC believes that the case has no merit and intends to defend it vigorously. It is too early in the matter to make an assessment of the likelihood of there being an adverse judgment against AMVAC or whether such judgment could have an adverse effect upon the Company’s financial performance.

The Company may, from time to time, be involved in other legal proceedings arising in the ordinary course of its business. The results of litigation, including those described above, cannot be predicted with certainty. The Company has and will continue to expend resources and incur expenses in connection with these proceedings. There can be no assurance that the Company will be successful in these proceedings. While the Company continually evaluates insurance levels for product liability, property damage and other potential areas of risk, an adverse determination in one or more of these proceedings could subject the Company to significant liabilities, which could have a material adverse effect on its financial condition and operating results.

12. Recently Issued Accounting Guidance—In March 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”). The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The new standard also improves transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”); and how derivative instruments and related hedged items affect its financial position, financial performance, and cash flows. The company is currently evaluating the effect SFAS No. 161 will have on its the Company’s consolidated financial position, cash flows and results of operations.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interest in Consolidated Financial Statements” (“SFAS 160”). SFAS 160 established new accounting and reporting standards for the noncontrolling interest in a subsidiary and rules related to deconsolidation of a subsidiary. Specifically, this statement requires the recognition of a noncontrolling interest (“minority interest”) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net income attributable to the noncontrolling interest will be included in the consolidated net income on the face of the income statement. SFAS 160 clarifies that changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using fair value of the noncontrolling equity investment on the deconsolidation date. SFAS 160 also includes expanded disclosure requirements regarding the interest of the parent and its noncontrolling interest. SFAS 160 is effective for fiscal years, and intermin periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoptions is prohibited. The Company is evaluating the adoption of SFAS 160 and its impact on the Company’s consolidated financial position, cash flows and results of operations.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

In December 2007, the FASB issued SFAS No. 141 (Revised) (“SFAS 141 (R)”) , “Business Combinations”. The provisions of this statement are effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning after December 15, 2008. Earlier application is not permitted. SFAS 141 (R) replaces SFAS 141 and provides new guidance for valuing assets and liabilities acquired in a business combination. We will adopt SFAS 141 (R) in fiscal year beginning January 1, 2009.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial assets and Financial Liabilities”, which provides companies with an option to report selected financial assets and liabilities at fair value. The objective of this standard is to reduce both the complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for the Company as of January 1, 2008. The adoption of SFAS No. 159 did not have a material impact on the Company’s consolidated financial position, cash flows and results of operations.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosure about fair value measurements. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. The adoption of SFAS No. 157 did not have a material impact on the Company’s consolidated financial position, cash flows and results of operations.

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Columnar Numbers in thousands)

FORWARD-LOOKING STATEMENTS/RISK FACTORS:

The Company, from time-to-time, may discuss forward-looking statements including assumptions concerning the Company’s operations, future results and prospects. These forward-looking statements are based on current expectations and are subject to a number of risks, uncertainties and other factors. In connection with the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary statements identifying important factors which, among other things, could cause the actual results and events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions contained in the entire Report. Such factors include, but are not limited to: product demand and market acceptance risks; the effect of economic conditions; weather conditions; changes in regulatory policy; the impact of competitive products and pricing; changes in foreign exchange rates; product development and commercialization difficulties; capacity and supply constraints or difficulties; availability of capital resources; general business regulations, including taxes and other risks as detailed from time-to-time in the Company’s reports and filings filed with the U.S. Securities and Exchange Commission (the “SEC”). It is not possible to foresee or identify all such factors. For more detailed information, refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operation, Risk Factors, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

RESULTS OF OPERATIONS

Quarter Ended March 31 (columnar numbers in thousands):


	2008		2007		Change
Net sales:
Crop	$	35,111	$	32,349	$	2,762
Non-crop		5,823		8,557		(2,734	)

	$	40,934	$	40,906	$	28

Gross profit:
Crop	$	15,447	$	14,637	$	810
Non-crop		2,289		3,780		(1,491	)

	$	17,736	$	18,417	$	(681	)

The Company reported net income of $1,733,000 or $0.06 per diluted share for the first quarter ended March 31, 2008. This compared to net income of $2,126,000 or $0.08 per diluted share for the same period in 2007.

Net sales for the first quarter of 2008 at $40,934,000 were in line with sales for the first quarter of 2007. Sales of our newly acquired products (primarily non-corn) were strong. As previously announced, adverse mid-west weather conditions including over-abundant rainfall and cold temperatures have affected preparation for and implementation of crop planting in large sections of the Corn Belt. This has had a direct impact on some of our product lines.

Cost of sales increased in the first quarter of 2008 ending at $23,198,000 or 56.7% of sales. This compared to $22,498,000 and 55% of sales for the same period last year. Within cost of sales, our raw material costs increased compared to the same period of the prior year. These increases were caused by the specific mix of products sold plus some significant and rapid price increases in our key raw materials particularly sulphur (up 400%) and phosphorous (up 100%) which are both used extensively in our product lines. Factory operating costs were well controlled and ended the quarter down 3.6% compared to the same period last year. The new acquired

facilities at Hannibal, MS and Marsing, ID (reported in the Company’s Form 10-K for the financial year 2007) are expected to become fully operational by the end of the second quarter of 2008. Gross profits were down 3.7% at $17,736,000 compared to the same period last year of $18,417,000.

It should be noted, when making comparisons with other companies’ financial statements, that the Company reports distribution costs in operating expenses and not as a part of cost of goods sold.

Operating expenses, which are net of other income and expenses, increased by $947,000 to end at $13,946,000 compared to last year $12,999,000. The differences in operating expenses by department are as follows:


	2008		2007		Change
Selling	$	4,804	$	4,542	$	262
General and administrative		3,818		3,954		(136	)
Research, product development and regulatory		1,839		1,617		222
Freight, delivery and warehousing		3,485		2,886		599

	$	13,946	$	12,999	$	947

•

Selling expenses increased by $262,000 to end at $4,804,000 in the first quarter of 2008 compared to the same period last year. Included in this change, advertising and promotional spending increased $302,000 supporting growth of our new product lines and positioning our corn soil insecticides in the market.

•

General and administrative expenses reduced by $136,000 to $3,818,000. The main driver of this reduction is a reduction in legal costs which were down $182,000 compared to the same period last year.

•

Research and product development costs and regulatory registration expenses increased by $222,000 to end at $1,839,000. This included product defense costs which increased by $240,000 compared to the same period last year.

•

Freight, delivery and warehousing costs increased by $599,000 to $3,485,000 in the first quarter of 2008 compared to the same period in 2007. This change is driven by mix of sales, inclusion of new product lines, the increase in inventory levels after the weaker than expected sales of our corn soil insecticide product lines and finally, increased freight costs.

Interest costs before capitalized interest and interest income were $1,015,000 in the quarter ended March 31, 2008 as compared to $1,895,000 in the same period in 2007. The Company’s average overall debt for the quarter ended March 31, 2008 was $77,197,000 and effective interest rate was 5.26%. This compares to $95,237,000 and an effective interest rate of 7.95% for the same period in 2007. The Company capitalized $50,000 of interest related to construction in progress during the first quarter of 2008; this compares to $16,000 for the same period last year.

Income tax expense decreased by $326,000 to end at $1,092,000 for the first quarter of 2008 compared to the same period last year. Our effective tax rate is at 38.65%, which compares with an effective rate of 40% for the same period of the prior year.

Weather patterns can have an impact on the Company’s operations. Weather conditions influence pest population by impacting gestation cycles for particular pests and the effectiveness of some of the Company’s products, among other factors. The end user of some of the Company’s products may, because of weather patterns, delay or intermittently disrupt field work during the planting season which may result in a reduction of the use of some of the Company’s products.

Because of elements inherent to the Company’s business, such as differing and unpredictable weather patterns, crop growing cycles, changes in product mix of sales, ordering patterns that may vary in timing, and

promotional programs, measuring the Company’s performance on a quarterly basis, (gross profit margins on a quarterly basis may vary significantly) even when such comparisons are favorable, is not as meaningful an indicator as full-year comparisons. The primary reason is that the use cycles do not necessarily coincide with financial reporting cycles. Because of the Company’s cost structure, the combination of variable revenue streams, and the changing product mixes, results in varying quarterly levels of profitability.

LIQUIDITY AND CAPITAL RESOURCES

The Company used $30,102,000 of cash in operating activities during the quarter ended March 31, 2008. This compared to $5,743,000 in the same period of last year. Net income of $1,733,000, non-cash depreciation and amortization of $2,762,000 and stock based compensation expense of $235,000 provided a net cash inflow of $4,730,000. This was offset by an increase in working capital of $34,832,000 mainly driven by inventories which increased by $26,829,000. In addition, receivables increased by $8,402,000, prepaid expenses and other current assets up $1,483,000, payables up $6,859,000 and other current liabilities down $4,977,000.

Inventories increased significantly in the quarter driven first by the growth and development of our product portfolio, significant raw material price increases (for example sulphur and phosphorous) and slower than expected sales in the first quarter. Payables were up by $6,859,000 offsetting some of the inventory increase.

The Company used $11,840,000 in investing activities during the quarter ended March 31, 2008. It invested $8,209,000 in intangible assets and $3,631,000 in capital expenditures.

Financing activities provided $40,986,000 during the first quarter of 2008, compared to $8,892,000 in the same period of the prior year. Net borrowings under the Company’s fully-secured revolving line of credit increased by $41,500,000. The Company received $513,000 from the exercise of stock options and the sale of common stock under its ESPP. Finally, the Company made payments on its long-term debt of $1,027,000 during the quarter.

At March 31, 2008 total indebtedness stood at $100,734,000 compared to $106,341,000 at March 31, 2007. At December 2007 total indebtedness was at $60,261,000. At both March 31, 2008 and March 31, 2007, the Company met all requirements under the covenants on its loan facilities. Furthermore based on its position relative to the covenants under the loan agreements, as at March 31, 2008, the Company had $14,014,000 available on its revolving line of credit compared to $5,409,000 at the end of the first quarter of the prior year.

In addition, we have $30,000,000 available under an accordion feature of the company’s term-loan facility.

RECENTLY ISSUED ACCOUNTING GUIDANCE

In March 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”). The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The new standard also improves transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”); and how derivative instruments and related hedged items affect its financial position, financial performance, and cash flows. The company is currently evaluating the effect SFAS No. 161 will have on its financial presentations.

the recognition of a noncontrolling interest (“minority interest”) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net income attributable to the noncontrolling interest will be included in the consolidated net income on the face of the income statement. SFAS 160 clarifies that changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using fair value of the noncontrolling equity investment on the deconsolidation date. SFAS 160 also includes expanded disclosure requirements regarding the interest of the parent and its noncontrolling interest. SFAS 160 is effective for fiscal years, and intermin periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoptions is prohibited. The Company is evaluating the adoption of SFAS 160 and its impact on the Company’s consolidated financial position, cash flows and results of operations.

CRITICAL ACCOUNTING POLICIES

Certain of the Company’s policies require the application of judgment by management in selecting the appropriate assumptions for calculating financial estimates. These judgments are based on historical experience, terms of existing contracts, commonly accepted industry practices and other assumptions that the Company believes are reasonable under the circumstances. These estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Actual results may differ from these estimates under different assumptions or conditions. The Company’s critical accounting polices and estimates include:

Revenue Recognition

Revenue from sales is recognized at the time title and the risks of ownership pass. This is when the customer has made the fixed commitment to purchase the goods, the products are shipped per the customers’ instructions, the sales price is determinable, and collection is reasonably assured.

Long-lived Assets

The carrying value of long-lived assets is reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Measurement of the impairment loss is based on the fair value of the asset. Generally, fair value will be determined using valuation techniques such as the present value of expected future cash flows.

Property, Plant and Equipment and Depreciation

Property, plant and equipment includes the cost of land, buildings, machinery and equipment, office furniture and fixtures, automobiles, and construction projects and significant improvements to existing plant and equipment. Interest costs related to significant construction projects are capitalized at the Company’s weighted average cost of capital. Expenditures for maintenance and minor repairs are expensed as incurred. When property or equipment is sold or otherwise disposed of, the related cost and accumulated depreciation is removed from the respective accounts and the gain or loss realized on disposition is reflected in earnings. All plant and equipment is depreciated using the straight-line method, utilizing estimated useful property lives. Building lives range from 10 to 30 years; machinery and equipment lives range from 3 to 15 years; office furniture and fixture lives range from 3 to 10 years; automobile lives range from 3 to 6 years; construction projects and significant improvements to existing plant and equipment lives range from 3 to 15 years when placed in service.

Foreign Currency Translation

Assets and liabilities of foreign subsidiaries, where the local currency is the functional currency, have been translated at period end exchange rates and profit and loss accounts have been translated using weighted average year to date exchange rates. Adjustments resulting from translation have been recorded in the equity section of the balance sheet as cumulative translation adjustments in other comprehensive income. The effect of foreign currency exchange gains and losses on transactions that are denominated in currencies other than the entity’s functional currency are remeasured into the functional currency using the end of the period exchange rates. The effects of remeasurement related to foreign currency transactions are included in current profit and loss accounts.

Goodwill and Other Intangible Assets

The primary identifiable intangible assets of the Company relate to product rights associated with its product acquisitions. The Company adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets”. Under the provisions of SFAS No. 142, identifiable intangibles with finite lives are amortized and those with indefinite lives are not amortized. The estimated useful life of an identifiable intangible asset to the Company is based upon a number of factors including the effects of demand, competition, and expected changes in the marketability of the Company’s products. The Company tests identifiable intangible assets for impairment at least annually, relying on a number of factors including operating results, business plans and future cash flows. Identifiable intangible assets that are subject to amortization are evaluated for impairment using a process similar to that used to evaluate elements of property. The impairment test for identifiable intangible assets not subject to amortization consists of a comparison of the fair value of the intangible asset with its carrying amount. An impairment loss, if any, is recognized for the amount by which the carrying value exceeds the fair value of the asset. Fair value is typically estimated using a discounted cash flow analysis, which requires the Company to estimate the future cash flows anticipated to be generated by the particular asset(s) being tested for impairment as well as select a discount rate to measure the present value of the anticipated cash flows. When determining future cash flow estimates, the Company considers historical results adjusted to reflect current and anticipated operating conditions. Estimating future cash flows requires significant judgment by the Company in such areas as future economic conditions, industry-specific conditions, product pricing and necessary capital expenditures. The use of different assumptions or estimates for future cash flows could produce different impairment amounts (or none at all) for long-lived assets, goodwill and identifiable intangible assets.

Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk related to changes in interest rates, primarily from its borrowing activities. The Company’s indebtedness to its primary lender is evidenced by a line of credit with a variable rate of interest, which fluctuates with changes in the lender’s reference rate. For more information, please refer to the applicable disclosures in the Company’s Form 10-K filed with the SEC for the year ended December 31, 2007. The Company does not use derivative financial instruments for speculative or trading purposes; however, as a condition of the Company’s credit agreement with its banks, the Company is required to maintain in effect interest rate swap agreement(s) for a notional amount not less than one-half of the principal amount of its term loan (originally the term loan was $60 million) from time to time outstanding.

The Company conducts business in various foreign currencies, primarily in Europe and Mexico. Therefore changes in the value of the currencies of such countries or regions affect the Company’s financial position and cash flows when translated into U.S. Dollars. As of March 31, 2008, the Company had not established a formal foreign currency hedging program. The Company has mitigated and will continue to mitigate a portion of its currency exchange exposure through operation of decentralized foreign operating companies in which the majority of all costs are local-currency based. A 10% change in the value of all foreign currencies would have an immaterial effect on the Company’s financial position and cash flows.

In addition to the above, there are no material changes related to market risk from disclosures in American Vanguard’s Report on Form 10K for the fiscal year ending December 31, 2007.

Item 4.

CONTROLS AND PROCEDURES

As of March 31, 2008, the Company has established a comprehensive set of disclosure controls and procedures designed to ensure that all information required to be disclosed in our filings under the Securities Exchange Act (1934) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. As at March 31, 2008, the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation, that the Company’s disclosure controls and procedures are effective to provide reasonable assurance of the achievement of the objectives described above.

There were no changes in the Company’s internal controls over financial reporting that occurred during the most recent quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II. OTHER INFORMATION

The Company was not required to report any matters or changes for any items of Part II except as disclosed below.

Item 1.

Legal Proceedings

On occasion, the Company and/or AMVAC Chemical Corporation (“AMVAC”), a wholly-owned subsidiary of the Company, are involved as either a plaintiff or defendant to claims and legal actions incidental to their operations.

A. DBCP Cases

plaintiffs and Dole’s acts occurred outside of California. The court also reversed the finding of strict products liability against Dole. As this case impacts the other DBCP suits, the Company is monitoring these developments.

Another such lawsuit, Rodolfo Mejia et al. v. Dole Food Company, Inc., et al, currently involving 26 Nicaraguan plaintiffs who claim sterility and were allegedly DBCP applicators, remains pending in the Los Angeles Superior Court; it had been stayed pending resolution of Tellez with the remaining defendants. Plaintiffs in Mejia filed a second amended complaint on January 22, 2008, and the case has been set for trial for March 16, 2009. The court has advised that discovery will be limited to 20 plaintiffs and any others beyond that number must be transferred to another case. Discovery has not yet begun in this case. It is too early to provide any evaluation of the likelihood of an unfavorable outcome at this time. At a status conference on February 8, 2008, the court ordered that the parties in this case and all the other DBCP cases filed in Los Angeles must engage in global mediation sessions that are to include all cases.

B. Other Matters

On July 19, 2006, AMVAC’s registered agent was served with a putative class action complaint entitled Latrice McLendon, et al. v. Philip Service Corporation etc. et al (including AMVAC), which was filed in the Superior State Court of Fulton County, State of Georgia No. 2006CN119863 and subsequently removed to the United States District Court for the Northern District of Georgia No. 1:06-CV-1770-CAP, in which a class of Georgia plaintiffs seek damages, including punitive damages, in an unspecified amount for personal injuries and diminution in property value allegedly arising from the airborne release of propyl mercaptan and ethoprop from a waste treatment facility operated by PSC Recovery Services (“PSC”) in Fairburn, Georgia. Plaintiffs, residents living in the vicinity of the PSC plant, allege trespass, nuisance and negligence on behalf of defendants in handling, storing and treating waste which was generated by AMVAC’s Axis, Alabama facility. After having completed class certification discovery, and prior to a ruling from the court on certification of the class, the parties engaged in mediation on September 19, 2007 before a neutral mediator. Working in conjunction with their insurance carriers at the mediation, defendants AMVAC and PSC have agreed in principle to settle the matter with a settlement class of approximately 2,000 households for payment of cash consideration. The settlement process involves multiple steps to be taken over several months and requires both preliminary and final court approval. As currently proposed, the settlement would not have an adverse effect upon the Company’s financial performance. However, the settlement is not yet final, members of the settlement class remain free to opt out of the settlement and to preserve their individual rights, and it is not anticipated that the settlement will include mutual releases between co-defendants. In addition, each co-defendant’s insurance carrier has reserved all rights under applicable insurance policies, including rights to subrogation and contribution. On a related note, on April 16, 2007, AMVAC executed a draft consent order (including an agreement to pay a civil penalty with the option to perform a supplemental environmental project in partial payment thereof) with the Alabama Department of Environmental Management (“ADEM”) for resolution of alleged violations of hazardous waste regulations arising from AMVAC’s storage of washwater and other materials that were returned to AMVAC by PSC in connection with activities that are the subject of the McLendon litigation; the consent order has been finalized, and ADEM has approved AMVAC’s proposed supplemental environmental project.

On March 14, 2008, AMVAC’s registered agent was served with a summons and complaint for damages arising from breach of warranty, negligence and strict liability in a matter entitled East Coast Growers & Packers, Inc. v. UAP Distribution, Inc (Cir. Ct., 10^th Jud. Dst. Polk County, FL No. 53-2008 CA-002373-0000-LK). In East Coast, plaintiff, a tomato grower, alleges damages of about $1.2 million from reduced crop yield due to clogging of application equipment by contaminated or defective insecticide. On April 11, 2008, defendants removed the action to U.S. District Court for the Middle District of Florida, Tampa Division (No. 8:08-CV-00701-T30 EAJ). AMVAC believes that the case has no merit and intends to defend it vigorously. It is too early in the matter to make an assessment of the likelihood of there being an adverse judgment against AMVAC or whether such judgment could have an adverse effect upon the Company’s financial performance.

Item 6.

Exhibits

Exhibits required to be filed by Item 601 of Regulation S-K:


Exhibit No.		Description
3.1		Amended Bylaws Effective as of March 31, 2008.

10.1		Employment Agreement of David T. Johnson dated as of March 7, 2008.

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.

32.1		Certification Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	AMERICAN VANGUARD CORPORATION

Dated: May 8, 2008	By:	/s/ ERIC G. WINTEMUTE
		Eric G. Wintemute President, Chief Executive Officer and Director



Dated: May 8, 2008	By:	/s/ DAVID T. JOHNSON
		David T. Johnson Chief Financial Officer,

EX-3.1 2 dex31.htm AMENDED AND RESTATED BYLAWS Amended and Restated Bylaws

Exhibit 3.1

AMENDED AND RESTATED BYLAWS

AMERICAN VANGUARD CORPORATION,

a Delaware Corporation

(Adopted and effective as of March 31, 2008)

ARTICLE I

Offices

Section 1.01 REGISTERED OFFICE. The registered office of American Vanguard Corporation (the “Corporation”) in the State of Delaware is 2711 Centerville Road, Suite 400, in the City of Wilmington, County of New Castle, State of Delaware, and the name of the registered agent at that address is The Prentice-Hall Corporation System, Inc. The Board of Directors of the Corporation (the “Board”) may change the registered agent.

Section 1.02 PRINCIPAL EXECUTIVE OFFICE. The principal executive office of the Corporation shall be located at 4695 MacArthur Boulevard, Suite 1250, Newport Beach, California 92660. The Board may change the location of said principal executive office.

Section 1.03 OTHER OFFICES. The Corporation may also have an office or offices at such other place or places, either within or without the State of Delaware, as the Board may from time to time determine or as the business of the Corporation may require.

ARTICLE II

Meetings of Stockholders

Section 2.01 ANNUAL MEETINGS. The annual meeting of stockholders of the Corporation shall be held on such date and at such time as the Board shall determine. At each annual meeting of stockholders, directors shall be elected in accordance with the provisions of Section 3.03 and any other proper business may be transacted.

Section 2.02 SPECIAL MEETINGS. Special meetings of stockholders for any purpose may be called at any time by a majority of the Board, the Chairman of the Board, the President or the Secretary. Special meetings may not be called by any other

Page 1 - BYLAWS

person. Each special meeting shall be held at such date and time as is requested by the person or persons calling the meeting, within the limits fixed by law.

Section 2.03 PLACE OF MEETINGS. Each annual or special meeting of stockholders shall be held at such location as may be determined by the Board or, if no such determination is made, at such place as may be determined by the Chairman of the Board. If no location is so determined, any annual or special meeting shall be held at the principal executive office of the Corporation.

Section 2.04 NOTICE OF MEETINGS. Except as otherwise required by law, notice of each meeting of the stockholders, whether annual or special, shall be given not less than 10 nor more than sixty days before the date of the meeting to each stockholder of record entitled to vote at such meeting by delivering a typewritten or printed notice thereof to him personally, or by depositing such notice in the United States mail, in a postage prepaid envelope, directed to him at his post-office address furnished by him to the Secretary for such purpose or, if he shall not have furnished to the Secretary his address for such purpose, then at his post-office address last known to the Secretary, or by transmitting a notice thereof to him at such address by telegraph, cable or wireless.

Except as otherwise expressly required by law, the notice shall state the place, date and hour of the meeting, and, in the case of a special meeting, shall also state the purpose for which the meeting is called. Notice of any meeting of stockholders shall not be required to be given to any stockholder to whom notice may be omitted pursuant to applicable Delaware law or who shall have waived such notice and such notice shall be deemed waived by any stockholder who shall attend such meeting in person or by proxy, except a stockholder who shall attend such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Except as otherwise expressly required by law, notice of any adjourned meeting of the stockholders need not be given if the time and place thereof are announced at the meeting at which the adjournment is taken.

Section 2.05 CONDUCT OF MEETINGS. All annual and special meetings of stockholders shall be conducted in accordance with such rules and procedures as the Board may determine subject to the requirements of applicable law and, as to matters not governed by such rules and procedures, as the chairman of such meeting shall determine. The chairman of any annual or special meeting of stockholders shall be the Chairman of the Board if he is willing, and if not, then the President. The Secretary, or in the absence of the Secretary, a person designated by the Chairman of the Board or President, as the case may be, shall act as secretary of the meeting.

Section 2.06 QUORUM. At any meeting of stockholders, the presence, in person or by proxy, of the holders of record of a majority of shares then issued and outstanding and entitled to vote at the meeting shall constitute a quorum for the

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transaction of business; provided, however, that this Section 2.06 shall not affect any different requirement which may exist under statute, pursuant to the rights of any authorized class or series of stock, or under the Certificate of Incorporation of the Corporation (as may be amended, restated or modified, the “Certificate”) for the vote necessary for the adoption of any measure governed thereby. In the absence of a quorum, the stockholders present in person or by proxy, by majority vote and without further notice, may adjourn the meeting from time to time until a quorum is attained. At any reconvened meeting following such an adjournment at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.

Section 2.07 VOTES REQUIRED. A majority of the votes cast at a duly called meeting of stockholders, at which a quorum is present, shall be sufficient to take or authorize action upon any matter which may properly come before the meeting, unless the vote of a greater or different number thereof is required by statute, by the rights of any authorized class of stock or by the Certificate. Unless the Certificate or a resolution of the Board adopted in connection with the issuance of shares of any class or series of stock provides for a greater or lesser number of votes per share, or limits or denies voting rights, each outstanding share of stock, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders.

Section 2.08 PROXIES. A stockholder may vote the shares owned of record by him either in person or by proxy executed in writing (which shall include writings sent by telex, telegraph, cable or facsimile transmission) by the stockholder himself or by his duly authorized attorney-in-fact. No proxy shall be valid after 3 years from its date, unless the proxy provides for a longer period. Each proxy shall be in writing, subscribed by the stockholder or his duly authorized attorney-in-fact, and dated, but it need not be sealed, witnessed or acknowledged.

Section 2.09 LIST OF STOCKHOLDERS. The Secretary of the Corporation shall prepare and make (or cause to be prepared and made), at least 10 days before every meeting of stockholders, a complete list of stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address of, and the number of shares registered in the name of, each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the duration thereof, and may be inspected by any stockholder who is present.

Section 2.10 INSPECTORS OF ELECTION. In advance of any meeting of stockholders, the Board may appoint Inspectors of Election to act at such meeting or at any adjournments thereof. If such Inspectors are not so appointed or fail or refuse to

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act, the chairman of any such meeting may (and, upon the demand of any stockholder or stockholder’s proxy, shall) make such an appointment.

The number of Inspectors of Election shall be 1 or 3. If there are 3 Inspectors of Election, the decision, act or certificate of a majority shall be effective and shall represent the decision, act or certificate of all. No such Inspector need be a stockholder of the Corporation.

The Inspectors of Election shall determine the number of shares outstanding, the voting power of each, the shares represented at the meeting, the existence of a quorum and the authenticity, validity and effect of proxies; they shall receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine when the polls shall close and determine the result; and finally, they shall do such acts as may be proper to conduct the election or vote with fairness to all stockholders. On request, the Inspectors shall make a report in writing to the secretary of the meeting concerning any challenge, question or other matter as may have been determined by them and shall execute and deliver to such secretary a certificate of any fact found by them.

ARTICLE III

Directors

Section 3.01 GENERAL POWERS. Subject to any requirements in the Certificate or the Bylaws, and of applicable law as to actions which must be authorized or approved by the stockholders, any and all corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be under the direction of the Board to the fullest extent permitted by law. Without limiting the generality of the foregoing, it is hereby expressly declared that the directors shall have the following powers, to wit:

First - To select and remove all the officers, agents and employees of the Corporation, prescribe such powers and duties for them as may not be inconsistent with law, with the Certificate or the Bylaws and fix their compensation.

Second - To conduct, manage and control the affairs and business of the Corporation, and to make such rules and regulations therefor not inconsistent with law, or with the Certificate or the Bylaws, as they may deem best.

Third - To change the location of the registered office of the Corporation in Section 1.01; to change the principal executive office for the transaction of the business of the Corporation from one location to

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another as provided in Section 1.02; to fix and locate, from time to time, one or more subsidiary offices of the Corporation within or without the State of Delaware as provided in Section 1.03; to designate any place within or without the State of Delaware for the holding of any stockholders’ meeting; and to adopt, make and use a corporate seal, and to prescribe the forms of certificates of stock, and to alter the form of such seal and of such certificates, from time to time, and in their judgment as they may deem best; provided, however, that such seal and such certificates shall at all times comply with the law.

Fourth - To authorize the issuance of shares of stock of the Corporation, from time to time, upon such terms and for such considerations as may be lawful.

Fifth - To borrow money and incur indebtedness for the purposes of the Corporation, and to cause to be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures, deeds of trust and securities therefor.

Section 3.02 NUMBER AND TERM OF OFFICE. The authorized number of directors of the Corporation shall not be less than three (3) nor more than nine (9) until this section is amended by a resolution duly adopted by the Board or by the stockholders, in either case in accordance with the provisions of the Certificate. The actual number of directors which shall constitute the whole Board shall be fixed from time to time by resolution duly adopted by the Board or by the stockholders. Directors need not be stockholders. Each of the directors shall hold office until his successor shall have been duly elected and shall qualify or until he shall resign or shall have been removed in the manner hereinafter provided.

Section 3.03 ELECTION OF DIRECTORS. The directors shall be elected by the stockholders of the Corporation, and at each election the persons receiving the greater number of votes, up to the number of directors then to be elected, shall be the persons then elected. The election of directors is subject to any provisions contained in the Certificate relating thereto.

Section 3.04 RESIGNATIONS. Any director may resign at any time by giving written notice to the Board or to the Secretary. Any such resignation shall take effect at the time specified therein, or, if the time is not specified, it shall take effect immediately upon receipt; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 3.05 VACANCIES. Except as otherwise provided in the Certificate, any vacancy in the Board, whether because of death, resignation, disqualification, an increase in the number of directors, or any other cause, may be filled by vote of the majority of the remaining directors, although less than a quorum.

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Each director so chosen to fill a vacancy shall hold office until his successor shall have been elected and shall qualify or until he shall resign or shall have been removed.

No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of his term of office.

Section 3.06 PLACE OF MEETING, ETC. The Board or any committee thereof may hold any of its meetings at any place, within or without the State of Delaware, as the Board or such committee may, from time to time, by resolution designate or as shall be designated by the person or persons calling the meeting or in the notice or a waiver of notice of any such meeting. Directors may participate in any regular or special meeting of the Board or any committee thereof by means of conference telephone or similar communications equipment pursuant to which all persons participating in the meeting of the Board or such committee can hear each other, and such participation shall constitute presence in person at such meeting.

Section 3.07 FIRST MEETING. The Board shall meet as soon as practicable after each annual election of directors and notice of such first meeting shall not be required.

Section 3.08 REGULAR MEETING. Regular meetings of the Board may be held at such times as the Board shall, from time to time, by resolution determine. If any date fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting shall be held at the same hour and place on the next succeeding business day not a legal holiday. Except as provided by law, notice of regular meetings need not be given.

Section 3.09 SPECIAL MEETING. Special meetings of the Board for any purpose shall be called at any time by the Chairman of the Board or, if he is absent, unable, or refuses to act, by the President or, if he is absent, unable, or refuses to act, by any Vice President, Secretary or by any two directors. Except as otherwise provided by law of by the Bylaws, written notice of the time and place of special meetings shall be delivered personally to each director, or sent to each director by mail or by other form of written communication, charges prepaid, addressed to him at his address as it is shown upon the records of the Corporation, or if it is not so shown on such records and is not readily ascertainable, at the place in which the meetings of the directors are regularly held. In case such notice is mailed or telegraphed, it shall be deposited in the United States mail or delivered to the telegraph company in the county in which the principal executive office for the transaction of business of the Corporation is located at least forty-eight hours prior to the time of the holding of the meeting. In case such notice is delivered personally as above provided, it shall be so delivered at least 24 hours prior to the time of the holding of the meeting. Such mailing, telegraphing or delivery as above provided shall be due, legal and personal notice to such director. Except where otherwise required by law or by the Bylaws, notice of the purpose of a special meeting need not be given. Notice of any meeting of the Board shall not be

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required to be given to any director who is present at such meeting, except a director who shall attend such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

Section 3.10. QUORUM AND MANNER OF ACTING. Except as otherwise provided in the Bylaws, the Certificate, or by applicable law, the presence of a majority of the total number of directors shall be required to constitute a quorum for the transaction of business at any meeting of the Board, and all matters shall be decided at any such meeting, a quorum being present, by the affirmative votes of a majority of the directors present. In the absence of a quorum, a majority of directors present at any meeting may adjourn the same, from time to time, until a quorum shall be present. Notice of any adjourned meeting need not be given. The directors shall act only as a Board, and the individual directors shall have no power as such.

Section 3.11 ACTION BY CONSENT. Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if consent in writing is given thereto by all members of the Board or of such committee, as the case may be, and such consent is filed with the minutes of proceedings of the Board or committee.

Section 3.12. COMPENSATION. Directors who are not employees of the Corporation or any of its subsidiaries may receive an annual fee for their services as directors in an amount fixed by resolution of the Board, and in addition, a fixed fee, with or without expenses of attendance, may be allowed by resolution of the Board for attendance at each meeting, including each meeting of a committee of the Board. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity as an officer, agent, employee, or otherwise, and receiving compensation therefor.

Section 3.13. COMMITTEES. The Board may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Any such committee, to the extent provided in the resolution of the Board and subject to any restrictions or limitations on the delegation of power and authority imposed by applicable law, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Any such committee may keep written minutes of its meetings and shall report on its meetings to the Board at the next regular meeting of the Board.

Section 3.14 EXECUTIVE COMMITTEE. Between meetings of the Board, the Executive Committee (if any) shall have, unless otherwise provided by resolution of the Board, all the powers and exercise all the duties of the Board in the management of the business of the Corporation that may lawfully be delegated to it by the Board.

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Section 3.15 MEETINGS OF COMMITTEES. Each committee of the Board shall fix its own rules of procedure consistent with the provisions of applicable law and of any resolutions of the Board governing such committee. Each committee shall meet as provided by such rules or such resolution of the Board. Unless otherwise provided by such rules or by such resolution, the provisions of the Bylaws under Article III entitled “Directors” relating to the place of holding meetings and the notice required for meetings of the Board shall govern the place of meetings and notice of meetings for committees of the Board. A majority of the members of each committee shall constitute a quorum thereof, except that when a committee consists of 1 member, then the 1 member shall constitute a quorum. In the absence of a quorum, a majority of the members present at the time and place of any meeting may adjourn the meeting from time to time until a quorum shall be present and the meeting may be held as adjourned without further notice or waiver. Except in cases where it is otherwise provided by the rules of such committee or by a resolution of the Board, the vote of a majority of the members present at a duly constituted meeting at which a quorum is present shall be sufficient to pass any measure by the committee.

ARTICLE IV

Officers

Section 4.01 DESIGNATION, ELECTION, AND TERM OF OFFICE. The Corporation shall have a Chairman of the Board, a President, a chief financial officer, such vice presidents as the Board deems appropriate, and a Secretary. These officers shall be elected annually by the Board at the organizational meeting immediately following the annual meeting of stockholders, and each such officer shall hold office until the corresponding meeting of the Board in the next year and until his successor shall have been elected and qualified or until his earlier resignation, death or removal. In its discretion, the Board may leave unfilled for any period it may fix any office to the extent allowed by law. Any vacancy in any of the above offices may be filled for the unexpired portion of the term by the Board at any regular or special meeting.

Section 4.02 CHAIRMAN OF THE BOARD. The Chairman of the Board shall, subject to the power and authority of the Board, have general direction of the affairs of the Corporation. In addition to the above duties, he shall have such other duties as may, from time to time, be assigned to him by the Board.

Section 4.03 PRESIDENT. Except to the extent that the Bylaws or the Board assign specific powers and duties to the Chairman of the Board, the President shall be the Corporation’s Chief Executive Officer and, subject to the control of the Board, shall have general charge, supervision, and control over the Corporation’s assets, businesses, operations, and its officers. The managerial powers and duties of the President include, but are not limited to, all of the general powers and duties of management usually vested in the office of a president of a corporation, and the making of reports to the Board and stockholders.

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Section 4.04 EXECUTIVE VICE PRESIDENT. The Board may appoint an Executive Vice President, who shall be accountable to the President. He shall perform such duties as may be assigned to him, from time to time, by the Board in its enabling resolution and by the President.

Section 4.05 VICE PRESIDENT/CHIEF FINANCIAL OFFICER. The chief financial officer of the Corporation shall be a vice president. He shall report to the Chairman of the Board or the President and be responsible for the management and supervision of all financial matters and for the financial growth and stability of the Corporation. In addition, he shall have the duties usually vested in the treasurer’s office of a corporation.

Section 4.06 VICE PRESIDENTS. Vice Presidents of the Corporation that are elected by the Board shall perform such duties as may be assigned to them, from time to time, by the President. Such vice presidents may be designated as Group Vice Presidents, Senior Vice Presidents or other appropriate designations given by the Board in its enabling resolutions.

Section 4.07 SECRETARY. The Secretary shall keep the minutes of the meetings of the stockholders, the Board and all committee meetings. He shall be the custodian of the corporate seal and shall affix it to all documents which he is authorized by law or the Board to sign and seal. He also shall perform such other duties as may be assigned to him, from time to time, by the Chairman of the Board or the Board.

Section 4.08 OTHER OFFICERS. The Board may also elect one or more Assistant Vice Presidents, Assistant Secretaries, and Assistant Treasurers.

Section 4.09 WHEN DUTIES OF AN OFFICER MAY BE DELEGATED. In the case of the absence or disability of an officer or for any other reason that may seem sufficient to the Board, the Board, or any officer designated by it, or the Chairman of the Board may, for the time of the absence or disability, delegate such officer’s duties and powers to any other officer of the Corporation.

Section 4.10 RESIGNATIONS. Any officer may resign at anytime by giving written notice to the Board, to the Chairman of the Board, to the President, or to the Secretary. Any such resignation shall take effect at the time specified therein unless otherwise determined by the Board. The acceptance of a resignation by the Corporation shall not be necessary to make it effective.

Section 4.11 REMOVAL. Any officer of the Corporation may be removed, with or without cause, by the affirmative vote of a majority of the entire Board.

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ARTICLE V

Contracts, Checks, Drafts, Bank Accounts, Etc.

Section 5.01 EXECUTION OF CONTRACTS. The Board, except as otherwise provided in the Bylaws, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances; and unless so authorized by the Board or by the Bylaws, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or in any amount.

Section 5.02 CHECKS, DRAFTS, ETC. All checks, drafts or other orders for payment of money, notes or other evidence of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board. Each such officer, assistant, agent or attorney shall give such bond, if any, as the Board may require.

Section 5.03 DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited, from time to time, to the credit of the Corporation in such banks, trust companies or other depositaries as the Board may select, or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such powers shall have been delegated by the Board. For the purpose of deposit and for the purpose of collection for the account of the Corporation, the President, any Vice President or the chief financial officer (or any other officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation who shall from time to time be determined by the Board) may endorse, sign and deliver checks, drafts and other orders for the payment of money which are payable to the order of the Corporation.

Section 5.04 GENERAL AND SPECIAL BANK ACCOUNTS. The Board may, from time to time, authorize the opening and keeping of general and special bank accounts with such banks, trust companies or other depositaries as the Board may select or as may be selected by any officer, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of the Bylaws as it may deem expedient.

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ARTICLE VI

Indemnification

Section 6.01 Except to the extent prohibited by then applicable law, the Corporation (i) shall indemnify and hold harmless each person who was or is a party to, or is threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether or not by or in the right of the Corporation, and whether civil, criminal, administrative, investigative or otherwise (any such action, suit or proceeding being hereafter in this Article referred to as a “proceeding”), by reason of the fact that such person is or was a director or officer of the Corporation, is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or was a director or officer of a foreign or domestic corporation which was a predecessor corporation of the Corporation or of another enterprise at the request of such predecessor corporation; and (ii) may indemnify and hold harmless each person who was or is a party to, or is threatened to be made a party to, any such proceeding by reason of the fact that such person is or was an employee or agent of the Corporation, is or was serving at the request of the Corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or was an employee or agent of a foreign or domestic corporation which was a predecessor corporation of the Corporation or of any enterprise at the request of such corporation (any such person being hereafter in this Article referred to as an “indemnifiable party”). Where required by law, the indemnification provided for in this Article shall be made only as authorized in the specific case upon a determination, in the manner provided by law, that the indemnification of the indemnifiable party is proper in the circumstances. The Corporation shall advance to indemnifiable parties expenses incurred in defending any proceeding prior to the final disposition thereof except to the extent prohibited by then applicable law. This Article shall create a right of indemnification for each such indemnifiable party whether or not the proceeding to which the indemnification relates arose in whole or in part prior to adoption of this Article (or the adoption of the comparable provisions of the Bylaws of the Corporation’s predecessor corporation) and, in the event of the death of an indemnifiable party, such right shall extend to such indemnifiable party’s legal representatives. The right of indemnification hereby given shall not be exclusive of any right such indemnifiable party may have, whether by law or under any agreement, insurance policy, vote of the Board or stockholders, or otherwise. The Corporation shall have power to purchase and maintain insurance on behalf of any indemnifiable party against any liability asserted against or incurred by the indemnifiable party in such capacity or arising out of the indemnifiable party’s status as such whether or not the Corporation would have the power to indemnify the indemnifiable party against such liability.

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ARTICLE VII

Stock

Section 7.01 CERTIFICATES. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution that any or all classes of its stock may be uncertificated shares. Any such resolution shall not apply to shares represented by certificates until any such certificate is surrendered to the Corporation. Each holder of stock represented by certificates shall be entitled to a certificate or certificates which shall represent and certify the number and class (and series, if appropriate) of shares of stock owned by him in the Corporation. Each certificate shall be signed in the name of the Corporation by the Chairman of the Board and the President, together with the Secretary or Assistant Secretary. Any or all of the signatures on any certificate may be facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were an officer, transfer agent, or registrar at the date of issue.

Section 7.02 TRANSFER OF SHARES. Shares of stock shall be transferable on the books of the Corporation only by the holder thereof, in person or by his duly authorized attorney, upon the surrender of the certificate representing the shares to be transferred, properly endorsed, to the Corporation’s registrar if the Corporation has a registrar or, if uncertificated, by a written assignment or power of attorney properly executed, and with such proof of authority or authenticity of signature as the Corporation or its transfer agent may reasonably require. The Board shall have power and authority to make such other rules and regulations concerning the issue, transfer and registration of certificates of the Corporation’s stock as it may deem expedient.

Section 7.03 TRANSFER AGENTS AND REGISTRARS. The Corporation may have one or more transfer agents and one or more registrars of its stock whose respective duties the Board or the Secretary may, from time to time, define. No certificate of stock shall be valid until countersigned by a transfer agent, if the Corporation has a transfer agent, or until registered by a registrar, if the Corporation has a registrar. The duties of transfer agent and registrar may be combined.

Section 7.04 STOCK LEDGERS. Original or duplicate stock ledgers, containing the names and addresses of the stockholders of the Corporation and the number of shares of each class of stock held by them, shall be kept at the principal executive office of the Corporation or at the office of its transfer agent or registrar.

Section 7.05 RECORD DATES. The Board shall fix, in advance, a date as the record date for the purpose of determining stockholders entitled to notice of, or to

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vote at, any meeting of stockholders or any adjournment thereof, or stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or in order to make a determination of stockholders for any other proper purpose. Such date in any case shall be not more than sixty days, and in case of a meeting of stockholders, not less than 10 days, prior to the date on which the particular action requiring such determination of stockholders is to be taken. Only those stockholders of record on the date so fixed shall be entitled to any of the foregoing rights, notwithstanding the transfer of any such stock on the books of the Corporation after any such record date fixed by the Board.

Section 7.06 NEW CERTIFICATES. In case any certificate of stock is lost, stolen, mutilated, or destroyed, the Board may authorize the issuance of a new certificate in place thereof upon such terms and conditions as it may deem advisable; or the Board may delegate such power to the Secretary; but the Board, Secretary, or agents, in their discretion, may refuse to issue such a new certificate unless the Corporation is ordered to do so by a court of competent jurisdiction.

ARTICLE VIII

General Provisions

Section 8.01 DIVIDENDS. Subject to limitations contained in Delaware Law and the Certificate, the Board may declare and pay dividends upon the shares of capital stock of the Corporation, which dividends may be paid either in cash, securities of the Corporation, or other property.

Section 8.02 VOTING OF STOCK IN OTHER CORPORATIONS. Any shares of stock in other corporations or associations which may, from time to time, be held by the Corporation, may be represented and voted at any of the stockholders’ meetings thereof by the Chairman of the Board. The Board, however, may by resolution appoint some other person or persons to vote such shares, in which case such person or persons shall be entitled to vote such shares upon the production of a certified copy of such resolution.

Section 8.03 AMENDMENTS. These Bylaws may be adopted, repealed, rescinded, altered, or amended only as provided in the Certificate.

Restated & Adopted: September 5, 2003

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EX-10.1 3 dex101.htm EMPLOYMENT AGREEMENT Employment Agreement

Exhibit 10.1

Execution Copy

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is entered into as of March 7, 2008 (the “Effective Date”), by and between AMERICAN VANGUARD CORPORATION, a Delaware corporation (the “Company”), and DAVID JOHNSON (“Employee”) to set forth the terms and conditions of the Company’s employment of Employee.

NOW, THEREFORE, in consideration of the mutual promises set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1. Employment.

(a) The Company hereby employs Employee and Employee hereby accepts employment by the Company pursuant to the terms and conditions of this Agreement.

(b) Employee is engaged by the Company with such title and capacity as set forth in the Schedule of Responsibilities attached to this Agreement as Schedule “A” (the “Schedule of Responsibilities”). Employee shall fully, faithfully, diligently and competently render the services and perform the duties described in the Schedule of Responsibilities and such other duties not inconsistent therewith that may be assigned to Employee from time to time by the Company. Employee shall conform to and comply with the lawful and reasonable directions and instructions given to Employee by the Company.

(c) Employee shall devote Employee’s full time, attention and energies to the business of the Company during Company working hours. Employee shall use Employee’s best efforts to further enhance and develop the best interests and welfare of the Company. The Company shall be entitled to all of the benefits, profits and other results arising from or incident to all work, services and advice of Employee.

(d) Employee shall not be employed or engaged in any other business activity, whether or not such activity is pursued for gain, profit, or other pecuniary advantage, without the prior written consent of the Company.

(e) The Company will advise Employee of its corporate rules, policies and procedures then in effect and as may be amended or adopted by the Company from time to time in the Company’s sole and absolute discretion (the “Company Policies”). Employee shall comply with all Company Policies. If there are any inconsistencies between any term of this Agreement and any of the Company Policies, this Agreement shall govern and control.

2. Period of Employment. Employee’s employment by the Company shall be for a period of one (1) year, commencing on the Effective Date and ending

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not later than one (1) year after the Effective Date, unless earlier terminated pursuant to Section 6 of this Agreement (the “Employment Period”). After the Employment Period, Employee shall be an “at will” employee of the Company.

3. Compensation. For services rendered to and duties performed by Employee for the Company during the Employment Period pursuant to the terms and conditions of this Agreement, the Company will offer to Employee such compensation and benefits specifically set forth in the Compensation Schedule attached to this Agreement as Schedule “B” (collectively, the “Compensation”).

4. Business Expenses. The Company, pursuant to its Company Policies, will reimburse Employee for reasonable and necessary expenses incurred within the scope of Employee’s employment in carrying out Employee’s services and duties under this Agreement, provided that such expenses are (a) deductible by the Company to the maximum extent permitted under the relevant rules and regulations of the Internal Revenue Code, (b) incurred and submitted for reimbursement in accordance with the Company Policies, and (c) evidenced by itemized and documented accounting of such expenditures.

5. Withholdings. The Company shall deduct and withhold from all compensation payable to Employee hereunder, including, without limitation, the Compensation, all applicable federal, state and local income and employment withholding taxes and any other amounts required to be deducted or withheld by the Company under applicable statutes, regulations, ordinances, or orders governing or requiring the withholding or deduction of amounts otherwise payable as compensation or wages to Employee.

6. Termination.

(a) Termination for Cause. The Company shall have the right to terminate Employee’s employment for “Cause” (as defined below) at any time, without prior notice. In the event of termination of Employee’s employment for Cause, all rights of Employee (and Employee’s dependents and legal representatives) under Sections 1, 2 and 3 of this Agreement shall cease as of the date of such termination. For purposes of this Agreement, termination for “Cause” by the Company will include a determination made by the Company in its discretion that Employee:

(1) has been convicted of or pled guilty or nolo contendere to (i) a felony or misdemeanor involving moral turpitude that is likely to impair Employee’s ability to perform under this Agreement or otherwise have a significant adverse effect upon the Company, any of its affiliates, or any of their businesses or reputations, or (ii) a felony or misdemeanor which results in a term of incarceration in any correctional institution;

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(2) has committed or conspired to commit an act of dishonesty, theft, gross carelessness, or other misconduct against the Company or any of its affiliates;

(3) has engaged in the use of alcohol or any illegal drug or intoxicant, or distributed or conspired to distribute any such substance, during working hours or at any facilities of the Company or any of its affiliates;

(4) has committed or conspired to commit any act or series of acts that constitute harassment or discrimination based on an unlawful classification;

(5) has committed or conspired to commit any act or series of acts without approval by the Company’s Board of Directors which would likely have a significant adverse effect on the Company, any of its affiliates, or any of their businesses or reputations;

(6) has engaged in a willful or negligent failure to perform duties or services for the Company;

(7) has improperly used or disclosed, or conspired to improperly use or disclose, confidential or proprietary information of the Company or any of its affiliates; or

(8) has committed any act or omission that constitutes a material breach by Employee of any of Employee’s obligations or agreements under this Agreement, but only after the Company has provided notice of such breach to Employee and Employee fails or refuses to correct such breach within ten (10) days of such notice; provided, however, that no prior notice is required for any event set forth in conditions (1) through (7), inclusive, of this Section 6(a).

(b) Termination Due to Death or Disability. If Employee, due to physical or mental disability or incapacity as determined by the Company in its discretion, is unable to perform Employee’s duties under this Agreement, the Company shall have the right to terminate Employee’s employment on thirty (30) days’ prior written notice. If Employee is able to and recommences rendering services and performing Employee’s duties under this Agreement within such thirty (30)-day notice period, such notice shall be vitiated. In addition, in the event of Employee’s death or disability, Employee or Employee’s personal representatives, as the case may be, shall be entitled to receive all earned but unpaid compensation through the date of termination on a pro rated basis.

(c) Termination Without Cause. Notwithstanding anything to the contrary, the Company shall have the right to terminate Employee’s employment without Cause or for any or no reason, at any time, effective immediately upon notice to Employee. If the Company exercises its rights under this Section 6(c)

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during the Employment Period and provided that Employee sign a release and waiver acceptable to the Company in its discretion, the Company will pay to Employee as severance, an amount equal to the Employee’s annual base salary. In the event of termination of Employee’s employment pursuant to this Section 6(c), all rights of Employee (and Employee’s dependents and legal representatives) under Sections 1, 2 and 3 of this Agreement shall cease as of the date of such termination. Further, if the Company exercises its rights under this Section 6(c) during the second full year of employment and provided that Employee signs a release and waiver acceptable to the Company in its discretion, the Company will pay to Employee as severance an amount equal to the Employee’s annual base salary. Notwithstanding anything to the contrary in the foregoing, severance payment(s) made under this paragraph 6(c) are intended to be in lieu of, and not in addition to any severance payment made under the Change-in-Control Severance Agreement attached hereto as Exhibit E. Thus, if Employee qualifies for a severance payment under the Change-in-Control Severance Agreement, then he shall not be entitled to payment for severance under this paragraph.

7. Disclosures and Assignment of Rights.

(a) Employee hereby agrees promptly to disclose to the Company and Employee hereby, without further compensation, assigns and agrees to assign to the Company or its designees, Employee’s entire right, title, and interest in and to all designs, trademarks, logos, business plans, business models, business names, economic projections, product innovations, discoveries, formulae, processes, manufacturing techniques, trade secrets, customer lists, supplier lists, inventions, research, improvements, ideas, know-how, patents, service marks, and copyrightable works (collectively, “Inventions”), including, without limitation, all rights to obtain, register, perfect and enforce all Inventions, which relate to Employee’s work for the Company, whether or not during normal working hours, or which are aided by the use of Company experience, time, material, equipment, or facilities; it being understood, however, that no rights are hereby conveyed in Inventions, if any, made by Employee prior to Employee’s employment with the Company and disclosed pursuant to Section 7(c) of this Agreement.

(b) Employee agrees to perform, during and after the Employment Period, all acts deemed necessary or desirable by the Company to permit and assist it, at its reasonable expense, including execution of documents and assistance and cooperation in legal proceedings, in obtaining and enforcing the full benefits, enjoyments, rights and title in the items assigned to the Company as set forth in Section 7(a) of this Agreement.

(c) Except as specifically set forth in the Disclosure of Inventions attached to this Agreement as Schedule “C” (or if nothing is listed therein), there are no Inventions that Employee wishes to exclude from the operation of Section 7(a) or 7(b) of this Agreement.

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(d) Employee understands, and hereby acknowledges having received notice, that Sections 7(a) and (b) of this Agreement do not apply to an invention which qualifies fully under the provisions of California Labor Code Section 2780, which is substantially set forth in Schedule “D” attached to this Agreement.

8. Conflicts of Interest. Employee recognizes that Employee owes a primary and fiduciary duty to the Company and that Employee shall not have any interest, financial or otherwise, direct or indirect, or engage in any business or transaction of any nature, which is in conflict with the proper and faithful discharge of Employee’s duties and services as an employee of the Company. Without limiting the generality of the foregoing, Employee shall not, while employed by the Company, directly or indirectly:

(a) be employed by or receive any compensation from a customer, supplier or competitor of the Company or any of its affiliates;

(b) have any ownership or financial interest of any nature in a customer, supplier or competitor of the Company or an of its affiliates, except where such ownership is stock in a corporation and consists of less than one percent (1%) of the outstanding capital stock of the corporation and where such stock is publicly traded and listed on a recognized stock exchange or actively traded in the over-the-counter market;

(c) have or participate in any dealings on behalf of the Company with a customer, supplier or competitor of the Company or any of its affiliates that employs, or more than five percent (5%) of whose ownership interest is beneficially held by, Employee’s spouse or any brother, sister, parent, child or grandchild of Employee or Employee’s spouse, or any person living in Employee’s household or the spouse of any of the foregoing persons;

(d) engage or participate in any activity, business enterprise, business opportunity, employment, occupation, consulting, or other business activity which the Company shall reasonably determine to be, or reasonably planned to be, in competition with the Company or any of its affiliates, or to interfere with Employee’s duties as an employee of the Company; or

(e) solicit, accept or receive any gift having a value of Fifty Dollars ($50) or more, whether in the form of money, service, loan, hospitality (except for ordinary business meals), thing or promise, or in any other form, under circumstances in which it could reasonably be inferred that the gift was intended to influence Employee, in the performance of Employee’s duties on behalf of the Company or was intended as a reward for any action on Employee’s part on behalf of the Company, unless such fact or activity is first fully disclosed in writing to the Company and the Company first approves in writing of such fact or activity.

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9. Information of Others. Employee certifies and acknowledges that Employee will not disclose or utilize in Employee’s work with the Company any secret or confidential information of others (including any prior employers), or any inventions or innovations of Employee’s own which are not included within the scope of this Agreement.

10. Confidential Information. The Company and/or one or more of its affiliates may, from time to time, provide Employee with confidential information, proprietary information, or trade secrets regarding the Company and/or one or more of its affiliates, including, without limitation, information regarding business methods, plan, products, pricing, customer lists, and other confidential customer information, including, but not limited to, contact names, purchasing authority(ies), product, know-how and/or customer service requirements, buying patterns and other proprietary information (collectively, “Confidential Information”). Except in furtherance of the Company’s business and without the Company’s prior written consent, Employee shall not, directly or indirectly, disclose, use, communicate, appropriate, or exploit any Confidential Information during the Employment Period and thereafter.

11. Non-Solicitation. Upon termination of Employee’s employment with the Company, for any reason whatsoever, and regardless of whether the Company or Employee initiated the separation, Employee shall not, for a period of two (2) years from the date of termination, directly or indirectly, solicit or in any other manner contact or deal with any customer or client of the Company whom Employee serviced or had contacts with as an employee of the Company during the Employment Period for the purpose of offering or attempting to offer to said customer or client any product or service similar to or competitive with any product or service manufactured, sold, distributed, or provided by the Company as of the date of Employee’s termination, either as a principal, consultant, representative, employee, or more than five percent (5%) stockholder. Employee represents and warrants that Employee’s experience and abilities are such that compliance with the covenants contained in this Section 11 will not cause any undue hardship or unreasonable restriction on Employee’s ability to earn a livelihood.

12. Non-Raiding. Employee will not, either during the Employment Period or for a period of two (2) years thereafter, either directly or indirectly, hire, solicit, induce or attempt to induce or encourage any of the Company’ employees, agents, or contractors to cease or limit providing services to the Company. Employee represents and warrants that Employee’s experience and abilities are such that compliance with the covenants contained in this Section 12 will not cause any undue hardship or unreasonable restriction on Employee’s ability to earn a livelihood.

13. Return of Property. Employee agrees that upon request by the Company, and in any event upon termination of employment, Employee shall turn over to the Company all Confidential Information, Inventions, documents, notes, papers, and other material in whatever media relating to the Company in

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Employee’s possession or control, together with all material, documents, notes, pagers, and other work product in whatever media which is connected with or derived from Employee’s services to the Company whether or not such material is in Employee’s possession or control.

14. Remedies. Employee recognizes and acknowledges that a breach of any provision under Sections 7, 8, 9, 10, 11, 12 and/or 13 of this Agreement could not reasonably be compensated in damages in an action at law and that the Company and/or any of its affiliates shall be entitled to injunctive relief obtainable in a court of competent jurisdiction, which may include, but shall not be limited to, restraining Employee from rendering any service which would breach this Agreement. Notwithstanding the foregoing, no remedy conferred by any of the specific provisions of this Agreement, including, without limitation, this Section 14, is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and in addition to every other remedy given under this Agreement now or hereafter existing at law or in equity or by statute or otherwise. The election of any one or more remedies by the Company and/or any of its affiliates shall not constitute a waiver of the right to pursue other available remedies. These obligations shall survive the termination of Employee’s employment.

15. Arbitration. Except as provided in this Section 15, any and all claims between Employee and the Company, any of its affiliates and/or any of their respective directors, officers, employees or agents that arise out of Employee’s employment, including, without limitation, disputes involving the terms of this Agreement, Employee’s employment by the Company or the termination thereof, claims for breach of contract or breach of the covenant of good faith and fair dealing, and any claims of discrimination or other claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans With Disabilities Act, the California Fair Employment and Housing Act, or any other federal, state or local law or regulation now in existence or hereinafter enacted and as amended from time to time concerning in any way the subject of Employee’s employment with the Company or Employee’s termination, shall be resolved through final and binding arbitration. The only claims not covered by this Section 15 are claims for equitable relief for violation of any provision under Sections 7, 8, 9, 10, 11, 12 and/or 13 of this Agreement and claims for benefits under the workers’ compensation or unemployment insurance laws, which will be resolved pursuant to those laws. Notices of requests to arbitrate a covered claim must be made within the applicable statute of limitations. Binding arbitration will be conducted in Orange County, California in accordance with the rules and regulations of the American Arbitration Association (“AAA”). Discovery may be carried out under the supervision of the arbitrator appointed pursuant to the rules of the AAA. Employee will be responsible for paying the same fee to initiate the arbitration that Employee would pay to file a civil lawsuit. The Company will pay any remaining cost of the arbitration filing and hearing fees, including the cost of the arbitrator; each side will bear its own attorneys’ fees, that is, the arbitrator will not have authority to award attorneys’ fees unless a statutory section at issue in the dispute authorizes the award of attorneys’ fees to the prevailing party, in which

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case the arbitrator has authority to make such award as permitted by the statute in question.

16. Miscellaneous.

(a) Survival. Sections 1, 2 and 3 of this Agreement, inclusive, shall terminate upon termination of Employee’s employment with the Company, and all other provisions of this Agreement shall survive such termination and be enforceable in accordance with their terms.

(b) Attorneys’ Fees. In the event that an action or proceeding is brought to enforce any provision under Sections 7, 8, 9, 10, 11, 12 and/or 13 of this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys’ fees and costs from the non-prevailing party.

(c) Waiver of Breach. The waiver by the Company of any breach of any provision herein shall not be binding upon the Company unless in writing signed by the Company, and shall not constitute a continuing waiver or a waiver of any subsequent breach by Employee.

(d) Assignment. Neither this Agreement nor any of the parties’ rights and obligations hereunder may be assigned by a party without the prior written consent of the other party hereto; provided, however, that the Company may assign any or all of its rights and obligations under this Agreement to (i) an affiliate of the Company, or (ii) a surviving entity in connection with a merger or consolidation involving the Company or a purchase or sale of all or substantially all of the Company’s assets, so long as such surviving entity assumes the Company’s obligations under this Agreement.

(e) Entire Agreement; Oral Statement Not Binding. This Agreement taken together with the offer letter dated as of the date hereof contains the entire agreement of the parties relating to the subject matter hereof and may not be waived, changed, modified, extended or discharged orally, but only by agreement specifically referencing this Agreement that is signed by the party against whom enforcement of any such waiver, change, modification, extension or discharge is sought. Employee acknowledges that the Company is not bound by any oral or other unauthorized statements or promises regarding salary, benefits, length of employment or any other conditions of Employee’s employment. All previous agreements or arrangements between the Company and Employee are hereby terminated. Each party acknowledges and agrees that no representations, inducements, promises or agreements, orally or otherwise, have been made by either party, or anyone acting on behalf of either party, that are not expressly set forth in this Agreement, and that no other agreement, statement or promise shall be valid or binding unless modified or amended pursuant to this Section 16(e). This Agreement may not be modified or amended unless in writing and signed by both Employee and the Company, acting through its Chief Executive Officer or President.

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(f) Severability. If any provision of this Agreement as applied to any party or to any circumstance should be adjudged by a court of competent jurisdiction or arbitrator, as the case may be, to be void or unenforceable for any reason, the invalidity of that provision shall in no way affect (to the maximum extent permissible by law) the application of such provision under circumstances different from those adjudicated by the court or arbitrator, the application of any other provision of this Agreement, or the enforceability or invalidity of this Agreement as a whole. Should any provision of this Agreement become or be deemed invalid, illegal or unenforceable in any jurisdiction by reason of the scope, extent or duration of its coverage, then such provision shall be deemed amended to the extent necessary to conform to applicable law so as to be valid and enforceable or, if such provision cannot be so amended without materially altering the intention of the parties, then such provision will be stricken and the remainder of this Agreement shall continue in full force and effect.

(g) Applicable Law. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of California without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California.

(h) Notice. All notices and other communications hereunder shall be in writing and shall be deemed duly given and delivered if delivered by messenger, or mailed by registered or certified mail, postage prepaid, return receipt requested, to the parties at the addresses set forth below (or at such other addresses for a party as shall be specified by like notice) and shall be deemed given on the date on which so delivered by messenger or three (3) days following the date on which so mailed.


If to the Company:		4695 MacArthur Boulevard, Suite 1250
		Newport Beach, California 92660
		Attn: Chief Executive Officer or
		President

With copy to:		Attn: General Counsel

If to Employee:		[ ]
		[ ], or
		at such other last known address on record
		with the Company.

(i) Enforceability. This Agreement does not in any way restrict Employee’s right or the right of the Company to terminate Employee’s employment. This Agreement inures to the benefit of the permitted successors and permitted assigns of the Company, and is binding upon Employee’s heirs and legal representatives. No course of conduct or failure or delay in enforcing any

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provision of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

(j) Headings. The headings of the sections or subsections in this Agreement are for convenience only and shall not control or affect the meaning or construction or limit the scope or intent of any of the provisions of this Agreement.

(k) Construction. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event any ambiguity or question of intent arises, this Agreement shall be construed as having been drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions hereof. Any act or series of act required to be performed by the Company under this Agreement shall be performed on behalf of the Company by its Chief Executive Officer, President, or other officer duly authorized by the Company’s Board of Directors.

(l) Facsimile Signatures. This Agreement may be executed by a party’s signature transmitted by facsimile, and copies of this Agreement executed and delivered by means of facsimile signatures shall have the same force and effect as copies hereof executed and delivered with original signatures. The parties may rely upon facsimile signatures as if such signatures were originals. A party executing and delivering this Agreement by facsimile shall promptly thereafter deliver a counterpart signature page of this Agreement containing said party’s original signature.

(m) Counterparts. This Agreement may be executed by the parties in one or more counterparts, each of which when so executed shall be an original and all such counterparts shall constitute one and the same instrument. Confirmation of execution by electronic transmission of a facsimile signature page shall be binding upon any party so confirming.

* * * *

[Remainder of page intentionally left blank; signatures follow]

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Execution Copy

IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement effective as of the date first written above.


“Company”

American Vanguard Corporation, a Delaware corporation

By:
Name:
Title:

“Employee”

DAVID JOHNSON

S-1

Execution Copy

SCHEDULE “A”

TO EMPLOYMENT AGREEMENT

SCHEDULE OF RESPONSIBILITIES

Title:

Chief Financial Officer.

Location:

Employee shall perform the services and duties principally at the Company’s facility located at 2110 Davie Avenue, Commerce, California 90040, or at such other location or locations as may be designated by the Company from time to time.

Essential duties and responsibilities include, but are not limited to the following:

•

Serve as key member of the Executive Management team.

•

Become conversant in the preparation and review of all disclosures to be submitted to the SEC.including, without limitation:

•

Annual Report on Form 10-K; Annual Report to Stockholders;

•

Proxy Statement and related materials; Quarterly reports on Form 10-Q; Current reports on Form 8-K; Other reports as needed.

•

Coordinate, design, implement and monitor compliance with the Sarbanes-Oxley Section 404.

•

Participate in the development of the Company’s plans and programs as a strategic partner. Evaluate and advise on the impact of long-range planning, introduction of new programs, and strategies and regulatory action.

•

Provide strategic guidance and financial input on issues affecting the organization; e.g., , evaluating potential alliances, acquisitions, and/or mergers and investments.

•

Act as financial advisor for any contracts into which the Company may enter.

•

After gaining a thorough understanding of the Company’s costs and implementing improved costing metrics, to forecast, plan, develop, and organize fiscal budgets, and identify trends, market conditions, and competitive intelligence for comparative purposes. Implement, direct, and evaluate the Company’s fiscal performance while looking for continual improvement of the budgeting process.

•

Participate in financial disclosure controls committee.

•

Participate, in formulating and administering company policies and developing long-range goals and objectives; confer with other executive and senior officers and administrative personnel to review achievements and discuss required changes in goals or objectives resulting from current status and conditions.

A-1

Additional oversight and responsibilities include, but are not limited to the following:

•

Coordinate, design, implement and monitor internal financial reporting systems, financial controls, and management information systems in coordination with automated financial reporting systems.

•

Prepare/write monthly, quarterly financial reporting to management and Audit Committee/Board of Directors.

•

Plan and manage audits and reviews performed by the Company’s independent auditors.

•

Responsible for federal, state and foreign taxes, including planning opportunities. Direct and coordinate activities of employees, outside tax specialists and accountants involved with tax preparation.

•

Develop cost accounting system to provide reliable cost data for management’s decision making.

•

Interpret current policies and practices and plans implement new operating procedures to improve efficiency and reduce costs.

•

Ensure compliance with local, state, and federal regulations.

Other Key Responsibilities

•

Optimize the handling of banking relationships and initiate appropriate strategies to enhance cash and debt position.

•

Develop a reliable cash flow projection process and reporting mechanism that includes minimum cash threshold to meet operating needs and forecasted financial position, business activities, and reports required by regulatory agencies.

•

Interpret current policies, practices, and plans, and implement new operating procedures to improve efficiency and reduce costs.

•

Ensure that institution reserves and/or financial condition meet legal requirements (such as Financial Assurance: Title: 22 - DTSC).

•

Overall responsibilities for providing the Company’s management and employees with top quality, consistently available computer service, support, training, and maintenance of all computer systems used throughout the Company.

•

Create, maintain and enforce written policies and procedures regarding all computer operations in the IT Department.

•

Evaluate new equipment, software, and processes. Recommend changes as appropriate, and supervise the overall installation and implementation.

A-2

•

Determine risks to which the Company is subject, particularly in connection with financial controls and strategic financial planning, implement internal changes to reduce risks, and work with the Sr. VP of Administration and Corporate Finance to ensure that such risks are suitable insured, where practicable.



Dated:
				Company

Dated:
				Employee

A-3

Execution Copy

SCHEDULE “B”

TO EMPLOYMENT AGREEMENT

COMPENSATION SCHEDULE

Annual Base Salary: Pursuant to the terms and conditions of this Agreement, the Company will pay to Employee an annual base salary of Two Hundred Forty Thousand Dollars ($240,000), payable in accordance with the Company’s then-existing payroll schedule, policies and procedures. The Company, in its sole discretion, may otherwise from time to time increase Employee’s salary as it deems appropriate, but such increases shall have no effect on or alter the obligations of the Company or other rights of the Employee as provided under this Agreement.

Stock Options: Subject to terms and conditions of the 1994 Stock Incentive Plan, as amended, of American Vanguard Corporation, a Delaware corporation (“American Vanguard”), and the execution of a Stock Option Agreement containing terms and conditions by and between Employee and American Vanguard, Employee will be granted options in a number of shares of the Company’s Common Stock equal to the quotient (rounded to the nearest whole number) of $100,000.00 divided by the fair market value of such stock (as expressed in dollars per share) as of the date of the option award. Such options which will vest in three equal tranches on the first, second and third anniversary of the award .

Car Allowance: Employee shall be provided a car allowance of One Thousand One Hundred Fifty Dollars ($1150) per month which amount will be paid to Employee monthly in full.

Relocation Assistance: Employee shall be entitled to receive reimbursement for out-of-pocket expenses arising from Employee’s relocation from the UK to California not to exceed Twenty Five Thousand Dollars ($25,000.00) and including, without limitation, expenses related to packing, moving, storage, and transport of personal goods and travel of family members. The Company shall promptly make such reimbursement upon presentation of written receipts for such expenses.

Vacation: During the term of the Employment Period, Employee shall be entitled to a maximum of four (4) weeks of vacation time each calendar year (or a prorated portion thereof). In the event that Employee is unable or fails to take the total amount of vacation time authorized herein during any calendar year, such unused vacation shall not roll over or be credited to the subsequent year(s), but will be paid out in cash, and the balance of accrued vacation reduced to zero at the end of such calendar year.

General Benefits: Pursuant to the terms and conditions of this Agreement, Employee may participate in benefit plans (subject to the provisions of such plans) and other perquisites which are made generally available to the Company’s other

B-1

employees and for which Employee qualifies, including, without limitation: group health, dental, life, accident and disability insurance; the Company’s 401k plan; flexible spending accounts; and the Company’s Employee Stock Purchase Plan .

Bonus. Employee may receive a bonus; the eligibility, amount, payment terms and other conditions of such bonus shall be subject to determination by the Company’s Board of Directors in its sole and absolute discretion, but which, on an annual basis, may amount to up to fifty percent ( 50%) of Employee’s annual base salary.

Change-in-Control Severance. In lieu of the severance provisions set forth in paragraph 6(c) hereof, Employee shall be entitled to participate in the severance arrangement for Company executives in the event of a change-in-control, the terms of which are set forth in Schedule “E” hereto.



Dated:
				Company

Dated:
				Employee

B-2

Execution Copy

SCHEDULE “C”

TO EMPLOYMENT AGREEMENT

DISCLOSURE OF INVENTIONS

Except as set forth below, there are no Inventions that I wish to exclude from the operation of Section 7(a) or 7(b) of this Agreement:



Dated:
				Employee

C-1

Execution Copy

SCHEDULE “D”

TO EMPLOYMENT AGREEMENT

CALIFORNIA LABOR CODE SECTION 2780

California Labor Code Section 2870 substantially provides:

(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his rights in an invention to his employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:

(1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or

(2) Result from any work performed by the employee for the employer.

(b) To the extent that a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.

D-1

SCHEDULE “E”

TO EMPLOYMENT AGREEMENT

FORM OF CHANGE-IN- CONTROL SEVERANCE AGREEMENT

EX-31.1 4 dex311.htm CERTIFICATION OF CHIEF EXECUTIVE OFFICER SECTION 302 Certification of Chief Executive Officer Section 302

Exhibit 31.1

AMERICAN VANGUARD CORPORATION

CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Eric G. Wintemute, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of American Vanguard Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(e) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in according with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosures controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Dated: May 8, 2008				/s/ ERIC G. WINTEMUTE
				Eric G. Wintemute Chief Executive Officer

EX-31.2 5 dex312.htm CERTIFICATION OF CHIEF FINANCIAL OFFICER SECTION 302 Certification of Chief Financial Officer Section 302

Exhibit 31.2

AMERICAN VANGUARD CORPORATION

CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David T. Johnson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of American Vanguard Corporation;

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Dated: May 8, 2008				/s/ DAVID T. JOHNSON
				David T. Johnson Chief Financial Officer

EX-32.1 6 dex321.htm CERTIFICATION PURSUANT TO SECTION 906 Certification Pursuant to Section 906

Exhibit 32.1

AMERICAN VANGUARD CORPORATION

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of American Vanguard Corporation (the “Company”) on Form 10-Q for the period ending March 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Executive Officer and Chief Financial Officer of the Company hereby certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002 that based on their knowledge (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (2) the information contained in the Report fairly represents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in the Report.

/s/ ERIC G. WINTEMUTE

Eric G. Wintemute

Chief Executive Officer

/s/ DAVID T. JOHNSON

David T. Johnson

Chief Financial Officer

May 8, 2008

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to American Vanguard Corporation and will be retained by American Vanguard Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Form 10-Q and shall not be considered filed as part of the Form 10-Q.

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