<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ACME UNITED CORPORATION
_______________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
_______________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1) or
Item 22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
_______________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_______________________________________________________________________
(3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
_______________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________
(5) Total fee paid:
_______________________________________________________________________
/x/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11 (a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
_______________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_______________________________________________________________________
(3) Filing Party:
_______________________________________________________________________
(4) Date Filed:
_______________________________________________________________________
<PAGE> 2
ACME UNITED CORPORATION
75 Kings Highway Cutoff
Fairfield, CT 06430
March 29, 1996
Dear Fellow Shareholder:
On behalf of your Board of Directors and Management, I cordially invite
you to attend the Annual Meeting of Shareholders of Acme United
Corporation scheduled to be held on Monday, April 22, 1996 at 11:00
a.m., local time at The Westport Inn, 1595 Post Road East, Westport,
Connecticut. This will be my first Annual Meeting since appointment as
your Company's President and Chief Executive Officer, and I particularly
look forward to greeting personally those shareholders able to attend.
At the Meeting, shareholders will be asked to elect nine directors to
serve for a one year term; approve an Amendment to the Company's 1992
Amended and Restated Stock Option Plan; approve the 1996 Non-Employee
Director Stock Option Plan; approve an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares
of Common Stock; and ratify the appointment of Coopers and Lybrand as
the Company's independent auditors for the current fiscal year.
Information regarding these matters is set forth in the accompanying
Notice of Annual Meeting and Proxy Statement to which you are urged to
give your prompt attention.
It is important that your shares be represented and voted at the
Meeting. Whether or not you plan to attend, please take a moment to
sign, date and promptly mail your proxy in the enclosed prepaid
envelope. This will not limit your right to vote in person should you
attend the meeting.
On behalf of you Board of Directors, thank you for your continued
support and interest in Acme United Corporation.
Sincerely,
/s/ Walter C. Johnsen
Walter C. Johnsen
President and Chief Executive Officer
<PAGE> 3
ACME UNITED CORPORATION
75 Kings Highway Cutoff
Fairfield, CT 06430
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 22,1996
Notice is hereby given that the Annual Meeting of Shareholders of
Acme United Corporation will be held at The Westport Inn, 1595 Post Road
East, Westport, Connecticut, on Monday, April 22, 1996, at 11:00 A.M.,
for the following purposes:
1. To elect nine Directors of the Company to serve until the next
Annual Meeting and until their successors are elected.
2. To consider and vote upon approval of an Amendment to the 1992
Amended and Restated Stock Option Plan.
3. To consider and vote upon approval of the 1996 Non-Employee
Director Stock Option Plan.
4. To consider and vote upon an Amendment to the Company's
Certificate of Incorporation to increase the number of
authorized shares of Common Stock.
5. To consider and vote upon the appointment of Coopers and
Lybrand as Auditors for the Company for the year 1996.
6. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on March 4, 1996,
will be entitled to vote at the meeting and at any adjournment thereof.
/s/ Dwight C. Wheeler
March 29, 1996 ____________________________________
Fairfield, Connecticut Dwight C. Wheeler II, Vice Chairman,
Secretary and Treasurer
YOUR VOTE IS IMPORTANT
You are urged to date, sign and promptly return your proxy so that
your shares may be voted in accordance with your wishes and in order that
the presence of a quorum may be assured. The prompt return of your signed
proxy, regardless of the number of shares you hold, will aid the Company
in reducing the expense of additional proxy solicitation. The giving of
such proxy does not affect the right to vote in person in the event you
attend the meeting.
Enclosure: The Annual Report of the Company for the year 1995.
<PAGE> 4
ACME UNITED CORPORATION
75 Kings Highway Cutoff
Fairfield, CT 06430
ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1996
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Directors of Acme United Corporation
(hereinafter called the "Company") to be used at the Annual Meeting of
Shareholders of the Company, to be held April 22, 1996, or at any
adjournment thereof. The purposes are set forth in the accompanying
Notice of Annual Meeting of Shareholders and in this Proxy Statement. Any
proxy given may be revoked by a shareholder orally or in writing at any
time prior to the voting of the proxy.
The approximate date on which this Proxy Statement and the enclosed
Proxy is first sent or given to shareholders is March 29, 1996.
Only holders of Common Stock of record at the close of business on
March 4, 1996 will be entitled to vote at the meeting. Each holder of the
3,337,620 issued and outstanding shares of $2.50 par value Common Stock
is entitled to one vote per share. The holders of a majority of the
outstanding shares present in person or by proxy will constitute a quorum
for the transaction of business at the meeting.
The affirmative vote of a majority of the outstanding Common Stock
entitled to vote thereon is required for approval of the Amendment to
the Certificate of Incorporation. Where a quorum is present, the
affirmative vote of a majority of the votes present, in person or by
proxy, at the meeting and entitled to vote will decide other questions
voted upon, including the election of Directors. Abstentions and broker
non-votes are counted only for the purpose of determining whether a
quorum is present at the meeting.
PRINCIPAL SHAREHOLDERS
The following information is given with respect to any person who,
to the knowledge of the Company's Board of Directors, owns beneficially
more than 5% of the Common Stock of the Company (exclusive of treasury
shares) as of February 12, 1996:
<TABLE>
<CAPTION>
Shares Owned
Type of on February 12, Percent
Shareholder Ownership 1996 of Class
___________________________________________________________________________
<S> <C> <C> <C>
Henry C. Wheeler Direct 434,844 13.03
149 Lansdowne
Westport, CT 06880
Henry C. Wheeler and Fleet Direct (1) 104,140 3.12
National Bank of Connecticut
(formerly Shawmut National
Corporation), 777 Main Street,
MSN 321, Hartford, CT 06115,
Trustees for Henry C. Wheeler
Fleet National Bank of
Connecticut, 777 Main Street,
MSN321, Hartford, CT 06115
(a) as Trustee for Acme Direct 58,333 1.75
United Corporation Profit
Sharing and Pension Plan
Trusts
(b) as Executor of Direct 23,033 .69
the Estate of Phyllis
S. Wheeler
Dimensional Fund Indirect (2) 222,364 6.67
Advisors Inc.
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Maxus Investment Group Indirect (3) 262,910 7.88
28601 Chagrin Boulevard
Cleveland, OH 44122
</TABLE>
1
<PAGE> 5
The persons shown above have sole voting power in these shares
except that in the trust marked (1) the fiduciaries share voting and
dispositive power and as noted in (2) and (3) below.
(2) Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of 222,364
shares, all of which are held in portfolios of DFA Investment Dimensions
Group Inc. ("Fund"), a registered open-end investment company, or The DFA
Investment Trust Company ("Trust"), a Delaware business trust, or the DFA
Group Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional serves as
investment manager. Dimensional has sole voting power over 142,831 shares
and sole dispositive power over 222,364 shares. Persons who are officers
of Dimensional also serve as officers of the Fund and the Trust. In
their capacity as such officers, they have the right to vote 69,033
additional shares which are owned by the Fund and 10,500 shares which are
owned by the Trust and all of which shares are included in the 222,364
shares disclosed. Dimensional disclaims beneficial ownership of such
shares.
(3) Maxus Investment Group incorporated as Resource Management Inc.
("Maxus Investment Group"), Richard A. Barone, ("Mr. Barone"), Maxus
Asset Management Inc. ("MAM"), Maxus Securities Corp. ("Maxus
Securities") and Maxus Capital Partners Limited Partnership ("Capital
Partners") are collectively referred to as the "Filing Persons." The
business address of each of the Filing Persons is 28601 Chagrin
Boulevard, Cleveland, Ohio 44122. The Filing Persons each disclaim
membership in a Group as such term is defined in Section 13(d)(3) of the
Securities Exchange Act of 1934.
Investment clients of MAM own 188,300 shares. MAM may be deemed to
own beneficially these shares by reason of its power to dispose of such
shares under its Investment Management Agreement with such clients. MAM
disclaims beneficial ownership of all such shares.
Brokerage clients of Maxus Securities own 8,500 shares. Maxus
Securities may be deemed to own beneficially these shares by virtue of
such relationship, although it has no contractual power to vote or
dispose of such shares. Maxus Securities disclaims beneficial ownership
of all such shares.
Capital Partners has the sole power to vote and dispose of the
66,110 shares which it owns. By virtue of its status as general partner
of Capital Partners, Maxus Corporate Partners, Inc., also may be deemed
to have the sole power to vote and dispose of the shares owned by Capital
Partners. By virtue of his position as an owner, officer and director of
Maxus Corporate Partners, Inc., Mr. Barone also may be deemed to have the
sole power to vote and dispose of the shares owned by Capital Partners.
Mr. Barone owns no shares directly but, by virtue of his position as
Chairman and President of MAM, Maxus Securities and Maxus Investment
Group, Mr. Barone may be deemed to own beneficially the 188,300 shares
which may be deemed to be beneficially owned by MAM and the 8,500 shares
which may be deemed to be beneficially owned by Maxus Securities. Mr.
Barone disclaims beneficial ownership of all such shares. Maxus
Investment Group owns no shares directly, but Maxus Investment Group may
be deemed to own beneficially the 188,300 shares which may be deemed to
be beneficially owned by MAM and the 8,500 shares which may be deemed to be
beneficially owned by Maxus Securities. Maxus Investment Group disclaims
beneficial ownership of all such shares.
MAM shares with its investment clients the power to dispose of the
shares which may be deemed to be beneficially owned by MAM. Maxus
Securities also may be deemed to share with its brokerage clients the
power to dispose of the shares which may be deemed to be beneficially
owned by Maxus Securities. By virtue of their relationship to MAM and
Maxus Securities, Maxus Investment Group and Mr. Barone also may be
deemed to share such power. None of the Filing Persons has any power to
vote any such shares.
2
<PAGE> 6
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates, as to each named executive officer,
director and nominee, and as to all directors and executive officers as
a group, the number of shares and percentage of the Company's Common
Stock beneficially owned as of February 12, 1996. The persons shown have
sole voting power in these shares except as shown in the footnotes below.
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned as of
February 12, 1996
__________________________
Number of
Shares (1) Percent
_________________________________________________________________
<S> <C> <C>
David W. Clark ..................... 70,704 (2) 2.04
George R. Dunbar ................... 5,026 *
James F. Farrington ................ 17,500 (3) *
Walter C. Johnsen.................... 143,300 (4) 3.97
Newman M. Marsilius ................ 8,553 (5) *
Wayne R. Moore ..................... 1,888 *
Gary D. Penisten ................... 25,000 *
Dwight C. Wheeler II ............... 55,502 (6) 1.54
Henry C. Wheeler ................... 538,984 (7) 14.92
Executive Officers and Directors
as a Group (13 persons)........ 1,064,957 (8) 29.48
</TABLE>
____________________
*Less than 1.0%
(1) Based on a total of 3,337,620 currently outstanding shares and
275,000 shares issuable upon exercise of outstanding options exercisable
within 60 days of February 12, 1996.
(2) Mr. Clark is Trustee of the John E. Clark Trust with 7,894
shares and has voting and dispositive power on those shares. Mr. Clark is
Co-Trustee with Margaret L. Clark of the David W. Clark Trust with 53,768
shares and shares voting and dispositive power on these shares.
(3) Includes 8,000 shares issuable upon exercise of outstanding
options exercisable within 60 days of February 12, 1996. Ruth
Farrington, wife of James F. Farrington, owns 1,080 shares in which Mr.
Farrington disclaims any beneficial interest. Mr. Farrington also
disclaims any beneficial interest in 79 shares owned by several of his
children.
(4) Includes 100,000 shares issuable upon exercise of outstanding
options within 60 days of February 12, 1996.
(5) Marie K. Marsilius, wife of Newman M. Marsilius, owns 632
shares in which Mr. Marsilius disclaims any beneficial interest.
(6) Includes 50,000 shares issuable upon exercise of outstanding
options exercisable within 60 days of February 12, 1996. Dwight C.
Wheeler II is a son of Henry C. Wheeler. Jeffrey H. Wheeler, son of
Dwight C. Wheeler, owns 504 shares in which Mr. Wheeler disclaims any
beneficial interest.
(7) Henry C. Wheeler is Co-Trustee with Fleet National Bank of
Connecticut of 104,140 shares and shares voting and dispositive power on
these shares. See Principal Shareholders for details.
(8) Includes 206,000 shares issuable upon exercise of outstanding
options exercisable within 60 days of February 12, 1996.
3
<PAGE> 7
ELECTION OF DIRECTORS
Each of the following persons has been nominated as a Director to serve
until the next Annual Meeting of Shareholders and until his successor is
chosen and qualified. The proxies in the enclosed form which are executed and
returned will be voted (unless otherwise directed) for the election as
Directors of the following nominees, all of whom are now members of the
Board of Directors, except James L. L. Tullis.
<TABLE>
<CAPTION>
Director
Nominees Principal Occupation Since
__________________________________________________________________________
<S> <C> <C>
Henry C. Wheeler
(age 79) Chairman and Chief Executive Officer 1941
through December 20, 1994, Chairman
through November 29, 1995, Chairman
Emeritus as of November 30, 1995
Newman M. Marsilius
(age 78) Chairman of the Board (1978- 1956
1986), The Producto Machine Company,
manufacturer of special machine tools
and tooling products, Bridgeport, CT
Wayne R. Moore
(age 65) Chairman of the Board, The 1976
Producto Machine Company,
manufacturer of machine tools,
special machines, and tool die
and mold components. Chairman
of the Board, Moore Tool Company,
manufacturer of machine tools,
measuring machines and metrology
products. Mr. Moore was Chairman
of the Association for Manufacturing
Technology/U.S. Machine Tool Builders
(1985-86). Committee Member of
U.S. Eximbank (1984).
George R. Dunbar
(age 72) President of Dunbar Associates, 1977
a municipal management consulting
firm. Former Chief Administrative
Officer for the City of Bridgeport.
President (1972-87), Bryant Electric
division of Westinghouse Electric
Corporation, manufacturer of wiring
devices load centers, circuit breakers
and ground fault products, Bridgeport,
CT. Mr. Dunbar is also a Director of
People's Bank, Bridgeport, CT.
David W. Clark
(age 58) Managing Director of Pryor & Clark 1980
Company, an investment company. From
July 1988 to June 1992, Mr. Clark
was President of Corcap, Inc., which
was spun off Lydall, Inc. in July
1988. Mr. Clark joined Lydall in 1972
as Vice President-Treasurer and Director.
He became Executive Vice President in
1977 and President in 1986. Until July
of 1992, Mr. Clark was also Chairman of
the Board of CompuDyne Corporation of
which he remains a Director. He is also
a Director of Checkpoint Systems, Inc.,
Thorofare, NJ; and Securities Software
and Consulting Company, Hartford, CT.
Dwight C. Wheeler II
(age 53) Vice Chairman since November 30, 1995, 1980
Secretary since March 26, 1996 and
Treasurer since April 23, 1990;
President and Chief Executive Officer
from December 20, 1994 to November 29, 1995.
Joined the Company in 1966. Posts held
include Executive Vice President, Chief
Operating Officer, Corporate Vice President -
Administration, Industrial Engineer and
Assistant to the President.
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
Director
Nominees Principal Occupation Since
__________________________________________________________________________
<S> <C> <C>
Gary D. Penisten
(age 64) Chairman of the Board since February 1994
27, 1996. He is a Director of D.E.
Foster & Partners L.P., an executive
search firm, and Food Court Entertainment
Network, Inc., a shopping mall advertising
entertainment venture. From 1977 to 1988,
he was Senior Vice President of Finance, Chief
Financial Officer and a Director of Sterling
Drug Inc. in New York City. After Sterling
was acquired by Eastman Kodak, he remained
in essentially the same position for
another two years at which time he retired
to pursue other interests. From 1974 to 1977
he served in the U.S. government as
assistant Secretary of the Navy for
Financial Management. Prior to that,
he was employed by General Electric
where his last position was Manager-
Finance, Power Generation Group.
Walter C. Johnsen
(age 45) President and Chief Executive Officer 1995
since November 30,1995; Chief
Financial Officer since March 26,
1996,Executive Vice
President from January 24, 1995 to
November 29, 1995. Formerly served as
Vice Chairman and a principal of Marshall
Products, Inc. a medical supply distributor
based in Lincolnshire, Ill., which he and his
associates acquired in a leveraged
acquisition. He contributed significantly
to the firm's growth from $18 million to $40
million in annual revenues in a period
of four years. Marshall was sold to a
Japanese company. Previously, he held
various venture capital positions at
Smith Barney and was Managing Partner
of the firm's West Coast activities.
Earlier in his career, he worked at
Pfizer, Inc.
James L.L. Tullis
(age 48) Chairman and Chief Executive Officer of
Tullis-Dickerson & Co., Inc., Greenwich,
Connecticut, a management company for venture
capital firms. From 1972 to 1983, he was a
securities analyst researching the health care
industry at Putnam Funds and Morgan Stanley
and Co., Inc. He also was a senior vice
president at E.F. Hutton and Co., and
established a health care investment banking
business there. He is former President of the
Investment Association of New York. He is a
director of Physician Sales & Service, Inc.,
American Consolidated Laboratories, Inc.,
Zynaxis, Inc., Quantum Solutions, Inc.,
PRP, Inc. and Guidestar, Inc.
</TABLE>
5
<PAGE> 9
Management does not expect that any of the nominees will become
unavailable for election as a Director, but, if for any reason that
should occur prior to the Annual Meeting, the persons named in the proxy
will vote for such substitute nominee, if any, as may be recommended by
Management.
There were no material transactions between the Company and any
Officer of the Company, any Director or nominee for election as Director,
any security holder holding more than 5% of the Common Stock of the
Company or any relative or spouse of any of the foregoing persons.
The Board of Directors had nine meetings. All Directors attended 75%
of the aggregate of the total number of Board meetings and meetings
of Committees of which they were a member.
All outside Directors received a fee of $6,000 per annum, plus a fee
of $500 for each Board or other meeting attended until November 19, 1995.
Effective November 30, 1995, the amount of fees payable to outside
Directors shall be $1,500 per quarter plus $500 for each Board of
Directors meeting attended. The fees earned for service on the
Committees of the Board shall be $500 per Committee meeting and $500 for
each one-half day, or major portion thereof, devoted to Committee work.
The Chairman of the Executive Committee will earn an additional $500 per
day to compensate for the broader responsibility and related effort.
Effective November 19, 1995 all fees payable to Directors shall be
deferred until the Company completes four consecutive quarters with
aggregate earnings per share of $.50 or more, the Company or one of its
major businesses has been sold or a change in control of the Company has
occurred. Until one of such events occurs, the fees as earned shall be
accrued by the Company and when one of such events does occur, the
accrued fees shall be paid as promptly as possible thereafter.
Each Director shall be offered the option of receiving, when such
fees become payable, (a) an amount equal to the fees earned during the
period of deferral, or (b) the sum of (i) the amount of the fees earned
during the period of deferral, plus or minus, as the case may be (ii) the
aggregate amount of the fees earned each month during the period of
deferral times the Percentage Increase or Decrease in the Company's Stock
Price index ("Index"). The "Percentage Increase or Decrease in the
Index" shall mean the increase or decrease expressed as a percentage in
the Index from the first business day of the month during which fees were
earned and the Index on the last business day prior to the date of
payment. The Index for any given day shall be the closing price on the
American Stock Exchange for the Company's stock on such day. All
payments pursuant to the Deferred Compensation Plan for Directors shall
be without interest.
There is an Executive Committee of the Board of Directors which was
reconstituted on November 20, 1995 and is composed of Messrs. Penisten,
Dunbar and Farrington. The function of the Executive Committee is to act
for the Board of Directors during the intervals between meetings of the
Board. During 1995, the Committee held two formal meetings. In
addition, the Committee members each worked independently on numerous
projects for the Company. For these services, through December 31, 1995
Mr. Penisten earned $9,000, Mr. Dunbar $4,000, and Mr. Farrington $4,500.
These amounts are being deferred as described above.
There is an Audit Committee of the Board of Directors which is
composed of Messrs. Dunbar, Marsilius, Moore and Penisten. During 1995,
this committee met two times with the Company's independent auditors. The
function of the Audit Committee is to maintain a direct and separate line
of communications between the Board of Directors and the Company's
independent auditors.
The functions of a Nominating Committee are performed by the whole
Board. The Board will consider nominees for Directors recommended by
shareholders, and such recommendations may be made by submitting in
writing to the Board, care of the Secretary at Company's principal
executive office, the name, address, telephone number and resume of his
or her business and educational background along with a written statement
by the shareholder as to why such person should be considered for
election to the Board of Directors.
6
<PAGE> 10
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION COMMITTEE AND INSIDER PARTICIPATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. During 1995 the
Committee was composed of the non-employee members of the Board of
Directors, which include David W. Clark, George R. Dunbar, Newman M.
Marsilius, Wayne R. Moore and Gary D. Penisten. The Committee had three
meetings during 1995.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is committed to a strong, positive link
between business, performance and strategic goals, and compensation and
benefit programs.
OVERALL EXECUTIVE COMPENSATION POLICY
Our compensation policy is designed to support the overall objective
of enhancing value for our shareholders by:
- Attracting, developing, rewarding and retaining highly
qualified and productive individuals.
- Directly relating compensation to both Company and individual
performance.
- Ensuring compensation levels that are externally competitive
and internally equitable.
Following is a description of the elements of the Company's
executive compensation program and how each relates to the objectives and
policy outlined above.
BASE SALARY
The Committee reviews each executive officer's salary annually. In
determining appropriate salary levels, we consider level and scope of
responsibility, experience, company and individual performance, internal
equity, as well as pay practices of other companies relating to
executives of similar responsibility.
On December 20, 1995, it was decided that no salary increases
would be granted on January 1, 1996. Moreover, salary increases in 1996
are to be reduced or delayed to reflect the performance of the Company.
ANNUAL INCENTIVES
Annual incentive programs and stock option incentives for executives
are as follows:
Annual incentive award opportunities are made to executives to
recognize and reward corporate and individual performance. The plan in
effect for 1995 provided for an incentive bonus based on the achievement
of corporate profitability goals set for each individual, based upon his
area of responsibility. The bonuses would range from 5% to 50% of base
salary, provided a minimum goal were reached.
The amount individual executives may earn under the bonus plan is
directly dependent upon the individual's position, responsibility and
ability to impact our financial success. No incentive bonuses were
granted for 1995.
In 1996, a new goal-related plan has been implemented.
7
<PAGE> 11
STOCK OPTION INCENTIVES
The Company's stock option compensation program is administered by
the Compensation Committee, which has been combined with the Stock Option
Plan Committee of the Board of Directors. The purpose of the Company's
1992 Amended and Restated Stock Option Plan is to promote the interests
of the Company by enabling its key employees to acquire an increased
proprietary interest in the Company and thus to share in the future
success of the Company's business. Accordingly, the plan is intended as
a means not only of attracting and retaining outstanding management
personnel but also of promoting a closer identity of interests between
employees and stockholders. Since the employees eligible to receive
options under the plan will be those who are in a position to make
important and direct contributions to the success of the Company, the
Committee believes that the grant of the options under the plan will be
in the best interest of the Company.
The following options were granted in 1995:
Options for 75,000 shares were granted to Walter C. Johnsen on
January 24, 1995 of which 25,000 shares vested on January 25, 1995,
25,000 on July 24, 1995 and 25,000 on January 24, 1996. In addition, on
January 23, 1996 Mr. Johnsen was granted options for 75,000 shares of
which 25,000 shares vested on January 23, 1996, 25,000 will vest on
July 24, 1996 and 25,000 on January 1, 1997.
The Committee also granted options for 10,000 shares each to Andrew
Harrison and Stephen T. Bajda. Mr. Dwight C. Wheeler surrendered options
for 50,000 shares effective on December 1, 1995.
RATIONALE FOR CEO COMPENSATION
Walter C. Johnsen was designated Chief Executive Officer of the
Company effective on November 30, 1995. His compensation package was
designed to encourage performance in line with the interests of our
shareholders. We believe Mr. Johnsen's total compensation was competitive
in the external marketplace and reflective of Company and individual
performance.
Mr. Johnsen's compensation was $150,000 per annum prior to his
becoming Chief Executive Officer, and was not changed as a result of his
new position. The factors which the Committee considered in determining
Mr. Johnsen's base salary for fiscal 1995 were those mentioned above for
other executive officers.
Dwight C. Wheeler was Chief Executive Officer of the Company through
November 29, 1995. His salary continued until November 30, 1995 at the
same level as he had received in 1994. As of December 1, 1995 his salary
was reduced to $150,000 per annum.
COMPENSATION COMMITTEE
David W. Clark
George R. Dunbar
Gary D. Penisten
Wayne R. Moore
Newman M. Marsilius
The Compensation Committee Report on Executive Compensation shall
not be deemed incorporated by reference by any general statement
incorporating by reference in this proxy statement into any filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under such Acts.
8
<PAGE> 12
SUMMARY COMPENSATION TABLE
The following sets forth information concerning the compensation of
the Company's Chief Executive Officer and each of the four other most
highly compensated executive officers of the Company at the end of the
last completed fiscal year earning more than $100,000 in salary and
bonuses. No information is given as to any person for any fiscal year
during which such person was not an executive officer of the Company.
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
Other Annual
Name and Compensation
Principal Position Year Salary Bonus (1)
______________________________________________________________________________
<S> <C> <C> <C> <C>
Walter C. Johnsen, 1995 $143,750 $ -0- $1,000
President & Chief
Executive Officer since
November 30, 1995,
Executive Vice President
through November 29, 1995.(2)
Henry C. Wheeler, 1995 $111,000 (3) $ -0- $ 893
Chairman through 1994 $180,000 $ -0- $1,000
November 29, 1995. 1993 $180,000 $ -0- $ 735
Dwight C. Wheeler II, 1995 $177,500 (4) $ -0- $ 972
Vice Chairman since 1994 $180,000 $ -0- $ 697
November 30, 1995 1993 $156,000 $ -0- $1,000
President & Chief
Executive Officer through
November 29, 1995.(5)
Andrew T. Harrison, 1995 $125,000 $ -0- $ 797
Senior Vice President 1994 $120,000 $ -0- $ 951
1993 $ 96,900 $ -0- $ 714
Stephen T. Bajda, 1995 $110,004 $ -0- $1,000
Senior Vice President(6) 1994 $100,020 $ -0- $1,000
1993 $ 94,800 $ -0- $1,000
</TABLE>
(1) Does not include the value of perquisites and other personal
benefits because the aggregate amount of such compensation, if any, does
not exceed the lesser of $50,000 or ten (10%) percent of the total amount
of annual salary and bonus for any named individual. Amounts shown
represent certain reimbursements for taxes.
(2) Walter C. Johnsen also serves as Chief Financial Officer (since
March 26, 1996).
(3) Henry C. Wheeler's salary was reduced to $12,000 per annum
effective December 1, 1995.
(4) Dwight C. Wheeler's salary was reduced to $150,000 per annum
effective December 1, 1995.
(5) Dwight C. Wheeler also serves as Secretary (since March 26, 1996)
and Treasurer (April 23, 1990) for the company.
(6) Stephen T. Bajda left the employment of the company effective
March 25, 1996.
9
<PAGE> 13
OPTION GRANTS IN LAST FISCAL YEAR AND POTENTIAL REALIZABLE VALUES
The following table provides information concerning each option
granted during the last fiscal year to each of the named executive
officers and the potential realizable value of such options at certain
assumed rates of stock appreciation.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS Potential Realizable
___________________________________________________ Value at Assumed Annual
Number of % of Total Rates of Stock Price
Shares Options Appreciation for Option
Underlying Granted to Exercise Expira- Term
Options Employees in or Base tion _______________________
Name Granted Fiscal Year Price Date 5% 10%
______________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Walter C. 75,000 48% $3.625 January $171,000 $433,000
Johnsen per share 23, 2005
Andrew T. 10,000 6% $3.625 January $ 23,000 $ 58,000
Harrison per share 23, 2005
Stephen T. 10,000 6% $3.625 January $ 23,000 $ 58,000
Bajda per share 23, 2005
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table provides information concerning each option exercised
during the last fiscal year by each of the named executive officers and the
value of unexercised options held by such executive officers at the end of the
fiscal year.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Option/SARs at Option SARs
Fiscal Year at Fiscal Yr
Shares End (1) End (1)(2)
acquired on Value Exercisable/ Exercisable/
Name exercise (#) Realized($) Unexercisable Unexercisable
_______________________________________________________________________________
<S> <C> <C> <C> <C>
Walter C. Johnsen.... -0- -0- 75,000/-0- $18,750/-0-
Henry C. Wheeler .... -0- -0- -0-/-0- -0-/-0-
Dwight C. Wheeler II -0- -0- 50,000/-0- $34,375/-0-
Andrew T. Harrison .. -0- -0- 10,000/-0- $ 2,500/-0-
Stephen T. Bajda..... -0- -0- 10,000/-0- $ 2,500/-0-
</TABLE>
(1) The Company has no unexercised SARs
(2) Values stated are based on the closing price per share of the
Company's Common Stock on the American Stock Exchange on
December 29, 1995, the last trading day of the fiscal year.
10
<PAGE> 14
ACME UNITED CORPORATION RETIREMENT PLANS
In December 1995, the Board of Directors adopted a resolution to freeze
the defined benefit pension plan resulting in no further benefit accruals
after February 1, 1996. The life annuity annual benefit at age 65, was zero
for Walter C. Johnsen, $18,187 for Dwight C. Wheeler, $28,961 for Andrew T.
Harrison and $8,604 for Stephen T. Bajda. Henry C. Wheeler is presently
receiving a $62,926 annual pension benefit under a 100% joint and survivor
form of payment. These amounts are not subject to a deduction for estimated
Social Security benefits, and do not include benefits which would result from
the transfer by a retiring employee of his accrued profit-sharing account
balance to the pension plan.
CHANGE-IN-CONTROL ARRANGEMENTS AND SEVERANCE PAY PLAN
The Company has a Salary Continuation Plan in effect covering officers
of the Company employed in the United States at the level of Vice President
or above, under the age of 65 and having at least one (1) year of Company
service. Amongst others, this plan covers Walter C. Johnsen, Dwight C.
Wheeler II, Andrew T. Harrison and Stephen T. Bajda, and is designed to
retain key employees and provide for continuity of management in the event of
an actual or threatened change in control of the Company and/or the sale of
its Medical Products Division. First, the plan provides that in the event of
such a change in control and/or sale of the Medical Products Division each
such key employee would have specific rights and receive certain benefits if,
within one year after such change in control and/or sale (two years for
certain officers who like Mr. Johnsen and Mr. Wheeler are also Directors),
either the employee's employment is terminated by the Company involuntarily,
his responsibility, status or compensation is reduced, or if he is
transferred to a location unreasonably distant from his current location. In
such circumstances the compensation which the employee would be entitled to
receive would be a lump sum payment equal to a specific number of months'
compensation based upon the level of his non-deferred compensation in effect
immediately preceding such disposition. Secondly, any such key employee
resigning within six (6) months after the disposition of the Company or the
Medical Products Division (one year for certain officers who like Mr. Johnsen
and Mr. Wheeler are also Directors) would be entitled to a similar payment.
Under the first scenario Messrs. Johnsen, Wheeler, Harrison and Bajda would be
entitled to thirty (30) months', thirty (30) months', eighteen (18) months'
and eighteen (18) months' compensation respectively; under the second
scenario, Messrs. Johnsen, Wheeler, Harrison and Bajda would be entitled to
twenty-four (24) months', twenty-four (24) months', twelve (12) months' and
twelve (12) months' compensation respectively.
The Company has a Severance Pay Plan in effect covering officers of the
Company employed in the United States at the level of Vice President or
above, under the age of 65 and having at least one (1) year of Company
service. Amongst others, this Plan covers Mr. Johnsen, Dwight C. Wheeler II,
Mr. Bajda and Mr. Harrison, and is designed to enable the Company to attract
and retain key employees. The Plan provides that in the event the key
employee's employment is terminated by the Company involuntarily, his
responsibility, status or compensation is reduced or if he is transferred to
a location unreasonably distant from his current location, he shall be
entitled to benefits under the Plan. In such circumstances the compensation
which the employee would be entitled to receive would be a lump sum payment
equal to a specific number of months compensation based upon the level of his
non-deferred compensation in effect immediately preceding such termination.
Under the Plan Mr. Johnsen would be entitled to six (6) months' compensation,
Mr. Wheeler to thirty (30) months' compensation, Mr. Bajda to eighteen (18)
months' compensation, and Mr. Harrison to eighteen (18) months' compensation
upon such severance. This plan applies only if the Salary Continuation Plan
does not apply. As a result of his change in status from President and Chief
Executive Officer to Vice Chairman, which became effective on November 30,
1995, Dwight C. Wheeler, II was eligible to claim severance pay pursuant to
the Severance Pay Plan. By agreement with the Board of Directors, Mr.
Wheeler has reserved the right to resign and to claim benefits under the
Severance Pay Plan through November 30, 1996. Further, if Mr. Wheeler
resigns on or before November 30, 1996 or otherwise becomes eligible to make
any claim under either the Salary Continuation Plan or the Severance Pay
Plan, the salary level used to calculate his benefit will be the greater of
his salary prior to November 30, 1995 or the salary in effect at the time of
termination of his employment.
11
<PAGE> 15
PERFORMANCE GRAPH
The following Performance Graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
The graph compares the yearly cumulative total stockholder return on the
Company's Common Stock with the yearly cumulative total return of (a) the
AMEX Market Index and (b) a peer group of companies that, like the Company,
(i) are currently listed on the American Stock Exchange, and (ii) have a
market capitalization of $10 million to $20 million. The peer group includes
the following companies: Acme United Corporation, Aircoa Hotel Partners LP,
Alba-Waldensian Inc, Alfin Inc, Allied Research Assoc., America First Prep 2
LP, Arizona Land Income CP, Arrhythmia Res Tech, Arrow Automotive Ind, Aurora
Electronics Inc., B&H Ocean Carriers LTD, Bank of Southington, Banyan Hotel
Invest Fund, Biopharmaceutics Inc., Blackrock CA INV QMT, Blackrock FL IQMT,
Blackrock NJ IQMT, Blackrock NY IQMT, Bowmar Instrument CP, Brock Exploration
Company, Buffton CP, Cabletel Commun, Calton Inc., Chicago Rivet & Machine,
Citadel Holding CP, Cognitronics CP, Columbus Energy CP, Computrac Inc,
Concord Fabrics Inc A, Continental Materials CP, CST Entertain Inc, Dataram
CP, Decorator Ind Inc, Dewolfe Cos Inc, Digital Comm Tech CP, Engex Inc,
Environmental Tectonics, Espey Mfg & Electronics, ETS Internat Inc, EXX Inc
CL A, Foodarama Supermarkets, Fountain Powerboat Ind, FPA CP, Franklin
Advantage RE FD, Frontier ADJ of America, General Automation Inc, General
Employment Ent, Global Ocean Carriers, Go-Video Inc, Goldfield CP, Graham CP,
Hallmark Financial Services, Health-Chem CP, Healthy Planet Products, Hein-
Werner CP, Howell Ind Inc, Income Opportunity RL TR, Independent Bankshares,
Intelligent System, Ion Laser Technology Inc, Jaclyn Inc, Joule Inc, Kinark
CP, Kit Manufacturing Co, Kleer-Vu Ind, Leather Factory Inc, Magnum Petrol,
Matec CP, Measurement Specialties, Mem Co Inc, Merrimac Ind Inc, Midsouth
Bankcorp, Milwaukee Land Co, MSR Exploration Ltd, NFC PLC ADR, O'Okiep Copper
Co, One Liberty Props Inc, Pacific Gateway Props, Pamida Holding CP, Pinnacle
Bank, Pittsburgh & WV Railroad, Plymouth Rubber Inc CL A, Portage Ind CP,
Pratt Hotel, Professional Bancorp, Professional Dental Tech, PS Business
Parks in CLA, Public Storage Prop XX, Reliv Internat Inc, Resort Income Inv
Inc, Richton Internat CP, Sahara Gaming CP, Scandinavia Co, Servotronics Inc,
Sheffield Exploration, Shopco Laurel Ctr LP, Silverado Foods Inc, Sloans
Supermarkets, Stage II Apparel CP, Sterling Cap CP, Sunair Electronics Inc,
Sunbelt Nursery GR, Surety Capital CP, Team Inc, Thermwood CP, Tolland Bank
CT, Town & Country CP, Trans Lux CP, Triton Group Ltd, Unapix Entertain,
Unitel Video Inc, UTI Energy CP, Van Kampen AM Cap OH VMI, Vanguard Real
Estate FD II, Versar Inc, Voyageur MN Muni Inc FD3, Wellco Enterprs Inc,
Wells-Gardner Electronic, Xytronyx Inc.
The Company does not believe it can reasonably identify a peer group of
companies on an industry or line-of-business basis for the purpose of
developing a comparative performance index. While the Company is aware that
some other publicly-traded companies market products in one of the Company's
two lines-of-business, none of these other companies provide most or all of
the products offered by the Company, and many offer other products or
services as well. Moreover, some of these other companies that engage in one
of the Company's two lines-of-business do so through divisions or
subsidiaries that are not publicly-traded. Furthermore, many of the other
companies are substantially more highly capitalized than the Company. For
all of these reasons, any such comparison would not, in the opinion of the
Company, provide a meaningful index of comparative performance.
The comparisons in the graph below are based on historical data and are
not indicative of, or intended to forecast, the possible future performance
of the Company's Common Stock.
<TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
<CAPTION>
FISCAL YEAR ENDING
COMPANY 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
ACME UNITED CP 100 142.48 117.02 87.26 66.73 79.56
PEER GROUP 100 112.27 123.13 128.02 103.24 94.39
BROAD MARKET 100 123.17 124.86 148.34 131.04 168.90
</TABLE>
12
<PAGE> 16
PROPOSAL FOR AMENDMENT TO EMPLOYEES' STOCK OPTION PLAN
DESCRIPTION OF 1992 AMENDED AND RESTATED STOCK OPTION PLAN
The Company adopted a non-qualified stock option plan, the 1988 Stock
Option Plan effective February 22, 1988, which was amended effective January
29, 1991 and further amended and restated as the 1992 Amended and Restated
Stock Option Plan (the "Plan") effective February 25, 1992. A further
amendment of the Plan to increase the number of shares available will be
considered at the Annual Meeting and is described below. Under the Plan,
which is administered by the Compensation Committee of the Board of Directors
("Committee"), key employees of the Company (including directors and officers
who are employees) have been granted options to purchase shares of Common
Stock.
The Plan permits the granting of an aggregate of 300,000 shares of
Common Stock (proposed to be increased to 400,000 shares) at a price equal to
one hundred percent (100%) of the fair market value of the Common Stock on
the date that the option is granted provided, however, that the price shall
not be less than the par value of the Common Stock which is subject to the
option. Further no Incentive Stock Option may be granted to an employee
owning Common Stock having more than 10% of the voting power of the Company
unless the option price for such employee's option is at least 110% of the
fair market value of the Common Stock subject to the option at the time the
option is granted and the option is not exercisable after five years from the
date of granting. The par value of the Company's Common Stock is presently
$2.50 per share. No option may be granted under the Plan after the tenth
anniversary of the adoption of the Plan. As a result of the amendment and
restatement of the Plan in 1992, options may be granted until February 24,
2002. Unless otherwise specified by the Committee, options granted under the
Plan are Incentive Stock Options under the provisions and subject to the
limitations of Section 422 of the Internal Revenue Code. Options granted
prior to the 1992 amendment and restatement are non-qualified stock options
and any shares issued under these options would be included in the 300,000
share total proposed to be increased to 400,000.
PLAN ADMINISTRATION
The Plan is administered by the Committee, which consists of members of
the Board who are not employees of the Company. The Committee is authorized,
subject to the provisions of the Plan, to determine the employees who will
receive options under the Plan, the number of shares subject to each option
and the terms of those options, and to interpret the Plan and to make such
rules of procedure as the Committee may deem proper.
Upon the granting of any option, the optionee must enter into a written
agreement with the Company setting forth the terms upon which the option may
be exercised. Such an agreement sets forth the length of the term of the
option and the timing of its exercise as determined by the Committee. In no
event shall the length of an option extend beyond ten years from the date of
its grant. An optionee may exercise an option by delivering payment to the
Company in cash.
Under the Plan, if the employment of any person to whom an option has
been granted is terminated for any reason other than the death, disability or
retirement of the optionee, the optionee may exercise within three months of
such termination such options as the optionee could have exercised if his or
her employment had continued for such three month period. If the termination
is by reason of retirement, the optionee may exercise the option, in whole or
in part, at any time within one year following such termination of
employment, but if the option is exercised later than three months from the
date of retirement the option shall not constitute an Incentive Stock Option.
If the optionee dies while employed by the Company or its subsidiaries, or
during a period after termination of employment in which the optionee could
exercise an option, the optionee's beneficiary may exercise the option within
one year of the date of the optionee's death but in no event may the option
be exercised later than the date on which the option would have expired if
the optionee had lived. If the termination is by reason of disability, the
optionee may exercise the option, in whole or in part, at any time within one
year following such termination of employment or within such other period,
not exceeding three years after the date of disability as is set forth in the
option agreement with respect to such options, provided, however, that if the
option is exercised later than one year after the date of disability, it
shall not constitute an Incentive Stock Option. Notwithstanding the above,
no option may be exercised after the expiration date specified in the option
agreement.
13
<PAGE> 17
TAX ASPECTS
With respect to the tax effects of non-qualified stock options, since
the options granted under the Plan do not have a "readily ascertainable fair
market value" within the meaning of the Federal income tax laws, an optionee
of an option will realize no taxable income at the time the option is
granted. When a non-qualified stock option is exercised, the optionee will
generally be deemed to have received compensation, taxable at ordinary income
tax rates, in an amount equal to the excess of the fair market value of the
shares of Common Stock of the Company on the date of exercise of the option
over the option price. The Company will withhold income on employment taxes
in connection with the optionee's recognition of ordinary income as a result
of the exercise by an optionee of a non-qualified stock option. The Company
generally can claim an ordinary deduction in the fiscal year of the Company
which includes the last day of the taxable year of the optionee which
includes the exercise date or the date on which the optionee recognizes
income. The amount of such deduction will be equal to the ordinary income
recognized by the optionee. When stock acquired through the exercise of a
non-qualified stock option is sold, the difference between the optionee's
basis in the shares and the sale price will be taxed to the optionee as
capital gain (or loss).
With respect to the tax effects of Incentive Stock Options, the optionee
does not recognize any taxable income when the option is granted or
exercised. If no disposition of shares issued to an optionee pursuant to the
exercise of an Incentive Stock Option is made by the optionee within two
years from the date of grant or within one year after the transfer of such
shares to the optionee then (a) upon sale of such shares, any amount realized
in excess of the option price (the amount paid for the shares) will be taxed
to the optionee as long-term capital gain and any loss sustained will be a
long-term capital loss and (b) no deduction will be allowed to the Company
for Federal income tax purposes. The exercise of an Incentive Stock Option
will give rise to an item of tax preference that may result in alternative
minimum tax liability for the optionee.
If shares of Common Stock acquired upon the exercise of an Incentive
Stock Option are disposed of prior to the expiration of the two year and one
year holding periods described above (a "Disqualifying Disposition")
generally (a) the optionee will realize ordinary income in the year of
disposition in an amount equal to the excess (if any) of the fair market
value of the shares at exercise (or, if less, the amount realized upon the
sale of such shares) over the option price thereof, and (b) the Company will
be entitled to deduct such amount, subject to applicable withholding
requirements. Any further gain realized will be taxed as short-term or long-
term capital gain and will not result in any deduction by the Company. A
Disqualifying Disposition will eliminate the item of tax preference
associated with the exercise of the Incentive Stock Option.
14
<PAGE> 18
CHANGES IN PLAN
The Plan may be terminated, suspended, or modified at any time by the
Board of Directors, but no amendment increasing the maximum number of shares
for which options may be granted (except to reflect a stock split, stock
dividend or other distribution), reducing the option price of outstanding
options, extending the period during which options may be granted, otherwise
materially increasing the benefits accruing to optionee or changing the class
of persons eligible to be optionees shall be made without first obtaining
approval by a majority of the shareholders of the Company. No termination,
suspension or modification of the Plan shall adversely affect any right
previously acquired by the optionee or other beneficiary under the Plan.
Options granted under the Plan may not be transferred other than by will
or by the laws of descent and distribution and, during the optionee's
lifetime, may be exercised only by the optionee.
All of the Options previously issued will remain unchanged and
outstanding after the 1996 amendment to the Plan.
The benefits or amounts that will be received by or allocated to any
participants are not now determinable, except that, because the grant of
options for 75,000 shares to Walter C. Johnsen, President and Chief Executive
Officer of the Company, on January 23, 1996 is conditional upon the
availability of sufficient shares in the Plan and because there were only
50,000 shares available in the Plan on January 23, 1996, Mr. Johnsen will be
entitled to a portion of the proposed increased amount level to 25,000
shares, upon adoption of the proposed amendment to the Plan (subject to the
vesting provisions of the grant).
AMENDMENT TO THE 1992 AMENDED AND RESTATED STOCK OPTION PLAN
On January 23, 1996, the Board of Directors adopted, subject to the
approval of the shareholders, an amendment to the Plan. The only change
adopted is an increase in the aggregate number of shares of Common Stock
available under the Plan from 300,000 shares to 400,000 shares. The
foregoing description of the Plan is qualified in its entirety by reference
to the text of the Plan (excluding the proposed amendment), a copy of which
has been filed with the Securities and Exchange Commission ("SEC").
VOTE REQUIRED
The purpose of the proposed amendment is to provide shares for managers
who will be instrumental in improving the operating results of the Company.
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock present in person or by proxy at the meeting is
required for approval of the 1996 Amendment to the 1992 Amended and Restated
Stock Option Plan.
The Board of Directors recommends a vote FOR approval of the 1996
Amendment to the Plan.
15
<PAGE> 19
PROPOSAL FOR ADOPTION OF 1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
On February 27, 1996, the Board of Directors adopted, subject to
approval of the Shareholders, the 1996 Non-Employee Director Stock Option
Plan ("Plan"). The following description of the Plan is qualified in its
entirety by reference to the text of the Plan, a copy of which has been filed
with the SEC.
PURPOSE
The purpose of the Plan is to provide long-term incentive supplemental
compensation for members of the Board of Directors of the Company who are not
employees of the company through the ownership of the Company's Common Stock,
thereby further aligning their interest with the interests of shareholders.
Stock option plans for non-employee directors have served other companies and
their shareholders well by directly relating incentive compensation to the
building of long-term shareholder values. A plan is being proposed for the
first time for directors to provide equity-related compensation for this
important group as well. Such plans are increasingly common throughout
American industry and are found in other companies with which the Company
competes for the services of qualified individuals to serve as directors.
ADMINISTRATION OF THE PLAN
The Plan will be administered by the Compensation Committee of the Board
of Directors composed of non-employee directors (the "Committee"). The
Committee, however, will have no discretion affecting the timing, price or
amount of any grants, all of which are determined in the Plan.
SHARES OF STOCK SUBJECT TO THE PLAN
The aggregate number of shares that may be subject to options during the
term of the Plan is limited to 50,000 shares of the Common Stock of the
Company. This limit may not be increased during the term of the Plan except
by equitable adjustment following recapitalization, stock splits, stock
dividends or any similar adjustment in the number of shares subject to
outstanding options, and in the related option exercise price. If the
shareholders approve this Plan, additional shares (which can be authorized
but unissued shares or treasury shares or a combination thereof) will be set
aside for the award of options.
ELIGIBILITY
New Directors of the Company who are first elected to the Board at the
1996 Annual Meeting or at subsequent Annual Meetings (or at a meeting of the
Board of Directors if such Director is elected to fill a vacancy) and, at the
time of receiving any grant, are not employees of the Company are eligible to
receive benefits under the Plan. It is expected that there will be one new
Director elected at the 1996 Annual Meeting. Directors who were first elected
to the Board prior to the 1996 Annual Meeting and at the time of receiving any
grant, and who are not employees of the Company, are eligible to receive
benefits under the Plan after the Company has had a period of four
consecutive quarters of aggregate earnings of $0.50 per share. Since there
has previously been no stock option plan for other than salaried employees,
no previous grants have been made to persons as non-employee Directors.
DURATION OF THE PLAN
No awards of stock options may be made after 2006, but termination will
not affect the rights of any participant with respect to any grants made
prior to termination.
OPTION
If approved by shareholders, an option to purchase 10,000 shares of the
Common Stock of the Company will be granted to each new director on April 22,
1996, and each year thereafter (beginning with 1997) on the date of the
Annual Meeting for that calendar year (or on the date of the meeting of the
Board of Directors at which such Director was elected to fill a vacancy) to
each Director who, at the adjournment of that meeting, is an eligible
Director.
Further, after a period of four consecutive quarters of earnings of aggregate
$0.50 per share by the Company, Directors who were elected prior to the 1996
Annual Meeting shall be granted options to purchase 2,500 shares of Common
Stock of the Company. Annually thereafter, during his continued service on
the Board, each such Director shall be granted
16
<PAGE> 20
options to purchase 2,500
shares of common stock provided that in the aggregate no such Director shall
receive grants of option for more than 10,000 shares in total.
EXERCISE PRICE
The exercise price with respect to an option awarded under the Plan will
be 100% of the fair market value of the Common Stock as of the date the
option is granted. It will be paid for in full, in cash or in any other
medium and manner satisfactory to the Company at the time the option is
exercised. The optionee must satisfactorily provide for the payment of any
taxes which the Company is obligated to collect or withhold before the Common
Stock is transferred to the optionee.
PROVISIONS RELATING TO OPTIONS
Options may not be exercised until at least one year from the date of
the grant and not after ten years from the date of the grant, except in the
case of death of the grantee in the final year prior to expiration of the
10-year term. In that case, stock options may be exercised for a period of
eleven years from the date of grant. The Committee may make provision for
exercises within the 10-year terms of a grant but following termination of
Board membership. Recipients will have no rights as stockholders until the
date of exercise in the case of an exercise involving receipt of stock.
Options may not be transferred except upon the death of the grantee, in
certain other instances as provided by law, and for the benefit of immediate
family members if permitted by law and under uniform standards adopted by the
Committee.
AMENDMENT TO THE PLAN
The Board of Directors on recommendation of the Committee may amend or
terminate the Plan, except that no amendment shall affect the timing, price
or amount of any grants to eligible Directors. In addition, shareholders
must approve any change (i) increasing the numbers of shares subject to the
Plan (except as described under "Shares of stock subject to the Plan") or
(ii) changing the eligibility for grant. Provisions of the Plan may not be
amended more than once every six months, other than to comply with provisions
of applicable law.
FEDERAL INCOME TAX CONSEQUENCES
Granting of options and rights
A recipient of options incurs no income tax liability as a result of
having been granted those options or rights.
Exercise of Options
The exercise by an individual of a stock option normally results in the
immediate realization of income by the individual of the difference between
the market value of the stock which is being purchased on the date of
exercise and the price being paid for such stock. The amount of such income
also is deductible by the Company.
Sale of Stock
Under current law an individual who sells stock which was acquired upon
the exercise of options will receive long-term capital gains or loss
treatment, if he or she has held such stock for longer than one year
following the date of such exercise, on gain or loss equal to the difference
between the price for which such stock was sold and the market value of the
stock on the date of the exercise. If the individual has held the stock for
one year or less the gain or loss will be treated as short-term capital gain
or loss.
PLAN BENEFITS
The benefits or amounts that will be received by or allocated to any
participants are not now determinable, except that upon election as a
Director, Mr. Tullis will be granted options for 10,000 shares under the
terms of the proposed plan.
VOTE REQUIRED
The plan described requires the affirmative vote of a majority of the
shares of Common Stock of the Company present in person or by proxy at the
meeting. If the plan is not approved by shareholders, it will not become
effective.
The Board of Directors recommends a vote FOR approval of the 1996 Non-
Employee Director Stock Option Plan.
17
<PAGE> 21
PROPOSAL FOR AMENDMENT TO CERTIFICATE OF INCORPORATION
The Board of Directors has approved and recommends that the Shareholders
of the Company approve an Amendment to the Certificate of Incorporation for
the purpose of increasing the number of its authorized shares of Common Stock
at $2.50 par value ("Common Stock"), from 4,000,000 to 8,000,000 shares.
The text of the resolutions for the proposed amendment is as follows:
RESOLVED that the authorized capital stock of this corporation
be changed from $10,000,000.00 consisting of 4,000,000 shares of
Common Stock of the par value of $2.50 per share and having no pre-
emptive rights to $20,000,000.00 consisting of 8,000,000 shares of
Common Stock of the par value of $2.50 per share; said stock to
have no pre-emptive rights.
FURTHER RESOLVED, that ARTICLE IV of the Articles of
Association and Certificate of Incorporation be and hereby is
amended to provide as follows:
"ARTICLE IV. The amount of Capital Stock of this corporation
is Twenty Million Dollars ($20,000,000.00), divided into
8,000,000 shares of Common Stock of the par value of Two
Dollars and Fifty Cents ($2.50) a share. The holders of
Common Stock shall have no pre-emptive rights."
The Company's capitalization is reflected in its audited financial
statement, and such financial statements, together with management's
discussion and analysis of financial condition and result of operations and
other required information is incorporated by reference to the Company's
Annual Report, a copy of which accompanies this Proxy Statement.
If the proposed Amendment to the Company's Certificate of Incorporation
is adopted, no further approval of the holders of Common Stock would be
required or sought for the issuance of shares of Common Stock as authorized
by the Amendment.
The Board of Directors believes that the increase in the number of
authorized shares of Common Stock will increase the flexibility of the
Company for acquisitions, financing and stock options. The Company has no
plans to issue any of the Common Stock at the present time.
The Board of Directors could authorize the issuance of the authorized
shares as an anti-takeover device but it has no plans to do so and the Board
is not aware of any present attempt to take over the Company.
If these additional shares are authorized, then upon the issuance of
such shares the interests of existing shareholders could be diluted.
Holders of Common Stock are not entitled to pre-emptive rights in
connection with the issuance of additional shares of Common Stock.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding Common Stock
entitled to vote on this proposal to amend the Certificate of Incorporation
is required for approval of the amendment.
The Board of Directors recommends a vote FOR approval of this amendment
to the Certificate of Incorporation.
18
<PAGE> 22
SELECTION OF AUDITORS
The shareholders will be asked to approve the appointment of Coopers &
Lybrand, auditors for the Company since 1969, as auditors for 1996. The
Company knows of no direct or material indirect financial interest in the
Company or of any connection with the Company by this accounting firm except
the professional relationship between auditor and client.
Representatives of Coopers & Lybrand are expected to be present at the
1996 Annual Meeting with the opportunity to make a statement if they desire
to do so and are expected to be available to respond to appropriate
questions.
COMPLIANCE WITH SECTION 16(a)
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10%
of a registered class of the Company's common stock, to file with the SEC and
the American Stock Exchange reports of ownership and changes in ownership of
common stock and other equity securities of the Company. Officers, directors
and greater than 10% shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on review of copies of such reports furnished to the
Company or written representations that no other reports were required, the
Company believes that, during the 1995 fiscal year, all filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with, except as follows:
Through an oversight, the initial filing of Form 3 with the SEC by Mr.
Walter C. Johnsen was not filed within ten (10) days of his becoming employed
by the Company on January 24, 1995. His Form 3 was filed with the SEC on or
about April 3, 1995.
SHAREHOLDER PROPOSALS
To allow sufficient time for preparation of the proxy and proxy
statement, shareholder proposals for presentation at the Annual Meeting
scheduled for April 28, 1997 must be received by the Secretary of the Company
no later than November 28, 1996.
In addition, the Company's by-laws provide that any shareholder wishing
to make a nomination for the office of Director at the 1997 Annual Meeting
must give the Company at least sixty (60) days' advance notice, and that
notice must meet certain requirements set forth in the by-laws. Shareholders
may request a copy of the by-laws from the Secretary of the Company.
Notices and requests should be addressed to Secretary, Acme United
Corporation, 75 Kings Highway Cutoff, Fairfield, Connecticut 06430.
19
<PAGE> 23
OTHER BUSINESS
Management does not know of any matters to be presented, other than
those described herein, at the Annual Meeting. If any other business should
come before the meeting, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies in accordance with their best
judgment.
Upon receipt of written request, directed to the Secretary at the below
address, by any shareholder, the Company will furnish without charge a copy
of the most recent Annual Report on Form 10-K including financial statements
and schedules thereto, and a copy of all exhibits as itemized in Item 11 of
Form 10-K.
Solicitation of proxies is being made by management through the mail, in
person and by telephone and telegraph. The Company will be responsible for
costs associated with this solicitation.
By Order of the Board of Directors
Dwight C. Wheeler II, Vice Chairman,
Secretary, Treasurer and Director
Acme United Corporation
75 Kings Highway Cutoff
Fairfield, Connecticut 06430
March 29, 1996
20
<PAGE> 24
ATTACHMENT A
ACME UNITED CORPORATION
75 Kings Highway Cutoff, Fairfield, Connecticut 06430
Proxy for Annual Meeting of Shareholders - April 22, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gary D. Penisten and Walter C. Johnsen, and
each of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of Common Stock of Acme United Corporation (the "Company"), held of
record by the undersigned on March 4, 1996 at the annual meeting of
stockholders to be held on April 22, 1996 or any adjournment or postponement
thereof.
The Board of Directors unanimously recommends a vote for the following
proposals:
1. Election of nine Directors
___ FOR all nominees listed below (except as marked to the contrary below)
___ Withhold authority to vote for all nominees listed below
David W. Clark, Jr., George R. Dunbar, James L.L. Tullis,
Walter C. Johnsen, Newman M. Marsilius, Wayne R. Moore, Gary D. Penisten,
Dwight C. Wheeler II, Henry C. Wheeler (Instruction: To withhold authority
to vote for any individual nominee, write the nominee's name in the space
provided below.)
______________________________________________________________________________
2. Approval of an Amendment to the 1992 Amended and Restated Stock Option
Plan.
___ FOR ___ AGAINST ___ ABSTAIN
3. Approval of the 1996 Non-Employee Director Stock Option Plan.
___ FOR ___ AGAINST ___ ABSTAIN
4. Approval of an Amendment to the Company's Certificate of Incorporation
to increase the number of authorized shares of Common Stock.
___ FOR ___ AGAINST ___ ABSTAIN
5. Approval of the appointment of Coopers & Lybrand as the independent
auditors of the Company for the 1996 fiscal year.
___ FOR ___ AGAINST ___ ABSTAIN
6. In their discretion, upon other matters as may properly come before the
meeting.
(Continued on other side)
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL DIRECTORS AND FOR PROPOSALS 2,3,4 AND 5.
Please sign exactly as name appears below.
Dated:______________________________, 1996
__________________________________________
Signature
__________________________________________
Signature if held jointly
When shares are held by joint tenants, both should sign.
When signed as an attorney, as executor, administrator,
trustee or guardian, please give your full title as such.
If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Please mark, sign, date and return the proxy form
promptly using the enclosed envelope.
<PAGE> 25
ATTACHMENT B
ACME UNITED CORPORATION
1992 AMENDED AND RESTATED STOCK OPTION PLAN
1. PURPOSE
The purpose of this plan (the "Plan") is to promote the interests of Acme
United Corporation (the "Corporation") by enabling its key employees to
acquire an increased proprietary interest in the Corporation and thus to
share in the future success of the Corporation's business. Accordingly,
the Plan is intended as a means not only of attracting and retaining
outstanding management personnel but also of promoting a closer identity
of interests between employees and stockholders. Since the employees eligible
to receive Options under the Plan will be those who are in a position to make
important and direct contributions to the success of the Corporation, the
Directors believe that the grant of the Options under the Plan will be in the
best interests of the Corporation.
2. DEFINITIONS
Unless the context clearly indicates otherwise, the following terms, when used
in the Plan, shall have the meanings set forth in this Section 2.
(a) "Beneficiary" means the person or persons who shall acquire the
right to exercise an option by bequest or inheritance.
(b) "Board of Directors" or "Board" means the Board of the Directors of
the Corporation.
(c) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(d) "Committee" means the Stock Option Plan Committee of the Board of
Directors, consisting of all Board members who are not employees of
the Corporation, but in no event fewer than two (2) such Board
members.
(e) "Common Stock" shall mean common stock, par value $2.50 per share,
of the Corporation.
(f) "Disability" means a disability as defined in the Corporation's
Long-Term Disability Plan, as amended from time to time.
(g) "Fair Market Value" shall mean the closing price for the Common
Stock on the date immediately preceding the date on which the option
is granted.
(h) "Incentive Stock Option" shall mean a stock option granted pursuant
to this Plan and intended to satisfy the requirements of Section 422
of the Code.
(i) "Option" shall mean a stock option granted pursuant to the Plan.
(j) "Optionee" shall mean a person to whom an Option has been granted
under the Plan.
(k) "Option Agreement" shall mean the written agreement to be entered
into by the Corporation and the Optionee, as provided in Section 6
hereof.
(I) "Retirement" shall mean retirement pursuant to the Retirement Plan
for Employees of Acme United Corporation, as amended from time to
time.
(m) "Share" shall mean the Common Stock of the Corporation, as adjusted
in accordance with Section 16 of the Plan.
(n) "Subsidiary" shall mean any subsidiary corporation of the
Corporation within the meaning of Section 424(f) of the Code (or a
successor provision of similar import).
Where used herein, unless the context indicates otherwise, words in the
masculine form shall be deemed to refer to females as well as to males.
3. SHARES SUBJECT TO THE PLAN
(a) The stock to be covered by the Options is the Common Stock of the
Corporation. The aggregate number of shares of Common Stock which
may be delivered on exercise of the Options is 300,000 shares,
subject to adjustment pursuant to Section 16.
(b) As determined by the Board from time to time, such shares may be
previously issued shares reacquired by the Corporation or authorized
but unissued shares. If any Option expires or terminates for any
reason without having been exercised in full, the Shares covered
by the unexercised portion of such Option shall again be available
for Options, within the limits specified above.
4. ADMINISTRATION OF THE PLAN
(a) Except as provided in paragraph (b) of this Section, the Plan shall
be administered by the Stock Option Plan Committee of the Board of
Directors of the Corporation. In addition to its duties with
respect to the Plan stated elsewhere in the Plan, the Committee
shall have full authority, consistent with the Plan, to interpret
the Plan, to promulgate such rules and regulations with respect to
the Plan as it deems desirable and to make all other determinations
necessary or desirable for the administration of the Plan. All
decisions, determinations, and interpretations of the Committee
shall be binding upon all persons.
<PAGE> 26
No member of the Board of Directors or of the Committee and no
employee of the Corporation shall be liable for any act or action
hereunder, whether of omission or commission, by any other member
or employee or by any agent to whom duties in connection with the
administration of the plan have been delegated in accordance with
the provisions of the Plan or, except in circumstances involving
his bad faith, for anything done or omitted to be done by himself.
(b) Except as provided in Section 7, it is intended that the stock
options granted pursuant to the Plan constitute Incentive Stock
Options within the meaning of Section 422 of the Code. The Committee
shall administer the Plan in such a manner as to establish and
maintain such Options as Incentive Stock Options.
(c) The Committee may, with the consent of the Optionee, substitute
Options which are not intended to be Incentive Stock Options for
outstanding Incentive Stock Options. Any such substitution shall
not constitute the grant of a new Option for the purposes of this
Plan, and shall not require a revaluation of the Option exercised
prior to the substituted Option. Any such substitution shall be
implemented by an amendment to the applicable Option Agreement or
in such other manner as the Committee in its discretion shall
determine.
(d) The Committee shall make such provisions as it deems necessary or
appropriate for the withholding of any federal, state, local or
other tax required to be withheld with regard to the exercise of an
Option under the Plan.
5. EMPLOYEES ELIGIBLE TO RECEIVE OPTIONS
(a) The Committee shall from time to time in its discretion select the
employees to whom the Options shall be granted from among the key
employees of the Corporation and any Subsidiary.
(b) Members of the Board of Directors who are not regular salaried
employees of the Corporation or a Subsidiary shall not be eligible
to receive Options.
(c) An individual employee may receive more than one Option.
6. OPTION AGREEMENT
(a) No Option shall be exercised by an Optionee unless he or she shall
have executed and delivered an Option Agreement.
(b) Appropriate officers of the Corporation are hereby authorized to
execute and deliver Option Agreements in the name of the Corporation
as directed from time to time by the Committee.
7. GRANTS OF OPTIONS
(a) The Committee shall in its discretion determine the time or times
when Options shall be granted and the number of shares of Common
Stock to be subject to each Option.
(b) The aggregate fair market value (determined as of the date the
Option is granted) of the stock with respect to which Incentive
Stock Options are exercisable for the first time by such individual
during any calendar year (under all stock option plans of the
Corporation and its Subsidiaries) shall not exceed $100,000.00.
(c) No Incentive Stock Option shall be granted to an employee who, at
the time the Option is granted, owns (within the meaning of Section
422(b) (6) of the Code) stock possessing more than ten percent of
the total combined voting power of all classes of stock of the
Corporation unless the following requirements are satisfied:
(i) notwithstanding the provisions of Section 8, the purchase price
for each share of common stock subject to an Option shall be at
least 110 percent of the fair market value of the Common Stock
subject to the Option at the time the Option is granted; and
(ii) the Option is not exercisable after the expiration of five (5)
years from the date such Option is granted.
(d) The Committee may in its discretion grant Options that are not
intended to constitute Incentive Stock Options.
(e) Each Option shall be evidenced by an Option Agreement, in such form
as the Committee shall from time to time approve, which shall state
the terms and conditions of the Option in accordance with the Plan,
and also shall contain such additional provisions as may be
necessary or appropriate under applicable laws, regulations, and
rules.
8. OPTION PRICE
The purchase price for each share of Common Stock subject to an Option shall
be one hundred percent (100%) of the Fair Market Value of the Common Stock on
the date the Option is granted provided, however, that the purchase price
shall not be less than the par value of the Common Stock which is the subject
of the Option.
9. OPTION PERIOD; EXERCISE RIGHTS
(a) Each Option shall be for such term as the Committee shall determine,
but not more than ten years from the date it is granted, and shall
be subject to earlier termination as provided in Section 10.
(b) The Committee may, at its discretion, provide that an Option may not
be exercised in whole or in part for any period or periods of time
specified in the Option Agreement. Except as provided in the Option
Agreement, an Option may be exercised in whole or in part at any
time during its term.
<PAGE> 27
(c) Upon the purchase of shares of Common Stock under an Option, the
Stock certificate or certificates may, at the request of the
purchaser, be issued in his name and the name of another person as
joint tenants with right of survivorship.
(d) The exercise of each Option granted under the Plan shall be subject
to the condition that if at any time the Corporation shall determine
in its discretion that the listing, registration, or qualification
of any shares of Common Stock otherwise deliverable upon such
exercise upon any securities exchange or under any State or Federal
law, or the consent or approval of any regulatory body, is necessary
or desirable as a condition of, or in connection with, such exercise
or the delivery or purchase of shares thereunder, then in any such
event such exercise shall not be effective unless such listing,
registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the
Corporation. Any such postponement shall not extend the time within
which the Option may be exercised; and neither the Corporation nor
its directors or officers shall have any obligation or liability to
the Optionee or to a Beneficiary with respect to any shares of
Common Stock as to which the Option shall lapse because of such
postponement.
10. EXERCISE RIGHTS UPON TERMINATION OF EMPLOYMENT
(a) Retirement
If an Optionee retires under a retirement or pension plan of the
Corporation or of a Subsidiary, the Optionee's Option shall
terminate one year after the date of such retirement, but in no
event later than the date on which it would have expired if the
Optionee had not retired, provided, however, that if the Option is
exercised later than three months from the date of such retirement,
such Option shall not constitute an incentive Stock Option. During
such period the Optionee may exercise the Option in whole or in
part, notwithstanding the limitations of Section 9(b) or any
limitation that may have been set by the Committee pursuant
thereto.
(b) Disability
If an Optionee becomes disabled, the Optionee may exercise the
Option (i) within one year after the date of Disability, but in no
event later than the date on which it would have expired if the
Optionee had not become disabled, or (ii) within such other period,
not exceeding three years after the date of Disability, as shall be
prescribed in the Option Agreement; provided, however, that if the
Option is exercised later than one year after the date of
Disability, it shall not constitute an Incentive Stock Option.
During such period the Optionee may exercise the Option in whole or
in part, notwithstanding the limitations of Section 9(b) or any
limitation that may have been set by the Committee Pursuant thereto
(c) Death
If an Optionee dies during a period in which he or she is entitled
to exercise an Option (including the period referred to in
paragraphs (a), (b), and (d) of this Section 10, the Option may be
exercised at any time within one year from the date of the
Optionee's death, but in no event later than the date on which it
would have expired if the Optionee had lived, by the Optionee's
Beneficiary, in whole or in part, notwithstanding the limitations
of Section 9(b) or any limitation that may have been set by the
Committee pursuant thereto.
(d) Termination of Employment for Any Other Reason
If an Optionee ceases to be employed by the Corporation or a
Subsidiary for any reason other than retirement, disability, or
death, the Optionee's Option shall terminate three months after the
date of such cessation of employment, but in no event later than the
date on which it would have expired if such cessation of employment
had not occurred. During such period the option may be exercised
only to the extent that the Optionee was entitled to do so under
Section 9(b) at the date of cessation of employment unless the
Committee, in its sole and nonreviewable discretion, permits
exercise of the Option to a greater extent. The employment of an
Optionee shall not be deemed to have ceased upon his or her absence
from the Corporation or a Subsidiary on a leave of absence granted
in accordance with the usual procedure of the Corporation or
Subsidiary.
11. METHOD OF EXERCISE
(a) Each exercise of an Option shall be by written notice to the
Secretary of the Corporation, stating the number of shares to be
purchased. An Option may be exercised with respect to all, or any
part of, the Shares of Common Stock as to which it is exercisable
at the time.
(b) The purchase price of the shares being purchased shall be paid in
full at the time the Option is exercised. Such payment shall be
made in cash in United States currency.
12. NONTRANSFERABILITY OF OPTIONS
Each Option shall be nonassignable and nontransferable by the Optionee other
than by will or by the laws of descent and distribution. Each Option shall be
exercisable during the Optionee's lifetime only by the Optionee.
13. SHAREHOLDER RIGHTS
No person shall have any rights of a shareholder by virtue of an Option except
with respect to shares actually issued to him and registered on the transfer
books of the Corporation, and the issuance of shares shall confer no
retroactive right to dividends.
<PAGE> 28
14. USE OF PROCEEDS
The proceeds received by the Corporation from the sale by it of shares of
Common Stock to persons exercising an Option pursuant to the Plan will be
used for the general purposes of the Corporation or any Subsidiary.
15. GENERAL PROVISIONS
The grant of an Option in any year shall not give the Optionee any right to
similar grants in future years or any right to be retained in the employ of
the Corporation or any Subsidiary.
16. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
If there is a change in the number or kind of outstanding shares of the
Corporation's stock by reason of a stock dividend, stock split,
recapitalization, merger, consolidation, combination, or other similar event,
appropriate adjustments shall be made by the Committee to the number and
kind of shares subject to the Plan, the number and kind of shares under
Options then outstanding, the maximum number of shares available for Options
or the Option Price and other relevant provisions, to the extent that the
Committee, in its sole and nonreviewable discretion, determines that such
change makes such adjustments necessary or equitable.
17. EFFECT OF MERGER OR OTHER REORGANIZATION
If the Corporation shall be the surviving corporation in a merger or other
reorganization, an Option shall extend to stock and securities of the
Corporation to the same extent that a holder of that number of Shares
immediately before the merger or consolidation corresponding to the number
of Shares covered by the Option would be entitled to have or obtain stock and
securities of the Corporation under the terms of the merger or consolidation.
If the Corporation dissolves, sells substantially all of its assets, is
acquired in a stock for stock or securities exchange, or is a party to a
merger or other reorganization in which it is not the surviving corporation,
then each Option shall be exercisable in full within the period of sixty (60)
days commencing upon the date of the action of the shareholders (or the Board
if shareholders' action is not required) is taken to approve the transaction
and upon the expiration of that period all Options and all rights thereto
shall automatically terminate.
18. TERMINATION; AMENDMENTS
(a) The Board may at any time terminate the Plan. Unless the plan shall
previously have been terminated by the Board, it shall terminate on
February 24, 2002. No Option may be granted after such termination.
(b) The Board may at any time or times amend the Plan or amend any
outstanding Option for the purpose of satisfying the requirements
of any changes in applicable laws or regulations or for any other
purpose which at the time may be permitted by law.
(c) Except as provided in Section 16, no such amendment shall, without
the approval of the shareholders of the Corporation: (i) increase
the maximum number of shares of Common Stock for which the Options
may be granted under the Plan; (ii) reduce the Option price of
outstanding Options; (iii) extend the period during which Options
may be granted; (iv) materially increase in any other way the
benefits accruing to Optionees; or (v) change the class of persons
eligible to be Optionees.
(d) No termination or amendment of the Plan, shall, without the consent
of an Optionee or Beneficiary, adversely affect the Optionee's or
Beneficiary's right under any Option previously granted, but it
shall be conclusively presumed that any adjustment for changes in
capitalization in accordance with Section 16 hereof does not
adversely affect any such right.
19. EFFECTIVE DATE
The Plan, as amended, shall become effective upon approval by the Board;
provided, however, that the Plan shall be submitted to the shareholders of the
Corporation for approval at the Annual Meeting of Shareholders to be held on
April 27, 1992, and if not approved by the shareholders shall be of no force
and effect. Options granted by the Committee before such Annual Meeting shall
be granted subject to such approval of the Plan by the shareholders and shall
not be exercisable before such approval.
20. GOVERNING LAW
The plan shall be construed and its provisions enforced and administered in
accordance with and under the laws of Connecticut except to the extent that
such laws may be superseded by any Federal law.
<PAGE> 29
ATTACHMENT C
ACME UNITED CORPORATION
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
I. GENERAL
1.1 PURPOSE OF THE PLAN
The purpose of the Acme United Corporation 1996 Non-Employee Director
Stock Option Plan (the "Plan") is to enable Acme United Corporation (the
"Company") to attract and retain persons of exceptional ability to serve as
directors of the Company and to align the interests of directors and
shareholders in enhancing the value of the Company's common stock (the
"Common Stock").
1.2 ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Compensation Committee or its
successors (the "Committee") of the Company's Board of Directors (the "Board")
which shall have full and final authority in its discretion to interpret,
administer and amend the provisions of the Plan; to adopt rules and
regulations for carrying out the Plan; to decide all questions of fact arising
in the application of the Plan; and to make all other determinations
necessary or advisable for the administration of the Plan. The Committee
shall consist of at least two persons and shall meet once each fiscal year,
and at such additional times as it may determine or as is requested by the
chief executive officer of the Company.
1.3 ELIGIBLE PARTICIPANTS
Commencing April 22, 1996 each member of the Board who is not an employee
of the Company or any of its subsidiaries shall be a participant (a
"Participant") in the Plan.
1.4 GRANTS UNDER THE PLAN
Grants under the Plan shall be in the form of stock options as described
in Section II (an "Option" or "Options").
1.5 SHARES
The aggregate number of shares of Common Stock, including shares reserved
for issuance pursuant to the exercise of Options, which may be issued under
the terms of the Plan, may not exceed 50,000 shares and hereby are reserved
for such purpose. Whenever any outstanding grant or portion thereof expires,
is canceled or forfeited or is otherwise terminated for any reason without
having been exercised, the Common Stock allocable to the expired, forfeited,
canceled or otherwise terminated portion of the grant may again be the subject
of further grants hereunder.
<PAGE> 30
Notwithstanding the foregoing, the number of shares of Common Stock
available for grants at any time under the Plan shall be reduced to such
lesser amount as may be required pursuant to the methods of calculation
necessary so that the exemptions provided pursuant to Rule 16b-3 under the
Securities Exchange Act of 1934 as amended (the "Exchange Act") will continue
to be available for transactions involving all current and future grants.
In addition, during the period that any grants remain outstanding under the
Plan, the Committee may make good faith adjustments with respect to the number
of shares of Common Stock attributable to such grants for purposes of
calculating the maximum number of shares of Common Stock available for the
granting of future grants under the Plan, provided that following such
adjustments the exemptions provided pursuant to Rule 16b-3 under the Exchange
Act will continue to be available for transactions involving all current and
future grants.
1.7 DEFINITIONS
The following definitions shall apply to the Plan:
(a) "Disability" shall have the meaning provided in the Company's
applicable disability plan or, in the absence of such a definition, when a
Participant becomes totally disabled (as determined by a physician mutually
acceptable to the participant and the Company) before termination of his or
her service on the Board if such total disability continues for more than
three (3) months.
(b) "Fair Market Value" means the average of the high and low sales
prices of the shares of Common Stock on such date on the principal national
securities exchange or automated quotation system of a registered securities
association on which such shares of Common Stock are listed or admitted to
trading. If the shares of Common Stock on such date are not listed or
admitted to trading, the Fair Market Value shall be the value established by
the Board in good faith.
II. OPTIONS
2.1 TERMS AND CONDITIONS OF OPTIONS
Each Participant who is first elected to the Board of Directors on or
after April 22, 1996 shall receive a grant of an option to purchase 10,000
shares of Common Stock on the date of the Annual Meeting for that calendar
year or the date of the meeting.of the Board of Directors at which such
Participant is elected to fill a vacancy.
Each Participant who was first elected to the Board of Directors prior to
April 22, 1996 shall, after the Company has had four consecutive quarters with
aggregate earnings of $0.50 per share, receive a grant of an Option to
purchase 2,500 shares of Common Stock within thirty (30) days thereafter and
on same date of each year thereafter during which
2
<PAGE> 31
such Participant serves on
the Board he shall receive an annual grant of an Option to purchase 2,500
shares of Common Stock of the Company up to an aggregate total of grants to
purchase 10,000 shares.
2.2 NONQUALIFIED STOCK OPTIONS
The terms of the Options shall, at the time of grant, provide that the
Options will not be treated as incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2.3 OPTION PRICE
The option price per share shall be the Fair Market Value of the Common
Stock on the date the Option is granted.
2.4 TERM AND EXERCISE OF OPTIONS
(a) The term of an Option shall not exceed ten (10) years from the date
of grant. Except as provided in this Section 2.4, after a Participant ceases
to serve as a director of the Company for any reason, including, without
limitation, retirement, or any other voluntary or involuntary termination of a
Participant's service as a director (a "Termination"), the unexercisable
portion of an Option shall immediately terminate and be null and void, and the
unexercised portion of any outstanding Options held by such Participant shall
terminate and be null and void for all purposes, after three (3) months have
elapsed from the date of the Termination unless extended by the Committee, in
its sole discretion, within thirty (30) days from the date of the Termination.
Upon a Termination as a result of death or Disability, any outstanding Options
may be exercised by the Participant or the Participant's legal representative
within twelve (12) months after such death or Disability; provided, however,
that in no event shall the period extend beyond the expiration of the option
term.
(b) Options shall become exercisable in whole or in part after one (1)
year has elapsed from the date of grant. In no event, however, shall an
Option be exercised after the expiration of ten (10) years from the date of
grant.
(c) A Participant, by written notice to the Company, may designate one
or more persons (and from time to time change such designation) including his
or her legal representative, who, by reason of his or her death, shall
acquire the right to exercise all or a portion of the Option. If no
designation is made before the death of the Participant, the Participant's
Option may be exercised by the personal representative of the Participant's
estate or by a person who acquired the right to exercise such Option by will
or the laws of descent and distribution. If the person with exercise rights
desires to exercise any portion of the Option, such person must do so in
accordance with the terms and conditions of this Plan.
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2.5 NOTICE OF EXERCISE
When exercisable pursuant to the terms of the Plan and the governing
stock option agreement, an Option shall be exercised by the Participant as to
all or part of the shares subject to the Option by delivering written notice
of exercise to the Company at its principal business office or such other
office as the Company may from time to time direct, (a) specifying the number
of shares to be purchased, (b) accompanied by a check payable to the Company
in an amount equal to the full exercise price of the number of shares being
exercised, and (c) containing such further provisions consistent with the
provisions of the Plan as the Company may from time to time prescribe. No
Option may be exercised after the expiration of the term specified in Section
2.4 hereof.
2.6 LIMITATION OF EXERCISE PERIODS
The Committee may limit the time periods within which an Option may be
exercised if a limitation on exercise is deemed necessary in order to effect
compliance with applicable law.
2.7 CHANGE IN CONTROL
Notwithstanding anything herein to the contrary, if a Change in Control
has occurred, then the Option shall immediately become exercisable on the date
such Change in Control occurred.
III. GENERAL PROVISIONS
3.1 GENERAL RESTRICTIONS
Each grant under the Plan shall be subject to the requirement that if the
Committee shall determine, at any time, that (a) the listing, registration or
qualification of the shares of Common Stock subject or related thereto upon
any securities exchange or under any state or federal law, or (b) the consent
or approval of any government regulatory body, or (c) an agreement by the
Participant with respect to the disposition of shares of Common Stock, is
necessary or desirable as a condition of, or in connection with, the granting
or the issuance or purchase of shares of Common Stock thereunder, such grant
may not be consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
3.2 ADJUSTMENTS FOR CHANGES IN CAPITALIZATION
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, rights offer, liquidation, dissolution,
merger, consolidation, spin-off or sale of assets, or any other change in or
affecting the corporation structure or
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capitalization of the Company, the
Board shall make such adjustments as the Committee may recommend, and as
the Board in its discretion may deem appropriate, in the number and kind of
shares authorized by the Plan, in the number, Option price or kind of shares
covered by the grants and in any outstanding grants under the Plan in order
to prevent substantial dilution or enlargement thereof.
3.3 AMENDMENTS
Without further approval of the shareholders, the Board may discontinue
the Plan at any time and may amend it from time to time in such respect as the
Board may deem advisable, unless shareholder or regulatory approval is
required by law or regulation, and subject to any conditions established by
the terms of such amendment; provided, however, that the Plan may not be
amended more than once every six (6) months other than to comport with changes
in the Code, the Employee Retirement Income Security Act or the rules
thereunder.
3.4 MODIFICATION, SUBSTITUTION OR CANCELLATION OF GRANTS
No rights or obligations under any outstanding Option may be altered or
impaired without the Participant's consent. Any grant under the Plan may be
canceled at any time with the consent of the Participant, and a new grant may
be provided to such Participant in lieu thereof.
3.5 SHARES SUBJECT TO THE PLAN
Shares distributed pursuant to the Plan shall be made available from
authorized but unissued shares or from shares purchased or otherwise acquired
by the Company for use in the Plan, as shall be determined from time to time
by the Committee.
3.6 RIGHTS OF A SHAREHOLDER
Participants under the Plan, unless otherwise provided by the Plan, shall
have no rights as shareholders by reason thereof unless and until certificates
for shares of Common Stock are issued to them.
3.7 WITHHOLDING
If a Participant is to experience a taxable event in connection with
the receipt of shares of Common Stock pursuant to an Option exercise, the
Participant shall pay the amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be withheld to the
Company prior to the issuance of such shares of Common Stock.
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3.8 NONASSIGNABILITY
Except as expressly provided in the Plan, no grant shall be transferable
except by will, the laws of descent and distribution or a qualified domestic
relations order ("QDRO") as defined by the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder.
During the lifetime of the Participant, except as expressly provided in the
Plan, grants under the Plan shall be exercisable only by such Participant or
by the guardian or legal representative of such Participant or pursuant to a
QDRO.
3.9 NONUNIFORM DETERMINATIONS
Determinations by the Committee under the Plan (including, without
limitation, determinations of the persons to receive grants, the form, amount
and timing of such grants, and the terms and provisions of such grants and the
agreements evidencing the same) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, awards
under the Plan, whether or not such persons are similarly situated.
3.10 EFFECTIVE DATE; DURATION
The Plan shall become effective as of the date the shareholders approve
the Plan. No grant may be given under the Plan after May 31, 2006, but grants
theretofore granted may extend beyond such date.
3.11 CHANGE IN CONTROL
Notwithstanding anything herein to the contrary, if a Change in Control
of the Company occurs, then all Options shall become fully exercisable as of
the date such Change in Control occurred. For the purposes of the Plan, a
Change in Control of the Company shall be deemed to have occurred upon the
earliest of the following events:
(a) when the Company acquires actual knowledge that any person (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the
beneficial owner (as defined in Rule 13d-3 of the Exchange Act) directly or
indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then-outstanding securities;
(b) upon the first purchase of Common Stock pursuant to a tender or
exchange offer (other than a tender or exchange offer made by the Company);
(c) upon the approval by the Company's shareholders of (i) a merger
or consolidation of the Company with or into another corporation (other than a
merger or consolidation in which the Company is the surviving corporation and
which does not result
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in any capital reorganization or reclassification or
other change in the Company's then-outstanding shares of Common Stock), (ii) a
sale or disposition of all or substantially all of the Company's assets or
(iii) a plan of liquidation or dissolution of the Company; or
(d) if the Board of Directors or any designated committee
determines in its sole discretion that any person (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than a person who
exercised a controlling influence as of the effective date of the Plan,
directly or indirectly exercises a controlling influence over the management
or policies of the Company.
3.12 GOVERNING LAW
The Plan and all actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of Connecticut.
