Exhibit 99.1
ACME UNITED CORPORATION NON-SALARIED DIRECTOR STOCK OPTION PLAN
April 25, 2005
I. GENERAL
1.1 Purpose of the Plan
The purpose of the Acme United Corporation Non-Salaried 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").
This Plan replaces the Non-Salaried Director Stock Option Plan of April 22,
1996 once all unused options under that plan have been granted.
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 25, 2005 each member of the Board who is not a salaried
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 I1 (an "Option" or "Options").
(1)
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 90,000 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.
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.
1.6 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 elected a director on April 25, 2005 and at
subsequent Annual Meetings and who has not received any prior grant under this
or previous plans shall receive an initial grant of an Option to purchase 5,000
shares of Common Stock (the "Initial Option") on his/her date of election as a
director. The Initial Options will vest over three years as described in Section
2.4.
(2)
Each Participant who is elected a director at an annual meeting and is not
receiving an Initial Option grant will receive a 2,500 share option (the "Annual
Option") grant. Under the Plan, the Board of Directors has the authority to
increase or decrease the number of shares of Common Stock which are the subject
of such Annual or Initial Option grants.
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, including, without limitation, any 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 thirty (30) days (or, for any option granted prior to April 28,
1997 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. Retirees from the board have the same rights except that for those
who have served at least five years on the board. The exercise rights for
Options they hold are automatically extended to the expiration of the option
term. However, in no event shall the period extend beyond the expiration of the
option term. "Retirement" is defined for the purposes of this Section as the
termination of a Participant's service as a director (i) at the end of his/her
term of office where he/she is not re-elected or (ii) during his/her term of
office, for a reason other than death or disability; provided, in either case,
that the Board of Directors, in its sole discretion, determines that the
Participant is entitled to the benefit of Retirement under this subsection.
(b) Initial Options granted April 25, 2006, and later shall have a (10) ten
year term and become exercisable as follows:
(3)
25% - date of grant
25% - one year after date of grant
25% - two years after date of grant
25% - three years after date of grant
(c) Annual Options shall become exercisable one day after the date of grant
for Annual Options granted on April 25, 2005 or later. In no event, however,
shall an Option be exercised after the expiration of 10 years from the date of
grant.
(d) 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.
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.
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.
(4)
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 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 including the initial and annual numbers of options granted,
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. The Company at its discretion and
with the agreement of the Participant may buy out the Participant's option
rights on Termination ((including but not limited to voluntary or involuntary
termination, death, disability and retirement) in return for cancellation of
exercisable grants. Unexercised grants returned to the Company can be regranted
to the Plan.
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.
(5)
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 by the Company
prior to the issuance of such shares of Common Stock. If a cash payment is made
in lieu of exercise, taxes will also be withheld as required by law.
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, as amended, shall become effective as of the date the
shareholders approve the Plan. No grant may be given under the Plan after May
31, 2015, but grants theretofore granted may extend beyond such date.
The effective date of the Plan is April 25, 2005.
(As amended April 23, 2007).
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:
(6)
(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 (1) 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 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.
(7)