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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest event reported) March 3, 1997
ACME UNITED CORPORATION
(Exact name or registrant as specified in its charter)
CONNECTICUT 0-04823 06-0236700
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification)
Incorporation)
75 Kings Highway Cutoff, Fairfield, CT 06430
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 332-7330
(Former name or former address, if changed since last report)
Item 2: Disposition of Assets
On March 3, 1997, Acme United Corporation ("Acme") entered
into an agreement with Seton Healthcare International Limited and
Sepro Healthcare, Inc. ("Seton") to sell its U.S. marketing
rights of certain woundcare products to Seton. This agreement
returns the marketing rights to Seton effective as of March 3,
1997.
Acme received $1,906,000 from Seton in addition to Seton
returning to Acme 64,620 common shares of Acme United Corporation
stock.
With the proceeds, Acme paid Seton $1,767,000 to extinguish
an outstanding note from Acme in favor of Seton, and $320,000 for
the Acme common stock.
For the transition period of March 3, 1997 until June 30,
1997, Acme will continue to distribute the Seton products. On
June 30, 1997, all Seton product inventory in the possession of
Acme will be sold to Seton at actual cost.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
ACME UNITED CORPORATION
(Registrant)
Date: March 17, 1997 /s/ Cherly L. Kendall
------------------------
Cheryl L. Kendall
Vice President -
Chief Financial Officer,
Secretary and Treasurer
TERMINATION AGREEMENT
This Termination Agreement (this "Agreement"), dated
the 25th day of February, 1997, is made between
1. SETON HEALTHCARE INTERNATIONAL LIMITED, a
company incorporated in accordance with the laws of England with
its registered office and its corporate address at Tubiton House
Medlock Street, Oldham OL1 3HS England, as agent for, and on
behalf of, Seton Healthcare Group plc with its registered office
and its corporate address at Tubiton House, Medlock Street,
Oldham OL1 3HF England ("Seton");
2. SEPRO HEALTHCARE, INC., a Pennsylvania
corporation having its principal place of business located at 800
Fernwood Road, Moorestown, New Jersey and an affiliate of Seton
("Sepro"); and
3. ACME UNITED CORPORATION, a company incorporated
in accordance with the laws of the State of Connecticut, United
States with its registered office at 75 Kings Highway Cutoff,
Fairfield, CT 06430 ("Acme").
BACKGROUND
WHEREAS, on the 29th day of January, 1992, Seton and
Acme entered into the following agreements, pursuant to which
Seton appointed Acme as Seton's distributor for the sale and
distribution of certain products in the United States: (i) the
"Seton Distribution Agreements" (the "Seton Agreement"); (ii) the
"Setopress Distribution Agreement" (the
"Setopress Agreement"); and (iii) the "Lyofoam Distribution
Agreement" (the "Lyofoam Agreement") (the Seton Agreement, the
Setopress Agreement, and the Lyofoam Agreement are hereinafter
referred to collectively as the "Distribution Agreements");
WHEREAS, pursuant to the Setopress Agreement, Acme
transferred to Seton 64,620 shares of the common stock of Acme
(the "Common Stock"), for which Acme issued Stock Certificate
Number KW4551 on March 10, 1992 (the "Stock Certificate");
WHEREAS, on the 29th day of January, 1992, Acme signed
that certain Promissory Note for the amount of $2,378,073 (the
"Note") in favor of Sepro;
WHEREAS, on the 7th day of March, 1996, PEOPLES' BANK,
a national banking association having an office located at 850
Main Street, Bridgeport, Connecticut 06604 ("Peoples") and Sepro
entered into a "Subordination and Intercreditor Agreement" (the
"Intercreditor Agreement"), to which the Note is subject; and
WHEREAS, Seton and Acme desire to terminate the
Distribution Agreements in their entirety, pursuant to the terms
hereof but prior to their scheduled expiry.
NOW, THEREFORE, in consideration of the premises and
mutual covenants hereinafter set forth, and intending to be
legally bound hereby, the parties agree as follows:
1. Definitions. As used herein, the terms below
will have the following meanings:
1.1 "Closing Date" shall mean February 26,
1997, or such other date that is agreed by the parties.
1.2 "Products" shall include the products
specified in Section 1.3 of each of the Distribution Agreements.
1.3 "Territory" shall have the meaning
attributed to such term in each of the Distribution Agreements.
1.4 "Transition Period" shall mean the period
between the Closing Date and June 30, 1997 or such other date as
the parties may agree.
2. Termination.
2.1 Nothwithstanding anything to the contrary
contained in the Distribution Agreements, and except as otherwise
necessary to give effect to the terms of this Agreement, the
Distribution Agreements, together with all of the rights and
obligations of the parties thereunder, shall terminate in their
entirety on the Closing Date without any further action by either
party.
2.2 Sections 8 and 11 of each of the
Distribution Agreements shall survive the termination of the
Distribution Agreements.
2.3 Effective immediately, and notwithstanding
anything to the contrary in the Distribution Agreements, Seton
may enter into agreements with, supply inventory to, and train
the personnel of, one or more other distributors or agents (each,
a "New Distributor") (or Seton may establish its own sale or
distribution system) for the sale of Products in the Territory,
provided that neither Seton nor any New Distributor may commence
sales of Products in the Territory prior to the Closing Date.
2.4 Each of Seton and Acme shall continue to
perform all of their respective remaining obligations under the
Distribution Agreements and under this Agreement in a
commercially reasonably manner and, in performing such
obligations and until all such obligations have been discharged,
Acme shall continue to be bound by all performance standards,
reporting requirements, restrictions and other requirements
provided by the Distribution Agreements and Seton shall be
obligated to perform those obligations required to be performed
by it thereunder.
3. Obligations Effective at Closing.
3.1 The Closing of the transactions
contemplated herein (the "Closing") will commence at 10:00 A.M.
local time on the Closing Date at Pepper, Hamilton & Scheetz,
1235 Westlakes Drive, Suite 400, Berwyn, PA 19312 unless the
parties hereto otherwise agree. The Closing will be effective as
of the close of business (local time) on the Closing Date. The
Closing shall not occur unless and until the consent, if any, of
Peoples required by Section 1 of the Intercreditor Agreement has
been obtained.
3.2 On March 3, 1997, (A) without offset,
counterclaim or recoupment, Seton shall pay Acme the sum of One
Million Seven Hundred Fifty-Six Thousand Four Hundred Forty-Four
Dollars ($1,756,444), which amount shall be paid to terminate the
existing distribution arrangements with Acme and as full
compensation for exit costs incurred due to the termination of
the distribution arrangements and (B) without offset,
counterclaim or recoupment Acme shall pay to (i) Sepro the sum of
One Million Seven Hundred Sixty-Six Thousand Five Hundred Forty-
Eight Dollars ($1,766,548), upon which the Note shall be canceled
and Acme shall be discharged and released from all further
obligations under the Note and the Note, or satisfactory
indemnity for the loss thereof, shall be promptly sent to acme,
and (ii) Seton the sum of Three Hundred Twenty Thousand Dollars
($320,000) against receipt of the Stock Certificate, endorsed in
blank, representing such shares, upon which all of Seton's right,
title and interest in and to the Common Stock shall terminate.
Acme acknowledges that Peoples has given all required consents
pursuant to Section 1 of the Intercreditor Agreement for the
payment and performance of this Agreement.
3.3 On March 3, 1997, Seton shall pay to Acme
United Limited the sum of One Hundred Fifty Thousand Dollars
($150,000) in full compensation of its services in connection
herewith, which amount shall be paid by wire transfer to the
account designated by Acme at least two business days prior to
closing.
3.4 Attached hereto as Schedule 3.4 is (i) an
estimate of its inventory of Products on hand and not yet sold by
Acme as of the Closing Date and its carrying cost therefor,
together with (ii) an estimate of Acme's projected consumption of
such inventory by Acme through sales during the Transition
Period.
3.5 At Closing, subject to the performance by
the parties of all of their obligations under this Agreement,
Acme and Seton shall enter into a general mutual release
substantially in the form as attached hereto as Exhibit 5.
4. Transition Period.
4.1 At the end of the Transition Period, Acme
shall deliver F.O.B. Acme Warehouse, Fremont, North Carolina, to
such distributor or other third party as Seton may designate, (i)
all inventory of Products delivered to Acme and not yet sold by
Acme (including, without limitation, promotional and marketing
materials), for which payment shall be made by such party within
ten (10) days after receipt thereof Acme's actual total cost
including freight, insurance, duty, steerage and handling as
reflected in the attached Schedule 3.4, (ii) all customer lists,
and books and records relating to the sale of the Products in the
Territory, and (iii) any outstanding sales orders for Products as
of the Termination Date. To the extent Acme receives from such
distributor or other third party an amount equal to less than the
amount due under Section 4.1(i), Seton shall pay Acme such
difference upon a proper accounting thereof. Moreover, following
the Transition Period, Acme shall promptly forward and/or refer
to Seton or its nominee all inquiries and purchase orders that
Acme receives for Products.
4.2 Together with the delivery of the items
listed in Section 4.1, Acme shall pay when due to Seton all
remaining accounts payable pursuant to the Distribution
Agreements.
4.3 The amounts due to Acme or Seton under
Section 4.1 and 4.2 may be netted against each other such that a
single payment to one party may be made.
5. Severability. If any provision of this
Agreement shall be determined to be void, invalid, unenforceable
or illegal for any reason, the validity and enforceability of all
of the remaining provisions hereof shall not be affected thereby.
6. Complete Agreement. This Agreement constitutes
the entire understanding between the parties with respect to the
subject matter hereof and supersedes any and all prior
understandings and agreements, oral or written, relating thereto.
Any amendment hereof or supplement hereto must be in writing and
signed by both parties.
7. Failure to Exercise Rights. The failure of
either party to exercise any of its rights under this Agreement
for breach thereof shall not be deemed to be a waiver of such
rights nor shall the same be deemed to be a waiver of any
subsequent breach.
8. Notices. Any notice hereunder by either party
shall be given by personal delivery, by sending such notice by
certified mail, postage pre-paid, or by telecopier with a
confirmation copy by regular mail, to the other party at its
address or telecopier number, as the case may be, set forth below
or at such other address or telecopier number designated by
notice in the manner provided in this section. Such notice shall
be deemed to have been received: if personally delivered, then
upon the date of actual delivery; if mailed, then two (2) days
after deposit in the mail; and if sent by facsimile, then upon
transmittal.
If to Seton:
Seton Healthcare Group, Plc
Tubiton House
Medlock Street
Oldham 011 3HS
England
Attention: Iain C.D. Cater, Chief Executive
with a copy to:
James D. Rosener, Esquire
Pepper, Hamilton & Scheetz
1235 Westlakes Drive, Suite 400
Berwyn, PA 19312-2401
Telecopier Number: 610-640-7835
If to Acme:
Acme United Corporation
75 Kings Highway Cutoff
Fairfield, Connecticut 06430
Attention: Walter C. Johnsen
Telecopier Number: 203-576-1547
with a copy to:
Marsh, Day & Calhoun
2507 Post Road
Southport, Connecticut 06490
Attention: James E. Rice, Esquire
Telecopier Number: 203-254-1772
9. Jurisdiction. In case of any dispute hereunder,
both parties consent to the jurisdiction and venue of the courts
of the State of Connecticut or of any federal court located in
the District of Connecticut.
10. Interpretation. The validity and
interpretation of this Agreement and the rights and obligations
of the parties hereunder shall be governed by the laws of the
State of Connecticut, without regard to the principles of
conflicts of laws of any jurisdiction.
11. Titles. The titles of the articles and
sections hereof are for convenience only and do not in any way
limit or amplify the terms and conditions of this Agreement.
IN WITNESS WHEREOF, the parties have signed this
Agreement as of the day and year first above written.
SETON HEALTHCARE INTERNATIONAL LIMITED
By:
Its: President
SEPRO HEALTHCARE, INC.
(only as to Section 3.2)
By:
Its:
ACME UNITED CORPORATION
By:
Its: President
NOTE: This Termination Agreement was signed on March 3, 1997,
which is the effective date.