SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO.1)
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)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
/x/ $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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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March 31, 1997
Dear Fellow Shareholder:
On behalf of your Board of Directors and Managment, I cordially
invite you to attend the Annual Meeting of Shareholders of Acme
United Corporation scheduled to be held on Monday, April 28, 1997
at 11:00 a.m., local time at People's Bank, Bridgeport Center
(Multipurpose Room), 850 Main Street, Bridgeport, Connecticut.
This will be my second 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 eight
directors to serve for a one year term; approve an Amendment to
the Company's 1996 Non-Employee Director Stock Option Plan; 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 your Board of Directors, thank you for your
continued support and interest in Acme United Corporation.
Sincerely,
Walter C. Johnsen
President and Chief Executive Officer
Acme United Corporation
75 KINGS HIGHWAY CUTOFF
FAIRFIELD, CONNECTICUT 06430
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28,1997
Notice is hereby given that the Annual Meeting of Shareholders of
Acme United Corporation will be held at People's Bank, Bridgeport
Center (Multipurpose Room), 850 Main Street, Bridgeport,
Connecticut, on Monday, April 28, 1997, at 11:00 A.M., for the
following purposes:
1. To elect eight Directors of the Company to serve
until the next Annual Meeting and until their
successors are elected.
2. To consider and vote upon an amendment to the 1996
Non-Employee Director Stock Option Plan.
3. To consider and vote upon the appointment of Coopers
and Lybrand as Auditors for the Company for the year
1997.
4. To transact such other business as may properly come
before the meeting.
Shareholders of record at the close of business on March 10,
1997, will be entitled to vote at the meeting and at any
adjournment thereof.
March 31, 1997 /s/ Cheryl L. Kendall
-----------------------------------
Fairfield, Connecticut Cheryl L. Kendall, Vice President -
Chief Financial Officer, 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 1996.
Acme United Corporation
75 KINGS HIGHWAY CUTOFF
FAIRFIELD, CONNECTICUT 06430
ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 1997
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
28, 1997, 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
31, 1997.
Only holders of Common Stock of record at the close of business
on March 10, 1997 will be entitled to vote at the meeting. Each
holder of the 3,325,500 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 10, 1997 (except as
noted):
Shares
Owned
on Percent
Type of February of
Shareholder Ownership 10, 1997 Class
- ---------------------------- ----------- --------- -------
Henry C. Wheeler Direct 434,844 12.83
149 Lansdowne
Westport, CT 06880
- ----------------------------- ------------ --------- -------
Henry C. Wheeler and Fleet Direct (1) 103,740 3.06
National Bank
777 Main Street,
MSN 321, Hartford, CT 06115
Trustees for Henry C. Wheeler
- ----------------------------- ------------ --------- -------
Fleet National Bank Direct 23,033 .68
777 Main Street
MSN 321, Hartford, CT 06115
Executor of the Estate of
Phyllis S. Wheeler
- ----------------------------- ------------ --------- -------
Walter C. Johnsen Direct 190,200 5.61
75 Kings Highway Cutoff
Fairfield, CT 06430
- ----------------------------- ------------ --------- -------
Dimensional Fund Indirect (2) 181,538 5.35
Advisors Inc.
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
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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) below.
(2) Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of
181,538 shares, all of which are held in portfolios of DFA
Investment Dimensions Group Inc. ("Fund"), a registered open-end
investment company, or in series of 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 181,538 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 28,707 additional shares which are owned
by the Fund and 10,000 shares which are owned by the Trust and
all of which shares are included in the 181,538 shares disclosed.
Dimensional disclaims beneficial ownership of such shares.
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 10, 1997. The persons shown have sole voting power in
these shares except as shown in the footnotes below.
Common Stock
Beneficially Owned as of
February 10, 1997
-----------------------------
Number of
Shares (1) Percent
------------- --------
David W. Clark, Jr. ............. 36,803 (2) 1.01
George R. Dunbar ................ 5,026 *
Walter C. Johnsen ............... 340,200 (3) 9.36
Newman M. Marsilius ............. 8,553 (4) *
Wayne R. Moore .................. 6,888 *
Gary D. Penisten ................ 43,000 1.18
James L.L. Tullis ............... 15,000 (5) *
Dwight C. Wheeler II ............ 5,505 (6) *
Henry C. Wheeler ................ 538,584 (7) 14.82
Executive Officers and Directors
as a Group (13 persons) ........ 1,031,059 (8) 28.18
*Less than 1.0%
(1) Based on a total of 3,390,120 outstanding shares as of
February 10, 1997 and 243,125 shares issuable upon exercise of
outstanding options exercisable within 60 days of February 10,
1997.
(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,
Jr. Trust with 19,867 shares and shares voting and dispositive
power on these shares.
(3) Includes 150,000 shares issuable upon exercise of
outstanding options within 60 days of February 10, 1997.
(4) Marie K. Marsilius, wife of Newman M. Marsilius, owns 632
shares in which Mr. Marsilius disclaims any beneficial interest.
(5) Includes 10,000 shares issuable upon exercise of
outstanding options exercisable with 60 days of February 10,
1997.
(6) Dwight C. Wheeler II is a son of Henry C. Wheeler.
(7) Henry C. Wheeler is Co-Trustee with Fleet National of
103,740 shares and shares voting and dispositive power on these
shares. See Principal Shareholders for details.
(8) Includes 189,000 shares issuable upon exercise of
outstanding options exercisable within 60 days of February 10,
1997.
ELECTION OF DIRECTORS
Each of the following persons has been nominated as a Director
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.
Nominees Principal Occupation Director
Since
- ------------------ --------------------------------- --------
Walter C. Johnsen President and Chief Executive 1995
(age 46) Officer as of November 30,1995;
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. The firm
grew from $18 million to $40
million in annual revenues in a
period of four years when it was
sold to a Japanese company.
Previously, Mr. Johnsen 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.
Gary D. Penisten Chairman of the Board since 1994
(age 65) February 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. 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.
David W. Clark, Jr. Managing Director of Pryor & 1980
(age 59) Clark Company, an investment
company. From July 1988 to June
1992, Mr. Clark was President of
Corcap, Inc., which was spun out
of 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 SSC
Technologies, Bloomfield, CT.
George R. Dunbar President of Dunbar Associates, 1977
(age 73) 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
electrical distribution and
utilization products,
Bridgeport,CT. Mr. Dunbar is also
a Director of People's Bank,
Bridgeport, CT.
Newman M. Marsilius Chairman of the Board (1978- 1956
(age 79) 1986), The Producto Machine
Company, manufacturer of special
machine tools and tooling
products, Bridgeport, CT.
Wayne R. Moore President and Chief Executive 1976
(age 66) Officer of The Moore Special Tool
Company (1974-93). Mr. Moore was
Chairman of the Board of The
Moore Special Tool Company and
The Producto Machine Company
(1993-96), and is presently a
Director and Chairman Emeritus.
He was Chairman of the
Association for Manufacturing
Technology/U.S. Machine Tool
Builders (1985-86) and Committee
Member of U.S. Eximbank (1984).
James L.L. Tullis Chairman and Chief Executive 1996
(age 49) Officer of of Tullis-Dickerson &
Co., Inc., Greenwich,
Connecticut, a venture capital
firm. From 1972 to 1983, he was a
securities analyst researching
the health care industry at
Putnam Funds and Morgan Stanley
and Co., Inc. From 1983 to
1986, he was a senior vice
president at E.F. Hutton and Co.
He is a director of Physician
Sales & Service, Inc. and
American Consolidated
Laboratories, Inc.
Henry C. Wheeler Chairman and Chief Executive 1941
(age 80) Officer through December 20,
1994, Chairman through November
29, 1995, Chairman Emeritus as of
November 30, 1995.
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 eleven meetings. All Directors
attended 90% of the aggregate of the total number of the Board
meetings and meetings of Committees of which they were a member.
All Directors who are not salaried employees received a fee of
$1,500 per quarter plus $500 for each Board of Directors meeting
attended. The fees earned for service on the Committees of the
Board were $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 earned an additional $500 per
day to compensate for the broader responsibility and related
effort.
Effective November 19, 1995 all fees payable to such 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 such Director has been 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. All
such Directors have selected Option (b), which ties payments to
the stock price.
There is an Executive Committee of the Board of Directors which
is composed of Mr. Penisten as Chairman and Messrs. Clark and
Dunbar. The function of the Executive Committee is to act for
the Board of Directors during the intervals between meetings of
the Board. During 1996, the Committee held three formal
meetings. In addition, the Committee members each worked
independently on numerous projects for the Company.
There is an Audit Committee of the Board of Directors which is
composed of Mr. Penisten as Chairman and Messrs. Dunbar,
Marsilius and Moore. During 1996, 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.
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 1996
the Committee was composed of certain non-employee members of the
Board of Directors, which include George R. Dunbar as Chairman
and David W. Clark, Jr., Wayne R. Moore and James L.L. Tullis.
The Committee had five meetings during 1996.
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.
Salary increases in 1996 were reduced or delayed to reflect the
performance of the Company.
ANNUAL INCENTIVES
Annual incentive award opportunities are made to executives to
recognize and reward corporate and individual performance. The
plan in effect for 1996 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 40% 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. Only one incentive bonus was granted for 1996.
In 1997, a new goal-related plan has been implemented.
STOCK OPTION INCENTIVES
The Company's stock option compensation program is administered
by the Compensation Committee of the Board of Directors. The
purpose of the Company's Amended and Restated Stock Option Plan
for employees 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 interests of the
Company.
The following options were granted in 1996:
Options for 75,000 shares were granted to Walter C. Johnsen on
January 23, 1996 of which 25,000 shares vested on January 23,
1996, 25,000 on July 24, 1996 and 25,000 on January 1, 1997.
The Committee also granted 52,000 shares for other executive
officers with staggered vesting dates through 1999.
RATIONALE FOR CEO COMPENSATION
Walter C. Johnsen was designated President and 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 1996 were
those mentioned above for other executive officers.
COMPENSATION COMMITTEE
George R. Dunbar, Chairman
David W. Clark, Jr.
Wayne R. Moore
James L.L. Tullis
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.
SUMMARY COMPENSATION TABLE
The following sets forth information concerning the
compensation of the Company's Chief Executive Officer and each of
the two 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
Other Annual
Compensation All Other
Name and Principal Position Year Salary Bonus (1) Compensation
- ---------------------------- -------- -------- -------- ------------ ------------
Walter C. Johnsen 1996 $150,000 $ -0- $2,000
President & Chief 1995 $143,750 $ -0- $1,000
Executive Officer (2)
Dwight C. Wheeler II, 1996 $112,500 $ -0- $ 671 $435,000 (3)
Vice Chairman until 1995 $177,500 $ -0- $ 972
September 19, 1996 (4) 1994 $180,000 $ -0- $ 697
Andrew T. Harrison, 1996 $125,016 $ -0- $ -0- $15,000 (5)
Senior Vice 1995 $125,000 $ -0- $ 797
President (6) 1994 $120,000 $ -0- $ 951
(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 served as Chief Financial Officer
from March 26, 1996 to June 30, 1996.
(3) Dwight C. Wheeler II received $435,000 in severance payments in
1996.
(4) Dwight C. Wheeler II also served as Secretary from March 26,
1996 to September 19, 1996 and Treasurer from April 23, 1990 to
September 19, 1996.
(5) Andrew T. Harrison received $15,000 in consulting fees in
1996.
(6) Andrew T. Harrison retired as of December 31, 1996.
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.
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Price Appreciation
for Option
Individual Grants Term
- -------------------------------------------------------------------- ------------------
% of
Total
Options
Number of Granted
Shares to
Underlying Employees Exercise
Options in Fiscal or Base Expiration
Name Granted Year Price Date 5% 10%
- --------------------- ----------- --------- -------- ----------- -------- --------
Walter C. Johnsen 75,000 50% $3.75 January 23, $177,000 $448,000
shares per 2006
share
Dwight C. Wheeler II - 0 - 0% $0 --- $0 $0
Andrew T. Harrison - 0 - 0% $0 --- $0 $0
(1) Includes President and Chief Executive Officer and the two
other most highly compensated executive officers as measured by
salary and bonus.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR
END OPTION VALUES
The following table provides information concerning each option
exercised during the last fiscal year by each of the named
executive officers and the value of unexercised options held by
such executive officers at the end of the fiscal year.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Option/SARs Option SARs
Shares at Fiscal at Fiscal
Acquired Year End Year End
on (#) (1) ($) (1) (2)
Exercise Value Exercisable / Exercisable /
(#) Realized Unexercisable Unexercisable
- -------------------- -------- -------- ------------- -------------
Walter C. Johnsen -0- -0- 150,000/-0- $271,875/-0-
Dwight C. Wheeler II 50,000 $68,750 -0-/-0- $0/-0-
Andrew T. Harrison -0- -0- 16,000/-0- $21,000/-0-
(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 31, 1996, the last trading day of the fiscal year.
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 II, and $28,961 for Andrew T. Harrison. 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, 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 officers who like Mr. Johnsen 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 are
also Directors) would be entitled to a similar payment. Under the
first scenario Mr. Johnsen would be entitled to thirty (30)
months' compensation; under the second scenario, Mr. Johnsen
would be entitled to twenty-four (24) months' compensation.
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 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 upon
such severance. This plan applies only if the Salary
Continuation Plan does not apply. Mr. Dwight C. Wheeler II resigned
on September 19, 1996, and was paid a severance of $435,000 under
this Plan representing twenty nine (29) months of compensation of
his salary in effect on November 30, 1995.
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,
Aerosonic Corp, Aircoa Hotel Partnr (LP), Alba-Waldensian Inc,
Alfin Inc, AM International Inc, America First Prep 2 LP,
American Real Estate Inv, American Restaurants PRT, Arizona Land
Income Corp, Arrhythmia Research Tech, Arrow Automotive Ind,
Aurora Electronics Inc, B&H Ocean Carriers LTD, Bank of
Southington, Barrister Info Systs CP, Beard Co, Bentley
Pharmaceutical, Biscayne Apparel Inc, Blackrock CA INV QMT,
Blackrock FL IQMT, Blackrock NJ IQMT, Blackrock NY IQMT, Bowmar
Instrument Corp, Brandywine Realty Trust, Buffton Corp,
Calton Inc, Carematrix Corporation, Chicago Rivet & Machine,
Citadel Holding Corp, Citisave Financial Corp, Coast Distribution
Systs, Cognitronics Corp, Computrac Inc, Core Material,
Cornerstone Bank, Dewolfe Copanies Inc, Driver-Harris Co, Editek
Inc, Engex Inc, Environmental Tectonics, Espey Mfg & Electronics,
ETS International Inc, EXX Inc CL A, Farmstead Telehone GR, FFP
Partners L.P., First Central Financial, First West VA Bancorp,
Foodarama Supermarkets, FPA Corp, Frontier Adjustr of Amer, Gamma
Biologicals Inc, General Automation Inc, Global Ocean Carriers,
Globalink Inc, Hastings Manufacturing, Heartland Partners L.P.,
Hein-Werner Corp, Heist C.H. Corporation, Income Opportun Rlty
Inv, Independent Bankshares, Intelligent Systems Corp, Jaclyn
Inc, Jalate LTD, Joule Inc, KBK Capital Corp, Kentucky First
Bancorp, Kit Manufacturing Co, Marlton Technologies Inc, Matec
Corp, Measurement Specialties, Media Logic Inc, Merrimac
Industries Inc, Midsouth Bancorp, Milwaukee Land Co, Morgan Group
Inc CL A, Movie Star Inc, MSR Exploration LTD, NFC PLC ADR,
O'Okiep Copper Co, Ohio Art Co, One Liberty Props Inc, Pacific
Gateway Props, Pamida Holdings Corp, PC Quote Inc, Pinnacle
Bancshares Inc, Pittsbgh & WV Railroad, Plymouth Rubber Inc CL A,
Polk Audio Inc, Professional Bancorp Inc, Richton Internat Corp,
Scandinavia Co, Servotronics Inc, Silverado Foods Inc, Sloans
Supermarkets, Southern Banc Co Inc, Southfirst Bancshares,
Sterling Cap CP, Sunbelt Nursery Group, Team Inc, Thermwood Corp,
Three Rivers Fin, Tolland Bank CT, Town & Country Corp, Trans Lux
Corp, Triton Group LTD, United Guardian Inc, Unitel Video Inc,
Van Kampen AM CAP OH VMI, Versar Inc, Vitronics Corp, Wellco
Enterprises Inc, Wells-Gardner Electronic, Winston Resources Inc,
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.
(Printer: Insert Graph)
PROPOSAL FOR AMENDMENT TO 1996 NON-EMPLOYEE DIRECTOR STOCK OPTION
PLAN
On February 27, 1997, the Board of Directors, subject to approval
of the Shareholders, amended and restated the 1996 Non-Employee
Director Stock Option Plan and renamed the plan the Non-Salaried
Director Stock Option Plan ("Plan"). The following description
of the Plan as amended 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 salaried 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 such directors have served
other companies and their shareholders well by directly relating
incentive compensation to the building of long-term shareholder
values. Last year a plan was 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. Approximately one year after
the Plan was approved by the shareholders in 1996 it became
apparent that, while the Plan was the correct action, certain
adjustments were necessary.
ADMINISTRATION OF THE PLAN
The Plan is administered by the Compensation Committee of the
Board of Directors composed of certain non-employee directors
(the "Committee"). The Committee, however, has 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
As approved in 1996, the aggregate number of shares subject to
options during the term of the Plan was limited to 50,000 shares
of the Common Stock of the Company. It is now proposed that the
number of shares subject to options be increased from 50,000 to
60,000. This limit may not be increased during the term of the
Plan except by the shareholders or 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 amendment, 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 and,
at the time of receiving any grant, are not salaried employees of
the Company are eligible to receive benefits under the Plan.
Directors who were first elected to the Board prior to the 1996
Annual Meeting and who are not salaried employees of the Company
are eligible to receive benefits under the Plan after being
elected at the 1997 Annual Meeting. The only non-employee
director to have received stock options to date is Mr. Tullis and
he will not be eligible for additional grants as a result of the
proposed amendment. Directors who are elected in the future will
be eligible for option grants only to the extent options
previously granted are terminated or surrendered.
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
The Plan as adopted in 1996 provides that an option to purchase
10,000 shares of the Common Stock of the Company be granted to
each new director on April 22, 1996, and for each additional new
director added each year thereafter (beginning with 1997) on the
date of the Annual Meeting for that calendar year to each
Director who, at the adjournment of that meeting, is an eligible
Director.
The Plan as adopted in 1996 provides that directors elected prior
to the 1996 Annual Meeting would be granted shares only after
aggregate earnings of $0.50 per share has been earned over a
period of four consecutive quarters. Thereafter, grants would
be made at a rate of 2,500 shares annually until a total 10,000
shares of options had been granted. In retrospect this approach
failed to create an immediate incentive and thus failed to
create the motivation intended by the Plan. Therefore it is
proposed that, subject to shareholder approval, all current
directors who are not salaried employees be granted an option to
purchase 10,000 shares on the date shareholder approval occurs.
Vesting of the option shares granted on April 28, 1997 to each
participant would be as follows:
2,500 on April 29, 1997
2,500 on April 29, 1998
2,500 on April 29, 1999
2,500 on April 29, 2000
The grant to Mr. Tullis after the 1996 Annual Meeting will vest
on April 23, 1997.
EXERCISE PRICE
The exercise price with respect to an option awarded under the
Plan is 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 vested as described above 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
Upon approval of the amendment to the Plan by the shareholders
and upon their election as Directors at the 1997 Annual Meeting,
all directors who are not salaried employees of the Company and
who have not previously received a stock option grant, namely
Messrs. Clark, Dunbar, Marsilius, Moore and Penisten, will be
granted options for 10,000 shares each under the terms of the
amended Plan.
VOTE REQUIRED
The Plan amendment 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 amendment is not
approved by shareholders, it will not become effective.
The Board of Directors recommends a vote FOR approval of the
amendment to the 1996 Non-Employee Director Stock Option Plan.
SELECTION OF AUDITORS
The shareholders will be asked to approve the appointment of
Coopers & Lybrand, auditors for the Company since 1969, as
auditors for 1997. 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 1997 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) OF THE SECURITIES EXCHANGE ACT OF
1934
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 1996 fiscal year,
all filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with, except as
follows:
- The filing of Form 3 with the SEC by Ms. Cheryl L. Kendall
was not made within ten (10) days of her becoming employed by the
Company on July 1, 1996. Her Form 3 was filed with the SEC on or
about August 1, 1996.
- The filing of Form 3 with the SEC by Mr. James L.L. Tullis
was not made within ten (10) days of his becoming a director of
the Company on April 22, 1996. His Form 3 was filed with the SEC
on or about May 3, 1996.
- The filing of Form 4 with the SEC by Mr. Wayne R. Moore was
not made within ten (10) days after the end of month of purchase
of company stock on August 29, 1996. The Form 4 was filed with
the SEC on or about September 16, 1996.
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 27, 1998 must be received by the
Secretary of the Company no later than November 27, 1997.
In addition, the Company's by-laws provide that any shareholder
wishing to make a nomination for the office of Director at the
1998 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.
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.
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
Cheryl L. Kendall, Vice President -
Chief Financial Officer, Secretary
and Treasurer
Acme United Corporation
75 Kings Highway Cutoff
Fairfield, Connecticut 06430
March 31, 1997
- ----------------------------------------------------------------------------
EXHIBIT A
AMENDED AND RESTATED ACME UNITED CORPORATION
NON-SALARIED DIRECTOR STOCK OPTION PLAN
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").
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 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 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
60,000 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.
1.7 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 elected a director on April 28, 1997
and who has not received any prior grant under this Plan shall
receive a grant of an Option to purchase 10,000 shares of Common
Stock on April 28, 1997. If and to the extent Options granted
hereunder lapse as a result of termination or surrender,
additional Options shall be granted to any Director or Directors
who are first elected after April 28, 1997, which Options shall
be in such amounts (not to exceed 10,000 shares per Director) and
shall vest at such times as the Committee shall determine.
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 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; 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 for Options
granted prior to April 28, 1997. In no event, however, shall an
Option be exercised after the expiration of (10) years from the
date of grant.
(c) Options granted April 28, 1997, and later shall
become exercisable as follows:
25% - one day after date of grant
25% - one day and one year after date of grant
25% - one day and two years after date of grant
25% - one day and three years after 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.
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 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.
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, 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
(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.
(As amended February 25, 1997, subject to shareholder approval).
