Exhibit
99.2
ACME UNITED CORPORATION
EMPLOYEE STOCK OPTION PLAN
1. PURPOSE
The
purpose of this plan (the "Plan") is to promote the interests of
Acme
United Corporation (the "Corporation") by enabling its key
employees to
acquire an increased proprietary interest in the Corporation and
thus to
share in the future success of the Corporation's business.
Accordingly, the
Plan
is intended as a means not only of attracting and retaining
outstanding management personnel but also of promoting a closer
identity of
interests between employees and stockholders. Since the employees
eligible
to
receive Options under the Plan will be those who are in a position
to
make
important and direct contributions to the success of the
Corporation,
the
Directors believe that the grant of the Options under the Plan will
be
in
the best interests of the Corporation.
2.
DEFINITIONS
Unless the context clearly indicates otherwise, the following terms
when
used
in the Plan, shall have the meanings set forth in this Section
2.
(a)
"Beneficiary" means
the person or persons who shall acquire the right
to exercise an option by bequest or inheritance.
(b)
"Board of Directors"
or "Board" means the Board of the Directors of
the Corporation.
(c)
"Code" means the
Internal Revenue Code of 1986, as amended from time
to time.
(d)
"Committee" means the
Compensation Committee of the Board of
Directors, consisting of select Board members who are not employees
of
the Corporation, but in no event fewer than two (2) such Board
members.
(e)
"Common Stock" shall
mean common stock, par value S2.50 per share, of
the Corporation.
(f)
"Disability" means a
disability as defined in the Corporation's
Long-Term Disability Plan, as amended from time to time.
(g)
"Fair Market Value"
shall mean the closing price for the Common Stock
on the date immediately preceding the date on which the option
is
granted.
(h)
"Incentive Stock
Option" shall mean a stock option granted pursuant to
this Plan and intended to satisfy the requirements of Section 422
of
the Code.
(i)
"Option" shall mean a
stock option granted pursuant to the Plan.
(j)
"Optionee" shall mean
a person to whom an Option has been granted
under the Plan.
(k)
"Option Agreement"
shall mean the written agreement to be entered into
by the Corporation and the Optionee, as provided in Section 6
hereof.
(l)
"Retirement" shall
mean retirement pursuant to the Retirement Plan for
Employees of Acme United Corporation, as amended from time to
time.
(m)
"Share" shall mean the
Common Stock of the Corporation, as adjusted in
accordance with Section 16 of the Plan.
(n)
"Subsidiary" shall
mean any subsidiary corporation of the Corporation
within the meaning of Section 424(f)of the Code (or a successor
provision of similar import).
Where used herein, unless the context indicates otherwise, words in
the
masculine form shall be deemed to refer to females as well as to
males.
(1)
<PAGE>
3. SHARES
SUBJECT TO THE PLAN
(a)
The stock to be
covered by the Options is the Common Stock of the
Corporation. The aggregate number of shares of Common Stock which
may
be delivered on exercise of the Options is 460,000 shares, subject
to
adjustment pursuant to Section 16.
(b)
As determined by the
Board from time to time, such shares may be
previously issued shares reacquired by the Corporation or
authorized
but unissued shares. If any Option expires or terminates for
any
reason without having been exercised in full, the Shares covered
by
the unexercised portion of such Option shall again be available
for
Options, within the limits specified above.
4.
ADMINISTRATION OF THE PLAN
(a)
The Plan shall be
administered by the Board of Directors of the
Corporation, which shall accept, amend, or reject recommendations
made
by the Committee. In addition to its duties with respect to the
Plan
stated elsewhere in the Plan, Board shall have full authority,
consistent with the Plan, to interpret the Plan, to promulgate
such
rules and regulations with respect to the Plan as it deems
desirable
and to make all other determinations necessary or desirable for
the
administration of the Plan. All decisions, determinations, and
interpretations of the Board shall be binding upon all persons.
No member of the Board of Directors or the Committee and no
employee
of the Corporation shall be liable for any act or action
hereunder,
whether of omission or commission, by any other member or employee
or
by any agent to whom duties in connection with the administration
of
the plan have been delegated in accordance with the provisions of
the
Plan or, except in circumstances involving his bad faith, for
anything
done or omitted to be done by himself.
(b)
Except as provided in
Section 7, it is intended that the stock options
granted pursuant to the Plan constitute Incentive Stock Options
within
the meaning of Section 422 of the Code. The Board shall administer
the
Plan in such a manner as to establish and maintain such Options
as
Incentive Stock Options.
(c)
The Board may, with
the consent of the Optionee, substitute Options
which are not intended to be Incentive Stock Options for
outstanding
Incentive Stock Options. Any such substitution shall not
constitute
the grant of a new Option for the purposes of this Plan, and shall
not
require a revaluation of the Option exercised prior to the
substituted
Option. Any such substitution shall be implemented by an amendment
to
the applicable Option Agreement or in such other manner as the
Board
in its discretion shall determine.
(d)
The Committee, subject
to the approval of the Board, shall make such
provision as it deems necessary or appropriate for the withholding
of
any federal, state, local or other tax required to be withheld
with
regard to the exercise of an Option under the Plan.
5. EMPLOYEES
ELIGIBLE TO RECEIVE OPTIONS
(a)
The Board, upon the
recommendation of the Committee, shall from time
to time in its discretion select the employees to whom the
options
shall be granted from among the key employees of the Corporation
and
any Subsidiary.
(b)
Members of the Board
of Directors who are not regular salaried
employees of the Corporation or a Subsidiary shall not be eligible
to
receive Options.
(c)
An individual employee
may receive more than one Option.
(2)
<PAGE>
6. OPTION
AGREEMENT
(a)
No Option shall be
exercised by an Optionee unless he or she shall
have executed and delivered an Option Agreement.
(b)
Appropriate officers
of the Corporation are hereby authorized to
execute and deliver Option Agreements in the name of the
Corporation
as directed from time to time by the Board.
7. GRANTS OF
OPTIONS
(a)
The Board, acting upon
the recommendation of the Committee, shall in
it discretion determine the time or times when Options shall be
granted and the number of shares of Common Stock to be subject to
each
Option.
(b)
The aggregate fair
market value (determined as of the date the Option
is granted) of the stock with respect to which Incentive Stock
Options
are exercisable for the first time by an individual during any
calendar year (under all stock option plans of the Corporation and
its
Subsidiaries) shall not exceed $100,000.00.
(c)
No Incentive Stock
Option shall be granted to an employee who, at the
time the Option is granted, owns (within the meaning of Section
422(b)(6) of the code) stock possessing more than ten percent of
the
total combined voting power of all classes of stock of the
Corporation
unless the following requirements are satisfied: (i)
notwithstanding
the provisions of Section 8, the purchase price for each share
of
common stock subject to an Option shall be at least 110 percent of
the
fair market value of the Common Stock subject to the Option at
the
time the Option is granted; and (ii) the Option is not
exercisable
after the expiration of five (5) years from the date
