UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
See the disclosure in Item 2.01 below, “Completion of Acquisition or Disposition of Assets” which is incorporated by reference herein.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
On November 1, 2023, Acme United Corporation (the “Company”) entered into an Asset Purchase Agreement to sell the assets of its Camillus Cutlery and Cuda business lines to GSM Holdings, Inc. Below is a summary of the terms of such transaction.
The sections below describe selected provisions of the Asset Purchase Agreement and certain ancillary documents but do not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of the Asset Purchase Agreement and the related ancillary documents, copies of which are attached hereto as Exhibits 2.1 and 2.2. Unless otherwise defined herein, the capitalized terms used below are defined in the Asset Purchase Agreement.
Asset Purchase Agreement
On November 1, 2023, the Company, a Connecticut Corporation entered into an Asset Purchase Agreement (“Asset Purchase Agreement”) with GSM Holdings, Inc., a Delaware Corporation (the “Purchaser”) pursuant to which the Company would sell all of the assets of its Camillus Business and its Cuda Business (the “Transaction”). The Closing of the Transaction also occurred on November 1, 2023.
Purchase Price
The Purchase Price for the Camillus Business and Cuda Business (collectively, the “Business”) is Nineteen Million Seven Hundred Seventy Three Thousand Dollars ($19,773,000), as determined in accordance with Sections 3(a) and 3(c)(i) of the Asset Purchase Agreement. At Closing, the Purchaser paid Eighteen Million Two Hundred Seventy Three Thousand Dollars ($18,273,000) to the Company; the balance of the Purchase Price is subject to a twelve-month holdback of One Million Five Hundred Thousand Dollars ($1,500,000) as a non-exclusive source of recovery primarily to satisfy indemnification claims pursuant to Section 7 of the Asset Purchase Agreement.
Representations and Warranties
The Asset Purchase Agreement contains customary representations and warranties by each of the Company and the Purchaser. Certain of the representations are subject to specified exceptions and qualifications contained in the Asset Purchase Agreement or in information provided pursuant to certain disclosure schedules to the Asset Purchase Agreement.
Post-Closing Covenants of the Parties
The Asset Purchase Agreement provides for certain covenants of the parties after the Closing of the Transaction including : (a) both parties have certain confidentiality obligations, (b) both parties have non-disparagement obligations, (c) the Company has agreed not to compete with the Business for a period of four years after Closing, (d) the Company has agreed, for a period of four years after Closing, not to hire any employees or independent contractors of the Purchaser who previously were employees or independent contractors of the Business or solicit, induce, attempt to solicit or attempt to induce any such persons leave the employ of Purchaser or any of its Affiliates or otherwise interfere in the relationship between Purchaser and such person, and (e) the Company has agreed, for a period of four years after Closing, not to solicit any customer, supplier, licensee or other business relation of the Business to cease or materially reduce doing business with the Purchaser or any of
its Affiliates or in any way interfere or attempt to interfere with the relationship any such person with the Business.
Indemnification
Under the Asset Purchase Agreement the parties have certain indemnification obligations with respect to each other. The representations and warranties of the Company and the Purchaser contained in the Asset Purchase Agreement will survive the Closing Date for a period of twelve (12) months except that Seller’s Fundamental Representations will survive the Closing Date until the expiration of the applicable statute of limitations plus sixty (60) days and certain fundamental representations of Purchaser will survive the Closing Date until the expiration of the applicable statute of limitations. The indemnification obligations under Section 7(a)(ii) (breach of representations and warranties) are subject to a deductible of $75,000 and, other than with respect to fraud of a breach of Seller’s Fundamental Representation, an aggregate cap of $2,000,000.
Related Agreements
Set forth below is a description of selected provisions of certain ancillary documents in the Transaction.
Transition Services Agreement
Upon the Closing of the Transaction, the parties also entered into a Transition Services Agreement, dated November 1, 2023, pursuant to which the Company has agreed to provide, in connection with the transfer of the Business to the Purchaser, certain operational services, knowledge transfer support, and documentation support to the Purchaser for a period of two months after the Closing of the Transaction. The Company will be entitled to receive reimbursement for costs incurred in connection with providing such services.
License Agreement
In connection with the Closing of the Transaction, pursuant to the terms of a License Agreement, dated November 1, 2023, entered into between the parties, the Company has provided a royalty free, perpetual, non-exclusive license to certain patents held by the Company that are used in the Business.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
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2.1 |
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2.2 |
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99.1 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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 |
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By |
/s/ Walter C. Johnsen |
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Walter C. Johnsen |
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Chairman and |
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Chief Executive Officer |
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Dated: November 2, 2023 |
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By |
/s/ Paul G. Driscoll |
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Paul G. Driscoll |
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Vice President and |
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Chief Financial Officer |
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Dated: November 2, 2023 |
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