ACME UNITED CORP - FORM 10-Q - XML - IDEA: XBRL DOCUMENT - November 9, 2012

Note 4 —Debt and Shareholders Equity

On April 5, 2012, the Company entered into a new revolving loan agreement with HSBC Bank, N.A. In conjunction with signing the new revolving loan agreement, the Company ended its agreement with Wells Fargo and used funds borrowed under the new loan agreement to pay all amounts then outstanding under the revolving loan agreement with Wells Fargo Bank.

The new five-year credit facility provides for increased borrowings of up to an aggregate of $30 million at an interest rate of LIBOR plus 1.75%, which is 0.25% lower than the interest rate under the former loan agreement with Wells Fargo. All principal amounts outstanding under the agreement are required to be repaid in a single amount on April 5, 2017, the date the agreement expires; interest is payable monthly. Funds borrowed under the agreement may be used for working capital, general operating expenses, share repurchases, acquisitions and certain other purposes. Under the revolving loan agreement, the Company is required to maintain specific amounts of tangible net worth, a specified debt service coverage ratio, and a fixed charge coverage ratio. These financial covenants in the new loan agreement are similar to the covenants in the prior agreement with Wells Fargo. At September 30, 2012 the Company was in compliance with these covenants under the new agreement with HSBC Bank.

As of September 30, 2012 and December 31, 2011, the Company had outstanding borrowings of $24,320,828 and $17,568,484, respectively, under the respective revolving loan agreements.

During the nine months ended September 30, 2012, the Company issued 5,000 shares of common stock upon the exercise of outstanding stock options and received total proceeds of $21,000.  There were no stock options exercised during the three months ended September 30, 2012.