Exhibit 10.4


 NOTICE OF EXERCISE

Under 2005 Non-Employee Director Stock Option Plan


 


Date of Exercise: _______________


 


Ladies and Gentlemen:


 


This constitutes notice to Acme United
Corporation (“Acme”) under my stock option that I elect to purchase the number of shares of Common Stock (the “Shares”)
for the price set forth below.


 


Option Information


 





	 	Stock option dated:	 	 	 
	 	 	 	 	 
	 	Number of shares as to

which option is exercised:	 	 	 
	 	 	 	 	 
	 	Exercise price:	 	$	 
	 	 	 	 	 
	 	Shares
to be

              issued in name of:


	 	 	 
	 	 	 	 	 













Instructions to Optionholder: There
are three methods by which you may exercise your option. The first, Method 1, is the traditional form of exercise in which you
pay the full exercise price of the option in cash and then receive Shares in the amounts set forth under “Option Information,”
above. If you choose Method 1 below, do not complete the information required in Methods 2 and 3.


 


Alternatively, you can choose either (but not both of) a net share
exercise (Method 2) or a pure cash settlement (Method 3). Either of these methods would eliminate the necessity of your making
an out of pocket cash payment to Acme to exercise your option. If you choose Methods 2 or 3, the value of the Shares will be calculated
using the Closing Price of Acme Common Stock determined in the manner described below. Note: In
Methods 2 or 3, your choice is subject to Acme’s consent at the time of exercise.


 


If you choose Methods 2 or 3, you must deliver this exercise
notice by email to the Chief Financial Officer of Acme.


 


Method 1. Standard Exercise. This method involves the
payment of the option exercise price in full in cash and receipt of the full amount of Shares.


 


I enclose cash payment in full of the total
exercise price for the Shares in the following amount as authorized by the related Stock Option Agreement: $_____________


 



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Method 2. Net Share Exercise. This method
will enable you to avoid paying the exercise price of the option in cash; the option will be settled in shares. By choosing
this method, you authorize Acme to decrease the number of the Shares to be delivered to you by the number of Shares having an aggregate
value equal to the total exercise price of your option, calculated as follows:





 


	 	Closing Price	 	A	$	 
	 	Exercise Price	 	B	$	 
	 	# Shares	 	C	 	 
	 	Total Value to be Received	 	(A-B)*C	$	 
	 	 	 	 	 	 
	 	Divided by Closing Price


equals # Shares to
be delivered


	 	 	 	 









 


 


Method 3. Cash Settlement. This method will enable you
to avoid paying the exercise price of the option in cash; the option will be settled in cash. By choosing this method, you
authorize Acme to deliver to you cash in an amount equal to the value of the Shares subject to the option, less the total exercise
price of the option, calculated as follows:


 





	 	Closing Price	 	A	$	 
	 	Exercise Price	 	B	$	 
	 	# Shares	 	C	 	 
	 	Total Value to be Received	 	(A-B)*C	$	 






 


By this exercise, I agree to provide
such additional documents as you may require pursuant to the terms of the related Stock Option Agreement and the Acme 2005 Non-Employee
Director Stock Option Plan.


 











	 	[Optionee Name]
	 	 	
	 		 
	 	Signature



 


If Methods 2 or 3 are selected:


 


Agreed to and approved:


 








	ACME UNITED CORPORATION	 
	 	 	 
	By:	 	 
	Name:	 
	Title:


	 



 


Definition of “Closing Price”:
If you deliver your notice on a given trading day, whether during or after trading hours, Acme will use the closing price of the
Common Stock published by NYSE MKT for that day. If you deliver an exercise notice before the opening of trading on a given day
or on a non-trading day, Acme will use the closing price of the Common Stock published by NYSE MKT for the immediately preceding
trading day.




 








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