PROXY STATEMENT
CutCo Industries, Inc.
125 South Service Road
Jericho, New York
Annual Meeting of Shareholders
To be held May 15, 1996
INTRODUCTION
This proxy statement is furnished to shareholders of CutCo
Industries, Inc., a New York corporation (the "Company"), in connection
with the solicitation by the Board of Directors of the Company (the "Board")
of proxies to be used at the Annual Meeting of Shareholders of the Company (the
"Meeting") to be held on May 15, 1996, at 9:30 A.M. at the principal
executive offices of the Company, 125 South Service Road, Jericho, New York
11753, for the purposes set forth in the Notice of Meeting. It is anticipated
that this proxy statement and accompanying material will first be mailed to
shareholders on or about April 12, 1996.
Matters to be Considered at the Meeting
At the Meeting, the shareholders of the Company will be asked to
elect four (4) directors of the Company, each of whom is to serve a two (2)
year term, and to transact such other business as properly may be brought
before the Meeting.
Voting at the Meeting
Shareholders of record entitled to vote at the Meeting and any
postponement or adjournment thereof will be determined as of the close of
business on April 8, 1996. At that date there were outstanding and entitled
to vote 780,625 shares of the Company's common stock, par value $.10 per
share ("Common Shares"). Each Common Share entitles the holder thereof to one
vote. The presence in person or by properly executed proxy of the holders of
a majority of the outstanding Common Shares entitled to vote at the Meeting
is necessary to constitute a quorum at the Meeting. The affirmative vote of
a plurality of the Common Shares voted at the Meeting is required for the
election of the directors.
Management recommends that shareholders vote FOR the election of
Management's four (4) nominees to the Board.
Proxies
All Common Shares represented at the Meeting by properly executed
proxies received prior to or at the Meeting will be voted at the Meeting in
accordance with the instructions on the proxies. If no instructions are
indicated, proxies will be voted FOR the election of Management's four (4)
nominees to the Board. If any other matters properly are brought before the
Meeting for action, the persons named in the enclosed form of proxy and
acting thereunder will have discretion to vote on such matters in accordance
with their best judgment. The proxy committee appointed by the Board consists
of Vincent K. DiPierro, Ira Goldberg and Don vonLiebermann.
Any proxy may be revoked by the person giving it at any time before
it is voted. Proxies may be revoked by (i) filing with the Secretary of the
Company at or before the taking of the vote at the Meeting a written notice
of revocation bearing a later date than the date of the proxy, (ii) duly
executing a subsequent proxy relating to the same shares and delivering it to
the Secretary of the Company or (iii) attending the Meeting and stating the
intention to vote in person to the Secretary of the Meeting and voting in
person (although attendance at the Meeting will not in and of itself
constitute revocation of a proxy). Any written notice revoking a proxy should
be delivered to CutCo Industries, Inc., 125 South Service Road, Jericho, New
York 11753, Attention: Secretary.
Proxy Solicitation
Proxies are being solicited by and on behalf of the Company. All
expenses of this solicitation, including the cost of preparing and mailing
this proxy statement, will be borne by the Company. In addition to
solicitation by use of the mails, proxies may be solicited by directors,
officers and employees of the Company in person or by telephone, telegram or
other means of communication. Such directors, officers and employees will not
be additionally compensated, but may be reimbursed for out-of-pocket expenses
in connection with such solicitation.
Arrangements also will be made with custodians, nominees and
fiduciaries for the forwarding of proxy solicitation material to beneficial
owners of Common Shares held of record by such custodians, nominees and
fiduciaries, and the Company may reimburse such custodians, nominees and
fiduciaries for reasonable expenses incurred in connection therewith.
Shareholders are urged to read and carefully consider the
information presented in this proxy statement.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Certain Beneficial Owners
The following table sets forth information at April 1, 1996,
concerning ownership of the Company's Common Shares by each person who owns
of record, or is known to the Company to own beneficially, more than 5% of
the Company's Common Shares.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership (1) of Class
________________ ________________________ ________
Sole Voting and Shared Voting and
Investment Power Investment Power
________________ _________________
<S> <C> <C> <C>
Marvin W. Marcus -0- 349,513(2) 42.0%
P.O. Box 265
Jericho, New York
Don vonLiebermann - 0 - 349,513(2) 42.0%
P.O. Box 265
Jericho, New York
</TABLE>
Footnotes for the preceding and following tables appear after the following
table.
Management
The following table sets forth information at April 1, 1996 concerning
ownership of the Company's Common Shares by all directors and nominees and
highly compensated executive officers, individually, and all officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership (1) of Class
___________________ ____________________ ________
Sole Voting and Shared Voting and
Investment Power Investment Power
________________ __________________
<S> <C> <C> <C>
Marvin W. Marcus - 0 - 349,513(2) 42.0%
P.O. Box 265
Jericho, New York
Don vonLiebermann - 0 - 349,513(2) 42.0%
P.O. Box 265
Jericho, New York
Michael P. Kramer 20,146(3) - 0 - 2.5%
P.O. Box 265
Jericho, New York
Richard C. Anthony 1,375(4) - 0 - .2%
118 East 92nd Street
New York, New York
John H. Daniels 1,375(4) - 0 - .2%
29 Kodiak Drive
Woodbury, New York
Vincent K. DePierro 1,375(4) - 0 - .2%
13 Grays Farm Road
Westport, Connecticut
Ira H. Goldberg 1,375(4) 2,200(5) .5%
220 Fifth Avenue
New York, New York
All officers and
directors as a
group (8 persons) 26,146 351,713 44.6%
</TABLE>
Footnotes to the two preceding tables follow immediately.
(1) Each named person or group is deemed to be the beneficial owner of
securities that may be acquired within sixty days through the exercise of
options, warrants and rights, if any, and such securities are deemed to be
outstanding for the purpose of computing the percentage of the class
beneficially owned by such person or group. Such securities are not deemed
to be outstanding for the purpose of computing the percentage of the class
beneficially owned by any other person or group. Accordingly, the indicated
number of shares includes shares issuable upon exercise of options (including
employee stock options) held by such person or group.
(2) Messrs. Marcus and vonLiebermann entered into an agreement pursuant to
which they agreed to vote all of the shares owned by either of them upon
mutual agreement with respect to matters relating to an acquisition of the
Company. Accordingly, this number includes 166,866 shares owned by Mr.
vonLiebermann individually and 117,241 shares owned by Mr. Marcus individually.
Also includes 26,000 Common Shares and 26,000 Common Shares issuable upon
exercise of currently exercisable options held by Messrs. vonLiebermann and
Marcus, respectively. Also includes 1,000 shares, representing Mr. Marcus'
pro rata portion of shares owned by a partnership in which Mr. Marcus is a
partner. Also includes an aggregate of 606 shares held by Mr. vonLiebermann
as custodian for his children in which he has voting and investment power, but
no present economic interest. Mr. vonLiebermann disclaims beneficial
ownership of these shares. Includes 11,800 shares owned directly or
indirectly by Mr. Marcus' wife but does not include 3,400 shares owned by
Mr. Marcus' adult children or 20,234 shares owned by other relatives of
Mr. Marcus, in all of which shares Mr. Marcus has no present economic interest
or voting power and as to which he disclaims beneficial ownership.
(3) Includes 9,500 Common Shares underlying options owned by Mr. Kramer that
are either presently exercisable or exercisable within sixty (60) days.
(4) Includes 1,375, 1,375, 1,375 and 1,375 Common Shares underlying options
owned by each of Messrs. Anthony, Daniels, DePierro and Goldberg,
respectively, and that are either presently exercisable or exercisable
within sixty (60) days.
(5) Includes 2,200 Common Shares owned by Mr. Goldberg's wife and father-in-
law, as joint tenants with right of survivorship. Mr. Goldberg holds a
power-of-attorney to vote those Common Shares, but disclaims beneficial
ownership thereof.
Based solely upon a review of any Forms 3 and 4 and amendments thereto
furnished to the Registrant under Rule 16a-3(d) during its most recent fiscal
year and any Form 5 and amendments thereto furnished to the Registrant
with respect to its most recent fiscal year, and any written representations
that no such Forms 3, 4, 5 or amendments to any of them, was required during
the most recent fiscal year, the Registrant believes that no person who at
any time during the fiscal year was a director, officer, or beneficial owner
of more than 10% of any class of equity securities of the Registrant, failed
to file on a timely basis reports required by Section 16(a) during the most
recent fiscal year or prior years.
ELECTION OF DIRECTORS
General
The number of directors to be elected at the meeting is four (4).
The Board of Directors consists of a Class I, with three directors, and a
Class II, with four directors. At the Company's annual shareholder meeting
held on January 27, 1994, all four (4) of the incumbent Class I directors,
Messrs. Marcus, Anthony, Kramer and Daniels, were elected as Class I directors
for a two (2) year term. The three incumbent Class II directors, Messrs.
vonLiebermann, Goldberg and DePierro, previously were elected for a term of
two years expiring at the Annual Meeting of Shareholders that will follow the
Company's fiscal year ending June 30, 1996. At the Meeting, Messrs. Marcus,
Anthony, Daniels and Kramer are being nominated as Class I directors, and
will be elected to two year terms, now scheduled to expire at the Annual
Meeting of Shareholders that will follow the Company's fiscal year ending
June 30, 1997. Each director elected at an annual meeting of shareholders
shall be elected for a two year term regardless of whether such director is a
Class I or Class II director. All of the current directors were elected by a
vote of shareholders at a meeting for which proxies were solicited.
There were two (2) regularly scheduled and special meetings of the
Board held during the fiscal year ended June 30, 1995. All directors of the
Company attended at least 75% of such meetings, except for Mr. DiPierro, who
attended one of the two meetings. The Company does not have audit, nominating
or compensation committees, or committees performing similar functions, on
its Board.
The four (4) nominees for election as directors at the Meeting are
the incumbent directors Messrs. Marcus, Anthony, Daniels and Kramer, each of
whom is described in the section of this Proxy Statement entitled "Management."
The proxies solicited hereby will not be voted for a greater number
of persons than the number of nominees named herein. The information contained
herein concerning the director nominees proposed by the Board has been
furnished to the Company by such nominees. The four (4) nominees receiving
the most votes at the Meeting will be elected as directors. In the event any
of the nominees should become unavailable or unwilling to accept election, it
is intended that the persons named in the proxy will vote for the election,
in the place and stead of such nominees, of a substitute who shall be
designated by the Board. The Board has no reason to believe that it will
be necessary to designate any substitute nominee.
MANAGEMENT
Set forth below is information, including a brief description of
principal occupation and employment during the past five years, with respect
to each director, nominee for director and executive officer of the Company.
Each such person is a United States citizen.
MARVIN W. MARCUS, age 71, has been Chairman of the Board of
Directors of the Company since October 1, 1986 and Vice President-Financial
Planning since May 1984. Mr. Marcus has also been a director of the Company
since 1970. From 1970 until April 1984, he served as Secretary/Treasurer and
Chief Financial Officer of the Company. He is a certified public accountant and
for more than twenty years has been a principal in the accounting firm of
Gettry, Marcus, Stern & Lehrer, CPA, P.C., formerly known as Gettry, Marcus &
Co., located in New York, New York.
DON VONLIEBERMANN, age 58, has been President of the Company since
October 1, 1986, and a director since 1975. Mr. vonLiebermann had been Vice
President, and thereafter Executive Vice President, of the Company from 1970
until he became President of the Company.
MICHAEL P. KRAMER, age 50, has served as Vice President-Finance and
Treasurer of the Company since May 1984 and as a director of the Company
since November 1984.
JOHN H. DANIELS, age 67, has been a partner in the Mineola, New
York law firm of John H. Daniels since 1958. Mr. Daniels is a director and
past president of the Nassau Lawyers Association and owns and manages
commercial real estate in New York State. Mr. Daniels is the brother-in-law of
Marvin W. Marcus.
RICHARD C. ANTHONY, age 57, is currently a private investor and
real estate consultant. He served as Executive Vice President of The
Peregrine White Company, Inc., engaged in the real estate business, from 1987
to 1993.
VINCENT K. DEPIERRO, age 58, has been an independent publisher,
sales representative since April 1995. He served as the Associate Publisher
of Parents Magazine, Division of Gruner Plus Jahr, from February 1987 through
April 1995.
IRA H. GOLDBERG, age 58, is a certified public accountant and for
more than twenty years has been a principal in the accounting firm of Gettry,
Marcus, Stern & Lehrer, CPA, P.C., formerly known as Gettry, Marcus & Co.,
located in New York, New York. Marvin W. Marcus is also a principal of such
firm.
LOUISE BATES, age 47, has been Secretary of the Company since
November 1995. She also has been Executive Assistant to the President of the
Company since 1988. Previously, from 1984 through 1988, Ms. Bates was CutCo's
Director of Administrative Services. She has held other administrative
positions at CutCo since 1981.
ELISSA ROSEMAN, age 29, was the Secretary/Controller of the Company
from January 1992 until she resigned as an officer and employee of the
Company in November 1995. Prior thereto, she was an audit senior with the
firms of Laventhol & Horwath from August 1988 to November 1990, and with
Grant Thornton from December 1990 to October 1991. She joined the Company in
November 1991.
EXECUTIVE AND DIRECTOR COMPENSATION
The following table shows information regarding compensation paid
for services rendered in all capacities to the Company and its subsidiaries
during the fiscal years ended June 30, 1993, 1994 and 1995, to the three (3)
highest paid persons who are officers or directors of the Company (being the
only such persons whose aggregate annual compensation exceeds $100,000). A
fee of $500 per meeting is paid to non-employee members of the Board for
attendance in person at Board meetings.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
____________________________________________
Securities
Name and Salary ($) Underlying Other
Principal Position Year (2)(3) Option Grants Compensation
____________________ ____ __________ _____________ ____________
<S> <C> <C> <C> <C>
Don vonLiebermann 1995 240,796 -- (1)
President 1994 246,582 6,000 (1)
1993 246,582 -- (1)
Marvin W. Marcus 1995 240,796 -- (1)
Chairman of 1994 246,582 6,000 (1)
the Board and 1993 246,582 -- (1)
Vice President-
Financial Planning
Michael P. Kramer 1995 155,756 -- (1)
Vice President- 1994 155,868 6,000 (1)
Finance 1993 145,491 -- (1)
</TABLE>
(1) The Company provided and maintained automobiles for use by Marvin W.
Marcus, Don vonLiebermann and Michael P. Kramer in connection with Company
business during fiscal years 1993, 1994 and 1995. The aggregate annual cost
to the Company for these automobiles was approximately $49,000. To the extent
these automobiles were used for other than Company business, the cost of
rental and maintenance may be considered compensation to the above-named
individuals. No value for personal use of automobiles by such individuals has
been included in the compensation table set forth above.
(2) The current annual salary for each of Messrs. Marcus, vonLiebermann and
Kramer are $147,000, $182,000, and $131,073, respectively. (See Employment
Agreements, below, for information concerning agreed-upon reductions in
salary by Messrs. Marcus, vonLiebermann and Kramer and deferrals by Messrs.
Marcus and vonLiebermann with respect to salary increases.)
(3) Does not include $32,400, $32,400, and $32,400 paid to the accounting
firm of Gettry, Marcus, Stern & Lehrer, CPA, P.C. (formerly known as Gettry,
Marcus & Co.), in which Messrs. Marcus and Goldberg are principals, for
services rendered by the firm during the fiscal years ended June 30, 1995,
1994, and 1993, respectively, in the preparation of federal, state and local
tax returns and performance of other accounting services for the
Company and its subsidiaries, inclusive of disbursements.
Employment Agreements
Each of Messrs. Marcus, vonLiebermann and Kramer has entered into
an Employment Agreement with the Company dated April 24, 1991, each of which
has been amended and extended from time to time, the most recent amendment
effective as of November 16, 1995. Each of the employment agreements is now
scheduled to expire on July 31, 1996. Those employment agreements provided for
initial annual salaries of $246,582, $246,582 and $129,162, for Messrs. Marcus,
vonLiebermann and Kramer, respectively (subject to cost of living increases
during certain years of the terms thereof).
Effective January 1, 1996, each of Messrs. Marcus, vonLiebermann
and Kramer agreed to reduce the amount of their annual salary prospectively,
by $75,000, $40,000, and $25,000, respectively. Prior to such reductions, the
adjusted annual salaries of Messrs. Marcus, vonLiebermann and Kramer under the
terms of their respective Employment Agreements were $222,000, $222,000 and
$156,073, respectively (which, in the case of Messrs. Marcus and
vonLiebermann, reflected a prior agreed-upon salary reduction).
Each of Messrs. Marcus and vonLiebermann has deferred receipt of
$55,435 of annual salary, which amount represents the aggregate of the cost
of living adjustments to which they are entitled for the period from August
1991 through October 31, 1994. Under prior understandings between the Company
and its executive officers, such deferred salary had accrued interest at a
rate equal to the prime rate offered from time to time by the Company's primary
bank lender. Such deferred salary with interest would have been payable upon
the termination of the deferring party's employment with the Company. The
Company and Messrs. Marcus and vonLiebermann agreed that, effective January 1,
1996, all interest would cease to accrue on such deferred compensation, and
each of Messrs. Marcus and vonLiebermann shall receive such deferred
compensation, together with previously accrued interest, in twelve consecutive
equal monthly installments of $5,469 each, the first of which was paid by the
Company on January 31, 1996. The aggregate of deferred compensation and
accrued interest payable to each of Messrs. Marcus and vonLiebermann prior to
payment of that first installment was $65,628.
The Employment Agreements contain customary provisions for
benefits, reimbursement of expenses, disability, non-disclosure and
non-competition (except for Mr. Kramer's agreement, which has no
non-competition provision). Under the January 1, 1996 amendments to the
Employment Agreements, each of Messrs. Marcus, VonLiebermann and Kramer agreed
to terminate, effective January 1, 1996, his rights, under his respective
Employment Agreement, to (i) terminate the Employment Agreement in the event
of a change in control of the Company (as defined in the Employment
Agreement), unless he is offered continued employment pursuant to a written
employment agreement on terms and at a compensation level at least as
favorable to him as those set forth in Employment Agreement, (ii) receive, in
the event of such a termination by reason of a change in control of the
Company, a lump sum severance payment from the Company in an amount equal to
2.99 times the employee's average annual compensation over the five taxable
years preceding the year in which the change of control occurs, and (iii)
continued medical insurance coverage under the Company's existing policies (to
the extent that the value thereof is not deemed income to the employee under
the Internal Revenue Code of 1986, as amended), for a period of three years
after termination of employment.
Stock Option Plans
The Company has a stock option plan for officers, directors and
employees of the Company and its subsidiaries that was adopted on October
16, 1987 (the |P`1987 Plan|P') and a stock option plan for officers,
directors and employees of the Company and its subsidiaries that was adopted
on November 15, 1990 (the "1990 Plan"). The Company had a stock option plan for
employees that was adopted on November 28, 1984 and amended on
January 15, 1987 and again on October 16, 1987 (the "1984 Plan"), which expired
on July 5, 1994.
Options granted under each Plan to employees may be either
incentive stock options or non-qualified stock options, at the discretion of
the Board. Options granted under each Plan to non-employee directors must be
non-qualified stock options. Non-qualified stock options are not intended to
qualify for incentive stock option plan treatment.
Each such Plan gives sole discretion to the Board to grant options to
purchase the Company's Common Shares at not less than the market value of the
shares on the date of grant. Options granted under each Plan must expire no
later than ten years (five years, if the grant is on or after January 1, 1987
and the grantee is a director or holder of 10% of the voting stock of the
Company), after the date of grant.
During fiscal 1995, no options were exercised or granted under any of
the Plans. During fiscal 1995, options to acquire 39,000 shares under the 1984
and 1987 Plans expired, including options held by Messrs. Marcus,
vonLiebermann, and Kramer, to acquire 6,000, 6,000, and 3,000 shares,
respectively, and options held by the outside directors, each to acquire 1,000
shares.
As of June 30, 1995, options to purchase 96,000 shares remained
available for grant under the 1987 Plan. As of that date, 60,000 shares were
available as the subject of options to purchase under the 1990 Plan. The 1984
Plan expired on July 5, 1994, and no grants may now be made thereunder. On
November 22, 1995, after the close of the Company's 1995 fiscal year, options
were granted to purchase 96,000 shares under the 1987 Plan and 10,000 shares
under the 1990 Plan, including options granted to Messrs. Marcus,
vonLiebermann, and Kramer, each to acquire 20,000 shares, respectively, and
options granted to the outside directors, each to acquire 2,500 shares.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See footnote (3) of the summary compensation table under "Executive
and Director Compensation," for a discussion of amounts paid by the Company
during fiscal 1995 to Gettry, Marcus, Stern & Lehrer, CPA, P.C., a New York
City accounting firm in which Messrs. Marcus and Goldberg are partners. With
respect to the fees paid by the Company for services, as described in the
preceding paragraph, Management believes that such fees are substantially
comparable to the fees that would have been paid to unaffiliated parties
providing such services to the Company.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Grant Thornton has been selected by the Board to audit
the Company's books and records for the current fiscal year.
It is expected that a representative of Grant Thornton will be
present at the Meeting and will have the opportunity to make a statement,
should he so desire, and answer appropriate questions from shareholders.
SHAREHOLDER PROPOSALS
The next Annual Meeting of Shareholders of the Company is expected
to be held in January 1997. Any shareholder who wishes to present a proposal
for inclusion in the proxy statement for action at such meeting must comply
with the rules and regulations of the Commission then in effect. Such proposal
must be received by the Secretary, CutCo Industries, Inc., 125 South Service
Road, P.O. Box 265, Jericho, New York 11753, not later than August 1, 1996.
MISCELLANEOUS
As of the date of this statement, the Board has no knowledge of any
business to be presented for consideration at the Meeting other than that
described above.
By Order of the Board of Directors
Marvin W. Marcus, Chairman
Don vonLiebermann, President
Dated: Jericho, New York
April 11, 1996
