<PAGE>
INTERNATIONAL CUTLERY, LTD.
127 WEST 25TH STREET
NEW YORK, NEW YORK 10011
___________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 4, 1996
TO THE STOCKHOLDERS OF INTERNATIONAL CUTLERY, LTD.:
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Meeting") of
Stockholders of International Cutlery, Ltd. (the "Company") will be held at
the Company's principal executive offices located at 127 West 25th Street New
York, New York on December 4, 1996, at 10:00 A.M., local time for the
following purposes:
1. To elect the Board of Directors of International Cutlery, Ltd. for the
ensuing year;
2. To ratify the appointment of Rothstein, Kass & Company, P.C. as the
Company's independent certified public accountants for the ensuing
year; and
3. To transact such other business as may properly come before the
Meeting and any continuations and adjournments thereof.
Stockholders of record at the close of business on October 28, 1996 are entitled
to notice of and to vote at the Meeting.
In order to ensure a quorum, it is important that stockholders representing a
majority of the total number of shares issued and outstanding and entitled to
vote, be present in person or represented by their proxies. Therefore, whether
you expect to attend the Meeting in person or not, please sign, fill out, date
and return the enclosed proxy in the self-addressed, postage-paid envelope also
enclosed. If you attend the Meeting and prefer to vote in person, you can
revoke your proxy.
Dated: _____, 1996
By Order of the Board of Directors
Joel J. Silver
Chairman, and Chief
Executive Officer
<PAGE>
INTERNATIONAL CUTLERY, LID.
127 WEST 25TH STREET
NEW YORK, NEW YORK 10011
___________________________
PROXY STATEMENT
___________________________
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AT 10:00 A.M., DECEMBER 4, 1996
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors of International Cutlery, Ltd. (herein
called the "Company") for use at the Annual Meeting (the "Meeting") of
Stockholders of the Company to be held at the Company's principal executive
offices at 127 West 25th Street, New York, New York, at 10:00 A.M., on
December 4, 1996, and at any continuation and adjournment thereof. Anyone
giving a proxy may revoke it at any time before it is exercised by giving the
Chairman of the Board of Directors of the Company written notice of the
revocation, by submitting a proxy bearing a later date or by attending the
Meeting and voting. This statement, the accompanying Notice of Meeting and
form of proxy have been first sent to the stockholders on or about November
4, 1996.
All properly executed, unrevoked proxies on the enclosed form, which
are received in time will be voted in accordance with the stockholder's
directions, and unless contrary directions are given, will be voted for the
election of directors of the nominees described below.
OWNERSHIP OF SECURITIES
Only stockholders of record at the close of business on October 28,
1996, the date fixed by the Board of Directors in accordance with the Company's
By-Laws, are entitled to vote at the meeting. As of October 28, 1996, the
record date fixed for the determination of stockholders entitled to vote at the
Meeting, there were issued and outstanding 3,939,248 shares of the Company's
common stock.
Each outstanding share of common stock is entitled to one vote on
all matters properly coming before the meeting. A majority of the shares of
the outstanding common stock is necessary to constitute a quorum for the
meeting.
The following table sets forth certain information as of
October 28, 1996, with respect to each beneficial owner of five percent (5%)
or more of the outstanding shares of common stock of the Company, each
officer and director of the Company and all officers and directors as a
group. The table
<PAGE>
does not include options or SARs that have not yet vested or are not exercisable
within 60 days of the date hereof. Unless otherwise indicated, the address of
each such person or entity is 127 West 25th Street, New York, New York 10011.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
TITLE OF CLASS NAME AND ADDRESS OWNED(1) PERCENT(2)
- -------------- ---------------- ------------ ----------
<S> <C> <C> <C>
Common Stock Joel J. Silver(1) 676,692 17.1%
$.01 Par Value Esther S. Silver 225,564 5.7%
Caryn N. Silver 225,564 5.7%
Lawrence N. Silver 225,564 5.7%
All officers and
directors as a group
(7 persons) 676,692 17.1%
</TABLE>
(1) Joel J. Silver, the Company's President, does not directly own any
shares of Common Stock. However, Mr. Silver has entered into
agreements with each of Esther S. Silver, Caryn N. Silver and Lawrence
N. Silver the other above individuals (all members of his immediate
family) which give Mr. Silver the right to vote such shares on any
matter that may be put before the stockholders for consideration and
therefore is deemed to be the beneficial holder of the 676,692 shares
of Common Stock owned directly by them. Does not include up to
450,000 shares of Common Stock which may be issuable upon the exercise
of the Performance Options.
(2) Does not include any shares of Common Stock issuable upon the exercise
any of the Company's outstanding Warrants.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The By-Laws of the Company provide that the authorized number of
directors shall be as set by the Board of Directors but shall not be less than
three, unless all of the outstanding shares are owned beneficially and of record
by less than three stockholders, in which event the number of directors shall
not be less than the number of stockholders permitted by statute. The
authorized number is presently five. The directors hold office until the next
annual meeting of stockholders and until their successors have been elected and
qualified. There are no agreements with respect to the election of directors
except that the Harriman Group, Inc., underwriter of the Company's initial
public offering, has the right to nominate a director and the Company is
obligated to use its best efforts to elect such individual. As of the date of
this Proxy Statement, Harriman has not designated a nominee to serve as a
director. The Company has not to date paid directors fees for service on the
Board of Directors or any committee thereof.
Five Directors, constituting the entire Board of Directors of the
Company, are to be elected at the meeting to serve until the next Annual Meeting
of Stockholders and until their successors have been elected and qualified.
Unless such authority is withheld, proxies will be voted for election of the
five persons named below, four of whom are now serving as Directors, and each of
whom has been designated as a nominee.
STOCKHOLDER VOTE REQUIRED
The election of the directors will require the affirmative vote of the
majority of the shares present in person or represented by proxy at the Annual
Meeting of Stockholders and entitled to vote on the election of directors.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C> <C>
Joel J. Silver 60 Chairman of the Board,
President, Chief
Executive Officer and
Chief Financial Officer
Lawrence N. Silver 36 Treasurer, Secretary and
Vice President, of
Operations and
Merchandising
Martin S. Begun 63 Director
Caryn N. Silver 32 Executive Vice President,
and Director
Norman Wolf 66 Director
</TABLE>
3
<PAGE>
JOEL J. SILVER has been President, Chief Executive Officer and a Director since
the Company's inception. Mr. Silver co-founded CW Acquisitions, Inc. ("CW
Acquisitions") in 1990 and served from its inception as a director and until
1993, as senior executive vice president. In June 1993, Mr. Silver was
appointed CW Acquisitions' Co-Chairman, President and Chief Executive Officer.
Mr. Silver was also a Director, President, Treasurer and Secretary of Hoffritz
Holding Company, Inc. and Edwin Jay Inc., a subsidiary of Hoffritz for Cutlery,
Inc. ("Hoffritz"), which positions he held for approximately 19 years. In
August 1994, certain creditors of CW Acquisitions and the above three Hoffritz
entities filed involuntary petitions in the Court pursuant to Chapter 11 of the
U.S. Bankruptcy Code, which petitions on September 28, 1994, placed the
companies into Chapter 11 reorganization proceedings. The bankruptcy proceeding
was dismissed on March 22, 1996. From 1970 to 1972, Mr. Silver served as First
Deputy Commissioner in the New York City Housing Development Administration
Department of Rent and Housing Maintenance. From 1960 to 1970 and 1972 to 1975,
Mr. Silver was engaged in private legal practice. Mr. Silver is also a director
of two public companies, Claire's Stores, Inc., a retail seller of costume
jewelry with over 1,400 stores and Acorn Venture Capital Corporation, a venture
capital company which invests in a variety of businesses. Mr. Silver received a
B.S. in accounting from New York University and a J.D. from New York Law School
in 1960.
LAWRENCE N. SILVER has served as the Company's Treasurer, Secretary and Vice
President of Operations and Merchandising since its inception. Mr. Silver was
initially employed by Hoffritz For Cutlery, Inc. as an Internal Auditor. He
then became a Sales Audit Manager, an Assistant District Manager, a District
Manager, a Manager of Expense Control and finally the Assistant Director of
Operations. Mr. Silver was employed in such capacities from 1989 until its
creditors placed the company into Chapter 11 reorganization proceedings in
August 1994. From 1987 to 1989, he was employed by Brown Brothers Harriman &
Company Securities Division as a foreign clerk and from 1985 to 1987, he was
employed by the Bank of New York as a journal clerk. Mr. Silver received a
B.B.A. in Management from Adelphi University.
MARTIN S. BEGUN was elected a Director of the Company in November 1994. Since
1963, Mr. Begun has been employed in a variety of positions by New York
University Medical Center and School of Medicine. Since 1979, he has been the
Vice President of External Affairs and Associate Dean of New York University
Medical Cener and School of Medicine. Mr. Begun has been a member of the
Battery Park City Authority since 1991. Since 1986 he has been a Director of
Lechter's, Inc., a public company engaged in the special retailing of
housewares. Mr. Begun has a long history of community service serving on a
variety of advisory panels and is the author of numerous academic articles. Mr.
Begun received his B.A. from the University of Wisconsin in 1953 and received
his M.A. from Columbia University in 1955.
4
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CARYN N. SILVER was elected a Director of the Company in November 1994 and
became Executive Vice President of the Company as of May 1, 1996. Since 1989,
Ms. Silver had been employed by the jewelry manufacturer Andin International and
served as its Director of Sales. In 1988, Ms. Silver worked as a merchandise
coordinator for Hoffritz For Cutlery, Inc. Ms. Silver received her B.A. in
marketing from George Washington University in 1986 and received her MBA in
Marketing and International Business from the New York University Leonard N.
Stern School of Business in 1988.
NORMAN WOLF was elected a Director of the Company in November 1994. Since 1990,
Mr. Wolf has been the president of Carole Wren, Inc., a clothing manufacturer.
Mr. Wolf has been in the business of apparel manufacturing for approximately 50
years.
Each officer of the Company serves at the discretion of the Board of
Directors. Joel J. Silver is the father of Lawrence N. Silver and Caryn N.
Silver. Otherwise, there are no family relationships among any other directors
or officers of the Company.
Joel J. Silver, Lawrence N. Silver, Martin Begun, Norman Wolf and
Caryn N. Silver may be deemed "Parents" and/or "Founders" of the Company as such
terms are defined under the federal securities laws.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board has three Committees, the Audit Committee, the Stock
Option Committee and the Compensation Committee. Martin Begun and Norman
Wolf, the Company's two independent directors, serve on each of such
committees. The Audit Committee is responsible for reviewing with the
Company's independent certified public accountants the scope and results of
their audits and reviewing with the independent certified public accountants
and management, the Company's accounting and reporting principles, policies
and practices, as well as the Company's accounting, financial and operating
controls and staff. The Stock Option Committee's responsibilities include
discussing strategies in connection with the issuance of options to
directors, employees and consultants. The Compensation Committee is
responsible for establishing and reviewing the appropriate compensation of
directors and officers of the Company and reviewing employee compensation
plans. The Company does not currently have a Nominating Committee.
The Company's Board of Directors did not meet during the fiscal year
ended April 27, 1996. There were no formal meetings held by either the Audit
Committee, the Stock Option Committee or the Compensation Committee during
the fiscal year ended April 27, 1996.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all cash compensation for services
rendered in all capacities to the Company, for the fiscal year ended April 27,
1996 (referred to as "1996" in this table) and the period ended April 29, 1995
(referred to as "1995" in this table) paid to the Company's Chief Executive
Officer, the four other most highly compensated executive officers (the "Named
Executive Officers") at the end of the above fiscal years whose total
compensation exceeded $100,000 per annum, and up to two persons whose
compensation exceeded $100,000 during the above fiscal years, although they were
not executive officers at the end of such years.
5
<PAGE>
<TABLE>
<CAPTION>
NAME AND YEAR/ RESTRICTED
PRINCIPAL PERIOD ANNUAL STOCK OPTIONS/ OTHER
POSITION ENDED COMPENSATION BONUS AWARDS SARs COMPENSATION
- -------- ------ ------------ ----- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Joel Silver President, 1996 $300,000 -0- -0- -0- -0-
Chief Executive Officer
1995 $100,000 -0- -0- -0- -0-
</TABLE>
EMPLOYMENT AGREEMENTS
On December 11, 1995, the Company entered into a two-year employment
agreement with Joel J. Silver, President, Chief Executive Officer and Chief
Financial Officer. Pursuant to the agreement, Mr. Silver's annual salary is
$300,000 per annum. As a condition of the Company's December 1995 Initial Public
Offering, for a period of twenty-four (24) months, commencing on December 6,
1995, the Company has covenanted that it will not increase or authorize an
increase in the compensation of its two most highly paid officers without the
consent of the Harriman Group, Inc., the underwriter of such offering.
On March 28,1996 the Company entered into a three year employment
agreement with Caryn Silver which became effective on May 1, 1996. Pursuant to
the agreement, Ms. Silver's annual salary will be $110,000. Ms. Silver is
eligible to receive a bonus of up to $25,000 based on pretax profitability of
the Company.
In July 1996, the Company entered into a three year employment
agreement with Lawrence Silver. Pursuant to the agreement, Mr. Silver's annual
salary is $80,000. Mr. Silver is eligible to receive raises at the discretion
of the Board.
PERFORMANCE OPTIONS
In the event that the Company opens six new locations, Mr. Silver may
be granted options to purchase 112,500 shares of Common Stock at $.01 per share
for a period of five years. For each additional six locations opened, Mr.
Silver will receive identical options to purchase up to 112,500 shares, up to an
aggregate of 450,000 options (the "Performance Options"). The grant of
Performance Options, if ever, will result in compensation expense to the Company
to the extent that the fair market value of the Common Stock at the date of
grant exceeds the exercise price of the Performance Options.
As of the date of this Proxy Statement, Joel Silver has earned the
option to purchase 112,500 shares because the Company opened six new locations.
In the event the Company opens four additional locations, bringing the total new
locations opened to twelve, Mr. Silver will have the option to purchase an
additional 112,500 shares. Mr. Silver has not, as of the date of this Proxy
Statement, requested the Board of Directors to issue him the option to purchase
any shares.
INTERESTS OF MANAGEMENT IN CERTAIN TRANSACTIONS
On August 22 and August 24, 1994, respectively, certain creditors of CW
Acquisitions and Hoffritz filed involuntary petitions in the U.S. Bankruptcy
Court for the Southern District of New York (the "Court") pursuant to Chapter 11
of the U.S. Bankruptcy Code, which petitions on September 28, 1994 placed CW
6
<PAGE>
Acquisitions and Hoffritz into Chapter 11 reorganization proceedings. PNC Bank,
Kentucky, Inc. ("PNC"), a secured creditor of CW Acquisitions, holds security
interests in all the assets of CW Acquisitions and agreed to allow CW
Acquisitions to sell certain assets to the Company, subject to the lien which
PNC retains on certain of the Company's inventory acquired from CW Acquisitions,
which inventory had a retail value of approximately $426,000 as of September 30,
1995. Bankruptcy proceedings were dismissed on March 22, 1996 and there are no
plans to reorganize these companies. Joel J. Silver, the Company's President
and Chief Executive Officer, was the Chief Executive Officer, President and a
principal stockholder of CW Acquisitions and a Director and Senior Executive
Vice President of Hoffritz.
The assets purchased from CW Acquisitions consist of (i) approximately $550,000
worth of inventory (at retail price); (ii) CW Acquisitions' furniture and
fixtures; and (iii) the following trademarks: "Cutlery World", "Cutlery World"
with design, "Sharp Talk", "Shaver Sharp" and "Shavers World". On March 16,
1995, the Court approved the sale of such assets by CW Acquisitions to the
Company. The purchase price for the assets is an amount equal to the greater
of: (i) 1/3 of the retail selling price of the inventory, which shall be due and
payable to PNC every two weeks as such inventory is sold; or (ii) $100,000. As
of July 15, 1996, the Company has paid to PNC approximately $29,000. Joel J.
Silver has personally guaranteed payment to PNC of $100,000.
In addition, Hoffritz assigned to the Company the leases to four Hoffritz
stores. Hoffritz secured the approval of the Court for the assignments. The
purchase price for this transaction consisted of (i) $2,500 per store; (ii) the
agreement by the Company to pay certain unpaid rents aggregating $147,851, which
has been paid; and (iii) the assumption of the future rents for the stores. In
connection with the Hoffritz transaction, the Company also negotiated directly
with the landlord to operate a fifth Hoffritz store located in Grand Central
Station, New York City, which it was forced to vacate in March 1996 due to
renovations in Grand Central Station.
In December 1994, the Company borrowed $100,000 from the Company's President,
which loan was repaid in March 1995 and $150,000 from Norman Wolf, a Director of
the Company. The note to Norman Wolf bore interest at 12% and was repaid at the
closing of the Initial Public Offering.
In October and November 1995, the Company borrowed an aggregate of $125,000 from
Joel Pashcow, Alan Adler and Bruce Adler, three former principal stockholders of
the Company. The notes representing such loans bore interest at 12% and were
repaid at the closing of the Initial Public Offering. The notes were secured by
7
<PAGE>
a lien, second in priority, on all of the Company's inventory, which lien has
been released.
The Company's lease at the Smithhaven Mall location expired September 1996, and
the Company vacated the location on September 3, 1996.
The Company rented 6,000 square feet of warehouse space from 24th Street
Associates, a New York general partnership which is owned 50% by Joel J. Silver,
the Company's president and 50% by his brother J. Leonard Silver. The warehouse
was rented at $10.00 per foot per year. The Company vacated such warehouse
space in December 1995, and currently rents 7,500 square feet of warehouse space
at the rate of $57,000 per year from a non-affiliated party.
The Company has adopted a board resolution stating that all future transactions,
including loans, between the Company and its officers, directors, principal
stockholders, and their affiliates must be approved by a majority of the Board
of Directors, including a majority of the independent and disinterested outside
directors on the Board of Directors, and will be on terms no less favorable to
the Company than could be obtained from unaffiliated third parties.
SECTION 16(a) REPORTING
Under the securities laws of the United States, the Company's directors,
its executive (and certain other) officers, and any persons holding ten percent
or more of the Company's Common Stock must report on their ownership of the
Company's Common Stock and any changes in that ownership to the Securities and
Exchange Commission and to the National Association of Securities Dealers,
Inc.'s Automated Quotation System. Specific due dates for these reports have
been established. During the year ended April 27, 1996, the Company believes
all reports for all transactions were filed on a timely basis.
8
<PAGE>
PROPOSAL 2
RATIFICATION OF ROTHSTEIN, KASS & COMPANY, P.C. AS THE
COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.
The Board of Directors has unanimously approved and unanimously
recommends that the stockholders approve the appointment of Rothstein, Kass &
Company, P.C. as the Company's independent certified public accountants for the
ensuing year. Unless a stockholder signifies otherwise, the persons named in
the proxy will so vote. A member of Rothstein, Kass & Company, P.C. will be
available to answer questions and will have the opportunity to make a statement
if (s)he so desires at the Annual Meeting of Stockholders.
STOCKHOLDER VOTE REQUIRED
Ratification of the appointment of Rothstein, Kass & Company as
independent public accountants will require the affirmative vote of the majority
of the shares present in person or represented by proxy at the Annual Meeting of
Stockholders.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
referred to in the Notice of Meeting which will be presented for consideration
at the meeting. However, it is possible that certain proposals may be raised at
the meeting by one or more stockholders. In such case, or if any other matter
should properly come before the meeting, it is the intention of the person named
in the accompanying proxy to vote such proxy in accordance with his or her best
judgment.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company.
Solicitations may be made by mail, personal interview, telephone, and telegram
by directors, officers and employees of the Company. The Company will reimburse
banks, brokerage firms, other custodians, nominees and fiduciaries for
reasonable expenses incurred in sending proxy material to beneficial owners of
the Company's capital stock.
STOCKHOLDER PROPOSALS
In order to be included in the proxy materials for the Company's next
Annual Meeting of Stockholders, stockholder proposals must be received by the
Company on or before July 31, 1997.
ANNUAL AND QUARTERLY REPORTS TO THE SECURITIES AND EXCHANGE
COMMISSION
A copy of the Company's Annual Report on Form 10-K-SB A-1 for the year
ended April 27, 1996 as filed with the Securities and Exchange Commission
(without exhibits) is attached hereto. Copies of the Company's Quarterly Report
on Form 10-QSB for the quarter ended July 27, 1996 as filed with the Securities
9
<PAGE>
and Exchange Commission (without exhibits) are available to stockholders free of
charge by writing to International Cutlery, Ltd., 127 West 25th Street, New
York, New York 10011, Attention: Secretary.
By Order of the Board of
Directors of
International Cutlery, Ltd.
Joel J. Silver
Chairman, President and
Chief Executive Officer
(Date) ________, 1996
10
<PAGE>
GENERAL PROXY--ANNUAL MEETING OF STOCKHOLDERS OF INTERNATIONAL CUTLERY, LTD.
The undersigned hereby appoints Joel J. Silver, with full power of
substitution, proxy to vote all of the shares of Common Stock of the undersigned
and with all of the powers the undersigned would possess if personally present
at the Annual Meeting of Stockholders of International Cutlery, Ltd., to be held
at International Cutlery, Ltd., 127 West 25th Street, New York, New York on
December 4, 1996 at 10:00 a.m. and at all continuations and adjournments
thereof, upon the matters specified below, all as more fully described in the
Proxy Statement dated , 1996 and with the discretionary powers upon
all other matters which come before the meeting or any continuation or
adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF INTERNATIONAL CUTLERY, LTD.'S BOARD OF
DIRECTORS.
1. To elect directors to hold office for the ensuing year.
/ / FOR ALL NOMINEES / / WITHHELD FOR ALL NOMINEES
Instruction: To withhold authority to vote for any individual, write that
nominee's name in the space provided below:
2. To ratify the appointment of Rothstein, Kass & Co. as the Company's
independent certified public accountants.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, upon such other matter or matters that may properly come
before the meeting, or any continuations or adjournments thereof.
Every properly signed proxy will be voted in accordance with the
specifications made thereon. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 and 2.
(Continued and to be signed on the other side)
<PAGE>
(Continued from other side)
The undersigned hereby acknowledges receipt of a copy of the accompanying
Notice of Meeting and Proxy Statement and hereby revokes any proxy or proxies
heretofore given.
Please mark, date, sign and mail your proxy promptly in the envelope
provided.
Dated ---------------- , 1996
---------------------------------
(Print name of Stockholder)
---------------------------------
(Print name of Stockholder)
---------------------------------
Signature
---------------------------------
Signature
Number of Shares
-----------------------------------------------------------------------
Note: Please sign exactly as name
appears in the Company's
records. Joint owners should
each sign. When signing as
attorney, executor or
trustee, please give title
as such.
