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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
INTERNATIONAL CUTLERY, LTD.
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(Name of Registrant as specified in its charter)
N/A
---
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No Fee required.
[ ] Fee computer on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
_________________________
(2) Aggregate number of securities to which transaction applies:
__________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: ______________
(4) Proposed maximum aggregate value of transaction: ______________
(5) Total fee paid: _____________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the
date of its filing.
(1) Amount Previously Paid: ______________________________
(2) Form, Schedule or Registration Statement No.:_______________
(3) Filing Party:__________________________________________
Date Filed: _________________________________________________
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INTERNATIONAL CUTLERY, LTD.
127 West 25th Street
New York, New York 10011
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 6, 1997.
TO THE STOCKHOLDERS OF INTERNATIONAL CUTLERY, LTD.:
NOTICE IS HEREBY GIVEN that a Special 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 August 6, 1997 at 10:00 A.M., local time for the following purposes:
To approve a one-for-twenty reverse split of the Company's Common Stock;
To approve a proposed private placement of the Company's Common Stock; and
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 July 23, 1997 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: July 10, 1997
By Order of the Board of Directors
Joel J. Silver
Chairman, President and Chief Executive Officer
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INTERNATIONAL CUTLERY, LTD.
127 West 25th Street
New York, New York 10011
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD AT 10:00 A.M., AUGUST 6, 1997
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 Special 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 August 6, 1997, 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 July 25, 1997.
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 in favor of approving
the proposals described below.
Only stockholders of record at the close of business on July 23, 1997, 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 July 23, 1997, the record dated 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 July 3, 1997, 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 does not include options
or SARs that have not yet vested or 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.
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SHARES
NAME AND BENEFICIALLY
TITLE OF CLASS ADDRESS OWNED(1) PERCENT(2)
Common Stock $.01 Joel J. Silver(1) 1,014,192 23.7%
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 1,014,192 23.7%
(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. Includes 337,500 shares of Common Stock issuable to Mr. Silver upon
exercise of Performance Options granted to Mr. Silver. Does not include up
to 112,500 shares of Common Stock, issuable upon the exercise of the
Performance Options which may be granted in the future.
(2) Does not include any shares of Common Stock issuable upon the exercise of
any of the Company's outstanding Warrants.
PROPOSAL 1
APPROVAL OF ONE-FOR-TWENTY REVERSE STOCK SPLIT
The Board of Directors has approved, subject to stockholder approval, a proposal
for a one-for-twenty reverse split (the "Reverse Split") of the Company's Common
Stock. As a result of the Reverse Split, each share of Common Stock outstanding
at the effective time of the Reverse Split, will, without any action on the part
of the holder thereof, become one-twentieth share of Common Stock. For purposes
of this proposal, the Common Stock, as presently constituted, is referred to as
the Common Stock or the "Old Common Stock" and the Common Stock resulting from
the Reverse Split is referred to as the "New Common Stock".
The Reverse Split will become effective upon the filing with the Secretary of
State of an amendment to the Company's certificate of incorporation which states
that, upon the filing of the Certificate of Amendment, each share of Common
Stock then issued and outstanding would automatically become and be converted
into one-twentieth share of Common Stock.
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Principal Effects of the Reverse Split
Based upon the 3,939,248 shares of Common Stock outstanding on the Record Date,
the Reverse Split would decrease the outstanding shares of Old Common Stock by
95%, and, upon the effectiveness of the Reverse Split, approximately 196,962
shares of New Common Stock would be outstanding.
As a result of the Reverse Split, each outstanding option or warrant will
automatically become an option or warrant, as the case may be, to purchase
one-twentieth of the number of shares of Old Common Stock subject to the option
or warrant immediately prior to the Reverse Split at an exercise price which is
twenty times the exercise price of the option or warrant immediately prior to
the Reverse Split. For example, a warrant to purchase 100,000 shares of Old
Common Stock at $1.00 per share, will automatically become a warrant to purchase
5,000 shares of New Common Stock at $20.00 per share.
The Company will obtain new CUSIP numbers for the New Common Stock and publicly
traded warrants effective at the time of the Reverse Split. Following the
effectiveness of the Reverse Split, the Company will provide each record holder
of Old Common Stock and publicly traded warrants with information to enable such
holder to obtain new stock and warrant certificates.
The Company is authorized to issue up to 11,000,000 shares of capital stock, of
which 10,000,000 shares are Common Stock, par value $.01 per share, and
1,000,000 shares are Preferred Stock, par value $.01 per share. The Reverse
Split will not affect the number of authorized shares of Preferred Stock or
Common Stock or the par value of the Preferred Stock or Common Stock.
Subject to the provisions for elimination of fractional shares, as described
below, consummation of the Reverse Split will not result in a change in the
relative equity position or voting power of the holders of Old Common Stock.
Assuming the Reverse Split is approved and implemented, the Certificate of
Amendment amending the certificate of incorporation will be filed with the
Secretary of Sate of Delaware as promptly as practicable thereafter. The
Reverse Split would become effective as of the date of such filing (the
"Effective Date").
Purposes of the Reverse Stock Split
The Reverse Split would decrease the number of shares of Old Common Stock
outstanding and presumably increase the per share market price for the New
Common Stock at or above $1.00 per share. On July 7, 1997, the bid price of the
Old Common Stock was $.09 per share. Theoretically, the number of shares
outstanding should not, by itself, affect the marketability of the stock, the
type of investor who acquires it, or the Company's reputation in the financial
community, but in practice this is not necessarily the case, as many investors
look upon a stock
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trading in the range of $1.00 per share as unduly speculative in nature and, as
a matter of policy, avoid investment in such stocks.
The Common Stock is currently listed on The Nasdaq SmallCap Market. One of the
requirements for continued listing on the Nasdaq is the maintenance of stock
price level of at least $1.00 per share. The Company received notice from the
Nasdaq that the Company's Common Stock and warrants are to be delisted on June
25, 1997. Delisting has been stayed pending the outcome of a hearing before a
Nasdaq panel to review the decision to delist the Common Stock and warrants.
Unless the price level of the Common Stock equals or exceeds $1.00, the hearing
panel will likely affirm the decision to delist the Common Stock. As a result,
in the event that the Reverse Split is not approved, the Common Stock may cease
to be listed on The Nasdaq SmallCap Market, in which event the Common Stock
would be traded on the NASD Electronic Bulletin Board.
Even if the Reverse Split is approved, there is no assurance that the Common
Stock will continue to be listed on the Nasdaq SmallCap Market. Moreover,
regardless of whether a stock is listed on The Nasdaq SmallCap Market, many
leading brokerage firms are reluctant to recommend lower-priced securities to
their clients and a variety of brokerage house policies and practices currently
tend to discourage individual brokers within firms from dealing in lower-priced
stocks. Some of those policies and practices pertain to the payment of brokers'
commissions and to time consuming procedures that make the handling of lower
priced stocks unattractive to brokers from an economic standpoint. In addition,
the structure of trading commissions also tends to have an adverse impact upon
holders of lower priced stocks because the brokerage commission on a sale of a
lower priced stock generally represents a higher percentage of the sales price
than the commission on a relatively higher priced issue.
The Board of Directors believes that the Reverse Split is in the best interest
of the Company and its stockholders. If the Reverse Split is not completed, the
Common Stock will likely be delisted from trading on The Nasdaq SmallCap Market.
The Company requires additional capital for its operations and does not believe
that it will be able to raise the necessary capital unless the price of the
Common Stock is higher than the current Common Stock price levels. However, no
assurance can be given that the Reverse Split will result in any increase in the
Common Stock price or that the Company will be able to complete any financing
following the Reverse Split.
Exchange of Certificate and Elimination of Fractional Shares Interests
On the Effective Date, each twenty shares of Old Common Stock will automatically
be combined and changed into one share of New Common Stock. No additional
action on the part of the Company or any stockholder will be required in order
to effect the Reverse Split. Stockholders will be requested to exchange their
certificates representing shares of Common Stock held prior to the Reverse Split
for new certificates representing shares of Old Common Stock. Stockholders will
be furnished the necessary materials and instructions to effect such exchange
promptly following the Effective Date. Certificates will not be transferred on
the books and
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records of the Company but will be returned to the tendering person for
exchange. Stockholders should not submit any certificates until requested to do
so. In the event any certificate representing shares of Old Common Stock is not
presented for exchange upon request by the Company, and dividends that may be
declared after the Effective Date of the Reverse Split with respect to the
Common Stock represented by such certificate will be withheld by the Company
until such certificate has been properly presented for exchange, at which time
all such withheld dividends which have not yet been paid to a public official
pursuant to relevant abandoned property laws will be paid to the holder thereof
or his designee, without interest.
No fractional shares of New Common Stock will be issued to any stockholder.
Accordingly, stockholders of record who would otherwise be entitled to receive
fractional shares of New Common Stock, will, upon surrender of their
certificates representing shares of Old Common Stock, receive a cash payment in
lieu thereof equal to the fair value of such fractional share. The fair value
of the Common Stock will be based on the closing price of the Common Stock on
The Nasdaq Small Cap Market on the Effective Date or, if there are no reported
sales on such date, the average of the last reported high bid and low asked
price on such day shall be used.
Federal Income Tax Consequences of the Reverse Split
The combination of each twenty shares of the Old Common Stock into one share of
New Common Stock should be a tax-free transaction under the Internal Revenue
Code of 1986, as amended, and the holding period and tax basis of the Old Common
Stock will be transferred to the New Common Stock received in exchange thereof.
Generally, cash received in lieu of fractional shares will be treated as a sale
of the fractional shares (although in unusual circumstances such cash might
possibly be deemed a dividend), and stockholders will recognize gain or loss
based upon the difference between the amount of cash received and the basis in
the surrendered fractional share. This discussion should not be considered as
tax or investment advice, and the tax consequences of the Reverse Split may not
be the same for all stockholders. Stockholders should consult their own tax
advisors regarding their individual federal, state, local and foreign tax
consequences.
Vote Required
The amendment to the certificate of incorporation requires the approval of the
holders of a majority of the outstanding shares of Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL I.
PROPOSAL 2
ISSUANCE OF COMMON STOCK BELOW BOOK AND MARKET VALUE
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Management desires to raise additional capital primarily to open additional
stores and kiosks and upgrade existing stores and kiosks. The Board of
Directors believes that it is in the best interest of the Company and the
stockholders that the Company raise such additional capital through a private
placement of the Company's Common Stock following the Reverse Split provided
stockholder approval for the Reverse Split is obtained. Management is presently
negotiating with a prospective placement agent to raise funds by offering up to
4,000,000 shares of the Company's Common Stock in a private placement (the
"Private Placement"). Although definitive terms for the Private Placement have
not yet been established, it is likely, however, that the offering price of the
Common Stock will be below the book and market values of the Company's Common
Stock.
Reason for Stockholder Approval
Although under Delaware law and the Company's By-Laws, stockholder approval is
not normally required, The Nasdaq Stock Market ("Nasdaq") has proposed amending
the standards for continued listing of securities on The Nasdaq SmallCap Market
("SmallCap Market"). The Nasdaq amendments would require approval of the
Securities and Exchange Commission ("Commission") prior to enactment of the
amendments. The Nasdaq amendments will require, among other obligations,
companies with securities listed on The Nasdaq SmallCap Market to comply with
certain corporate governance procedures. One such proposal provides, in
general, that each SmallCap Market issuer shall obtain stockholder approval
prior to the sale or issuance of common stock (or securities convertible into or
exercisable for common stock) at a price less than the greater of book or market
value which equals or exceeds 20% of the common stock before the issuance.
The Board of Directors does not know when and if the Commission will approve the
Nasdaq's amendments or the effective date of the amendments if approved by the
Commission. The Board of Directors, however, believes that it is in the best
interests of the Company and the stockholders to obtain stockholder approval of
the Private Placement in the event that prior to completion of the Private
Placement, the Commission approves the Nasdaq's amendments. Absent approval of
the Nasdaq's amendments by the Commission, or if the Commission approves the
amendments and the Nasdaq delays implementing the amendments, the Board may, and
is permitted to, proceed with the Private Placement with or without stockholder
approval.
Principal Effects of the Issuance of Common Stock Below Book and Market Value
If this Proposal is approved by the Company's stockholders, the additional
shares of Common Stock would be issuable by action of the Board of Directors
without further authorization from the stockholders and for such consideration
as the Board determines, including at a price per share below the market price
of the Common Stock. The issuance of additional shares of Common Stock at a
price below market price may, among other things, have a dilutive effect on
earnings per share and on the equity and voting power of existing holders of
Common Stock, and may result in a decline in the market price of the Common
Stock. Holders of Common Stock
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have no preemptive rights to acquire or subscribe to any of the Common Stock
proposed to be sold in the Private Placement.
The plan to issue additional shares of Common Stock below market price has not
been proposed for an anti-takeover-related purpose and the Board and management
have no knowledge of any current efforts to obtain control of the Company or to
effect large accumulations of the Company's stock. Nevertheless, the issuance
of additional shares by the Company may potentially have an anti-takeover effect
by making it more difficult to obtain stockholder approval of various actions,
such as a merger or removal of management.
Vote Required
The authorization of the issuance of the Company's Common Stock at a price below
the book and market values requires the approval of a majority of the total
votes cast on the proposal in person or by proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
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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. Solicitation 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.
ANNUAL AND QUARTERLY REPORTS TO THE SECURITIES AND EXCHANGE COMMISSION
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 and the Company's
Quarterly Report on Form 10-QSB for the quarter ended January 25, 1997 as filed
with the Securities and Exchange Commission incorporated herein by reference 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
July 10, 1997
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GENERAL PROXY - SPECIAL 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 posses if personally present at the Special
Meeting of Stockholders of International Cutlery, Ltd., to be held at
International Cutlery, Ltd., 127 West 25th Street, New York, New York on August
6, 1997 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 July 10, 1997 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.
To approve a one-for-twenty reverse split of the Company's Common Stock.
/ / FOR / / AGAINST / / ABSTAIN
To approve a proposed offering of the Company's Common Stock.
/ / FOR / / AGAINST / / ABSTAIN
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)
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(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: ________, 1997
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(Print name of Stockholder)
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(Print name of Stockholder)
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Signature
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Signature
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Number of Shares
Note: Please sign exactly as name appears in the Company's records. Joint
owners should each sign. When signing as an attorney, executor or trustee,
please give title as such.
