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Filed Pursuant to Rule 424(b)(1)
Registration File No.: 33-54211
PROSPECTUS
WAXMAN INDUSTRIES, INC.
2,950,000 WARRANTS TO PURCHASE SHARES OF COMMON STOCK
2,950,000 SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE
This Prospectus relates to the offer and sale of 2,950,000 warrants
("Warrants") to purchase shares of common stock, par value $.01 per share (the
"Common Stock"), of Waxman Industries, Inc. (the "Company") and the 2,950,000
shares of Common Stock, subject to adjustment, issuable upon exercise of the
Warrants. The Warrants and shares of Common Stock referenced above offered
hereby are sometimes collectively referred to herein as the "Securities." The
Securities will be sold by the holders thereof (the "Selling Security
Holders"). See "Selling Security Holders."
On May 20, 1994, the Company issued Series A 12 3/4% Senior Secured
Deferred Coupon Notes due 2004 having an initial accreted value of $50,000,000
(the "Notes") together with the Warrants in exchange for $50,000,000 aggregate
principal amount of the Company's then outstanding 13 3/4% Senior Subordinated
Notes due June 1, 1999 (the "Senior Subordinated Notes") pursuant to a private
exchange offer (the "Private Exchange Offer") which was a part of a series of
interrelated transactions (the "Reorganization"). In addition to the Private
Exchange Offer, the components of the Reorganization included (i) the
solicitation of the consents of the holders of the Company's 12.25% Fixed Rate
Senior Secured Notes due September 1, 1998 and Floating Rate Senior Secured
Notes due September 1, 1998 to certain waivers of and the adoption of certain
amendments to the indenture governing such Senior Secured Notes (which notes
have recently been defeased by the Company - See "Recent Developments"), (ii)
the establishment of a $55 million revolving credit facility and a $15 million
term loan (each of which were recently refinanced), (iii) the solicitation of
the consents of the holders of the Senior Subordinated Notes to certain waivers
of and the adoption of certain amendments to the indenture governing the Senior
Subordinated Notes and (iv) the repayment of the borrowings under the
Company's then existing domestic revolving credit facilities.
Each Warrant entitles the holder thereof to purchase one share of
Common Stock, subject to adjustment in certain circumstances discussed below,
at a cash exercise price of $2.45 per share, subject to adjustment in certain
circumstances discussed below. The Company would receive all of the proceeds
from the exercise of the Warrants. The Warrants are currently exercisable and
expire on June 1, 2004. The Warrants were originally issued by the Company in
a private placement to certain institutional investors. There is presently no
active trading market for the Warrants and there can be no assurance that one
will develop. The Common Stock is traded on the New York Stock Exchange, Inc.
(the "NYSE") under the symbol "WAX." On May 23, 1996, the last reported sales
price per share of Common Stock, as reported by the NYSE, was $5 5/8.
The Securities are being offered for the accounts of the Selling
Security Holders. See "Selling Security Holders." The offer and sale of the
Securities is being registered under the Registration Statement of which this
Prospectus forms a part in order to satisfy certain obligations of the Company
contained in the Registration Rights Agreement (the "Equity Registration
Rights Agreement"), dated as of May 20, 1994, between the Company and The
Huntington National Bank, as Warrant Agent (the "Warrant Agent") under the
Warrant Agreement dated as of May 20, 1994 between such Warrant Agent and the
Company, on behalf of the original purchasers of the Warrants. The Company has
agreed to pay all expenses of this offering but will not receive any of the
proceeds from the sale of Securities being offered hereby. The aggregate
proceeds to the Selling Security Holders from the sale of the Securities will
be the purchase price of the Securities sold, less the aggregate underwriting
fees, discounts and commissions, if any. See "Plan of Distribution."
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The Selling Security Holders directly, through agents designated from
time to time or through dealers or underwriters also to be designated, may
sell the Securities from time to time on terms to be determined at the time of
sale. To the extent required, the specific Securities to be sold, the names of
the Selling Security Holders, the purchase price, the public offering price,
the names of any such agents, dealers or underwriters and any applicable
commissions or discount with respect to a particular offer will be set forth
in an accompanying Prospectus supplement (or, if required, a post-effective
amendment to the Registration Statement of which this Prospectus forms a
part). The distribution of the Securities of the Selling Security Holders may
be effected in one or more transactions that may take place on the NYSE or the
over-the-counter market, including ordinary broker's transactions, privately
negotiated transactions or through sales to one or more dealers for resale of
such securities as principals, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. Usual and customary or specifically negotiated brokerage fees,
commissions or discounts may be paid by the Selling Security Holders in
connection with such sales.
The Selling Security Holders and any broker-dealers, agents or
underwriters that participate with the Selling Security Holders in the
distribution of the Securities may be deemed to be "Underwriters" within the
meaning of the Securities Act of 1933, as amended (the "Securities Act"), and
any commissions received by them and any profit on the resale of the
Securities purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. See "Plan of Distribution" for
indemnification arrangements."
PROSPECTIVE PURCHASERS OF THE SECURITIES OFFERED HEREBY SHOULD
CAREFULLY CONSIDER THE MATTERS SET FORTH UNDER "RISK FACTORS."
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THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES HAVE NOT BEEN AND WILL NOT BE QUALIFIED FOR SALE UNDER
THE SECURITIES LAWS OF CANADA OR ANY PROVINCE OR TERRITORY OF CANADA. THE
SECURITIES ARE NOT BEING OFFERED FOR SALE AND MAY NOT BE OFFERED OR SOLD,
DIRECTLY OR INDIRECTLY, IN CANADA, OR TO ANY RESIDENT THEREOF, IN VIOLATION OF
THE SECURITIES LAWS OF CANADA OR ANY PROVINCE OR TERRITORY OF CANADA.
THIS DOCUMENT MAY NOT BE PASSED ON IN THE UNITED KINGDOM TO ANY
PERSON UNLESS THAT PERSON IS OF A KIND DESCRIBED IN ARTICLE 9(3) OF THE
FINANCIAL SERVICES ACT 1986 (INVESTMENT ADVERTISEMENTS) (EXEMPTIONS) ORDER
1988 OR IS A PERSON TO WHOM THIS DOCUMENT MAY OTHERWISE LAWFULLY BE ISSUED OR
PASSED ON.
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NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR
A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B WITH THE STATE OF NEW HAMPSHIRE
NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED
IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE
THAT ANY DOCUMENT FILED UNDER CHAPTER 421-B IS TRUE, COMPLETE AND NOT
MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR
EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE
SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS
OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR
TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE
PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE
PROVISIONS OF THIS PARAGRAPH.
-----------------------------------------
THE DATE OF THIS PROSPECTUS IS MAY 24, 1996
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
The Registration Statement, as well as such periodic reports, proxy statements
and other information, can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549; Suite 1400, Northwest Atrium Center, 500 West Madison
Street, Chicago, Illinois 60661; and 7 World Trade Center, New York, New York
10048. Copies of such material can also be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. The Company's common stock is listed on the NYSE.
Reports, proxy statements and other information may also be inspected at the
offices of the NYSE, 20 Broad Street, New York, New York 10005.
The Company has filed a Registration Statement on Form S-2 (together
with all amendments thereto referred to herein as the "Registration
Statement") under the Act, with the Commission covering the securities being
offered by this Prospectus. This Prospectus does not contain all the
information set forth or incorporated by reference in the Registration
Statement and the exhibits and schedules relating thereto, certain portions of
which have been omitted as permitted by the rules and regulations of the
Commission. For further information with respect to the Company and the
securities offered by this Prospectus, reference is made to the Registration
Statement and the exhibits and schedules thereto which are on file at the
offices of the Commission and may be obtained upon payment of the fee
prescribed by the Commission, or may be examined without charge at the offices
of the Commission. Statements contained in this Prospectus as to the contents
of any contract or other documents referred to are not necessarily complete,
and are qualified in all respects by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company hereby incorporates by reference in this Prospectus the
Company's Annual Report on Form 10-K for its fiscal year ended June 30, 1995
filed with the Commission (File No.0-5888) pursuant to the Exchange Act, as
amended by an amendment on Form 10-K/A filed with the Commission on October
11, 1995 and further amended by an amendment on Form 10-K/A-1 filed with the
Commission on November 2, 1995 (collectively, the "1995 Annual Report"), the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1995 filed with the Commission on November 13, 1995 (the "September 1995
10-Q"), the Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1995 filed with the Commission on February 12, 1996 (the
"December 1995 10-Q") and the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996 filed with the Commission on May 9, 1996 (the
"March 1996 10-Q," and, together with the 1995 Annual Report, the September
1995 10-Q and the December 1995 10-Q, the "Periodic Reports").
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is incorporated
or deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Any person receiving a copy of this Prospectus may obtain without charge,
upon request, a copy of any of the documents incorporated by reference herein,
except for the exhibits to such documents. Requests should be directed to
Waxman Industries, Inc. 24460 Aurora Road, Bedford Heights, Ohio 44146,
Telephone No: (216) 439-1830.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to,
and should be read in conjunction with, the more detailed information and
financial statements appearing elsewhere or incorporated by reference in this
Prospectus. References in this Prospectus to a particular fiscal year refer to
the 12-month period ended on June 30 in that year. Unless the context
otherwise indicates, all references to the "Company" are to the continuing
operations of Waxman Industries, Inc. and its subsidiaries and divisions and
to the business conducted through such subsidiaries and divisions and include
the operations of Waxman Consumer Products Group Inc. ("Consumer Products").
As a result of the Company's prior determination to sell its Consumer Products
business, Consumer Products was reported by the Company as a discontinued
operation as of June 30, 1995. In connection with the recently completed
initial public offering of Barnett Inc. ("Barnett"), formerly a wholly-owned
indirect subsidiary of the Company, the Company ceased its efforts to sell
Consumer Products effective March 31, 1996. Accordingly, unless the context
otherwise indicates, the information contained in this Prospectus reflects
Consumer Products as a continuing operation; provided, however, that the
information contained in the Periodic Reports prior to March 31, 1996 reflects
Consumer Products as a discontinued operation. See "Recent Developments."
THE COMPANY
The Company believes it is one of the leading suppliers of plumbing
products to the repair and remodeling market in the United States. The
Company, through its subsidiaries, together with Barnett, distribute plumbing,
electrical and hardware products to approximately 50,000 customers in the
United States, including, electrical and plumbing repair and remodeling
contractors and independent retailers. The Company's consolidated net sales
were $232.3 million and $175.5 million in fiscal 1995 and the nine months
ended March 31, 1996, respectively.
The business of the Company is conducted primarily through its
indirect wholly-owned subsidiary Consumer Products and through Barnett, of
which the Company indirectly owns approximately 45% of the outstanding common
stock, and, through the ownership of certain convertible preferred stock, owns
approximately a 54% economic interest. The Company also owns several smaller
operations. Consumer Products markets and distributes approximately 9,400
products to a wide variety of retailers, primarily do-it-yourself ("D-I-Y")
warehouse home centers, home improvement centers, mass merchandisers, hardware
stores and lumberyards. Consumer Products' customers include large national
retailers such as Kmart, Builders Square and Wal-Mart, as well as large
regional D-I-Y retailers such as Fred Meyer Inc. According to rankings of the
largest D-I-Y retailers published in National Home Center News, an industry
trade publication, Consumer Products' customers include 15 of the 25 largest
D-I-Y retailers in the United States. Consumer Products works closely with its
customers to develop comprehensive marketing and merchandising programs
designed to improve their profitability, efficiently manage shelf space,
reduce inventory levels and maximize floor stock turnover.
Consumer Products' marketing strategy includes offering mass
merchandisers and D-I-Y retailers a comprehensive merchandising program which
includes design, layout and setup of selling areas. Sales and service
personnel assist the retailer in determining the proper product mix in
addition to designing department layouts to effectively display products and
optimally utilize available floor and shelf space. Consumer Products supplies
point-of-purchase displays for both bulk and packaged products, including
color-coded product category signs and color-coordinated bin labels to help
identify products, and backup tags to signify products that require
reordering. Consumer Products also offers certain of its customers the option
of private label programs for their plumbing and floor care products. In-house
design, assembly and packaging capabilities enable Consumer Products to react
quickly and effectively to service its customers' changing needs. In addition,
Consumer Products' products are packaged and designed for ease of use, with
"how to" instructions included to simplify installation, even for the
uninitiated D-I-Y consumer. Consumer Products' net sales for fiscal 1995 and
the nine
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months ended March 31, 1996 were $72.0 million and $47.1 million,
respectively. The Company currently is reevaluating the strategic direction of
Consumer Products with a view to eliminating certain product lines, optimizing
product offerings and rationalizing certain warehousing costs and evaluating
the carrying value of certain long-lived assets. The Company is currently
contemplating exiting from the distribution of electrical products to further
focus the strategic direction of Consumer Products. The Company believes that
the reevaluation of Consumer Products' strategic focus will initially result
in a decrease in net sales but will strengthen and improve the Consumer
Products business in the long-term.
Barnett is a direct marketer and distributor of an extensive line of
plumbing, electrical and hardware products to over 40,000 active customers
throughout the United States. Barnett offers approximately 8,200 name brand
and private label products through its industry-recognized Barnett(R) catalogs
and telesales operations. Barnett markets its products through three distinct,
comprehensive catalogs that target professional contractors, independent
hardware stores and maintenance managers. Barnett's staff of over 70
knowledgeable telesalespersons, customer service and technical support
personnel work together to serve customers by assisting in product selection
and offering technical advice. To provide rapid delivery and a strong local
presence, Barnett has established a network of 28 distribution centers
strategically located in 28 major metropolitan areas throughout the United
States. Through these local distribution centers, approximately two-thirds of
Barnett's orders are shipped directly to the customer, usually within 24 hours
of an order. The remaining one-third of the orders are picked up by the
customer at one of Barnett's local distribution centers. Barnett's strategy of
being a low-cost, competitively priced supplier is facilitated by its volume
of purchases and offshore sourcing of a significant portion of its private
label products. Products are purchased from over 400 domestic and foreign
suppliers.
Barnett believes that its distinctive business model has enabled it to
become a high-volume, cost-efficient direct marketer of competitively priced
plumbing, electrical and hardware products. Barnett's approximately 500- page
catalogs offer an extensive selection of products in an easy to use format
enabling customers to consolidate purchases with a single vendor. Barnett
provides an updated version of its catalogs to its customers on average four
times a year. To attract new customers and offer special promotions to
existing customers, Barnett supplements its catalogs with monthly promotional
flyers. Barnett's experienced and knowledgeable inbound telesales staff,
located at Barnett's centralized headquarters in Jacksonville, Florida, uses
Barnett's proprietary information systems to take customer orders as well as
offer technical advice. Barnett's highly trained outbound telesales staff
maintains frequent customer contact, makes telesales presentations and
encourages additional purchases. Targeted customer accounts are typically
assigned an outbound telesalesperson in order to enhance customer
relationships and improve customer satisfaction. Barnett's high in-stock
position and extensive network of local distribution centers enable it to
fulfill approximately 94% of the items included in each customer order and
provide rapid delivery. Barnett's net sales were $109.1 million and $93.4
million in fiscal 1995 and the nine months ended March 31, 1996, respectively.
The Company has several smaller operations which are conducted through
its other indirect wholly-owned subsidiaries, WOC Inc. ("WOC") and TWI,
International, Inc. ("TWI"). WOC includes four operations, the largest of
which are U.S. Lock ("U.S. Lock") - a distributor of a full line of security
hardware products and LeRan Copper & Brass ("LeRan") - a supplier of copper
tubing, brass fittings and other related products. WOC's other operations also
include its Madison Equipment division, a supplier of electrical products, and
its Medal Distributing division, a supplier of hardware products. TWI includes
foreign sourcing operations in Mexico, China and Taiwan which support Consumer
Products, Barnett and WOC. Net sales from these smaller operations were $51.2
million and $35.0 million in fiscal 1995 and the nine months ended March 31,
1996, respectively.
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The current corporate structure of the Company is as follows:
WAXMAN INDUSTRIES, INC.
WAXMAN USA INC.
BARNETT WAXMAN WOC INC. TWI, INTERNATIONAL INC.
INC.(1) CONSUMER AND SUBSIDIARIES
PRODUCTS
GROUP INC.
- ---------------
(1) Waxman USA beneficially owns approximately 49.9% of the Barnett Common
Stock and, together with non-voting preferred stock of Barnett owned
by Waxman USA Inc. (as defined below), approximately 54% of the
capital stock of Barnett.
RECENT DEVELOPMENTS
In August 1995, the Company announced that it had decided to sell its
Consumer Products business and entered into a letter of intent, which
subsequently expired, which contemplated the sale of the Consumer Products
business, together with certain supporting operations and certain home center
accounts now serviced by Barnett, to a group consisting of HIG Capital
Management of Miami, Florida along with certain members of Consumer Products'
existing management team for an aggregate cash purchase price of $50 million
plus other consideration which would have given the Company approximately a
25% economic interest in Consumer Products on a going forward basis. Since the
consummation of the Barnett Public Offering, the Company has ceased its
efforts to sell Consumer Products and instead retains and continues to operate
Consumer Products. Consequently, the Coapany reported its results as a
continuing operation for the nine month period ended March 31, 1996.
On February 1, 1996, Barnett filed a registration statement with the
Commission with respect to an initial public offering (the "Barnett Public
Offering") of its common stock (the "Barnett Common Stock"). On March 28,
1996, the registration statement with respect to the Barnett Public Offering
was declared effective and on April 3, 1996, the Barnett Public Offering was
consummated. In such offering, 7,207,200 shares, representing approximately
55.1% of the Barnett Common Stock, were sold in the aggregate by Barnett and
Waxman USA Inc. ("Waxman USA"), a direct wholly-owned subsidiary of the
Company, at an initial public offering price per share of $14.00, resulting in
aggregate net proceeds of $93.4 million. As of May 8, 1996, as a result of the
Company's ownership of certain convertible non-voting preferred stock of
Barnett, Waxman USA beneficially owns approximately 49.9% of the Barnett
Common Stock and approximately a 54% economic interest in the capital stock of
Barnett.
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Of the $48.5 million of net proceeds received by Barnett in the
Barnett Public Offering, Barnett used (i) approximately $23.0 million to repay
all of the outstanding indebtedness borrowed by it under the secured credit
facility (the "Operating Companies Revolving Credit Facility") among Citicorp
USA, Inc., as agent, Barnett, Consumer Products and WOC, (ii) $22.0 million to
pay dividend evidenced by a note payable to Waxman USA and (iii) $3.5 million
for working capital. The $44.9 million of net proceeds received by Waxman USA
from the Barnett Public Offering, together with payment from Barnett of the
$22.0 note payable described above, were, or will be, applied primarily to
repay debt including (i) all of the $39.2 million principal amount of the
Company's 12 1/4% Senior Secured Notes due 1998 and Floating Rate Senior
Secured Notes due 1998 (collectively, the "Senior Secured Notes") plus accrued
interest and redemption premium of approximately $1.7 million, thereby
eliminating the mandatory sinking fund requirements relating to the Senior
Secured Notes which were scheduled to commence in September 1996 and (ii)
approximately $5.0 million of the $10.0 million outstanding indebtedness and
accrued interest under the secured term loan (the "Term Loan") among Citibank,
N.A., as agent, Barnett, Consumer Products and WOC. The remaining net proceeds
received by Waxman USA (approximately $21.0 million) are intended to be used
to (i) reduce additional outstanding indebtedness borrowed by Consumer
Products and WOC under the Restated Credit Agreement (as defined below) and/or
(ii) retire the Notes and/or Exchange Notes (as defined below) and/or (iii)
reinvest in Consumer Products' and/or WOC's businesses.
In connection with the Barnett Public Offering and as part of the
Company's efforts to decrease its leverage and increase its financial
flexibility, Waxman USA consummated an exchange offer (the "Exchange Offer")
pursuant to which it exchanged $43,026,000 principal amount of the Company's
outstanding Senior Subordinated Notes for a like principal amount of Waxman
USA 11 1/8% Senior Notes due 2001 (the "Exchange Notes") and in connection
therewith solicited consents to certain amendments to the Indenture pursuant
to which the Senior Subordinated Notes were issued. Generally, the amendments
to the Senior Subordinated Note indenture eliminate virtually all of the
restrictive covenants and events of defaults previously contained in such
indenture. The Exchange Offer decreased the Company's cash interest burden and
extended the maturity of the Senior Subordinated Notes exchanged in the
Exchange Offer by several years. The Exchange Notes were not registered under
the Securities Act and may not be offered or sold in the United States absent
registration or an applicable exemption from such registration requirements.
In connection with the Barnett Public Offering, Waxman USA entered
into an amendment and restatement of the Operating Companies Revolving Credit
Facility and Term Loan (the "Restated Credit Agreement") to provide for, among
other things, an approximately one year secured credit facility providing for
revolving credit advances of up to $25.0 million and term loans of up to $5.0
million ("Restated Term Loans") and a release of Barnett from such lending
arrangements. As a result of the limited duration of the Restated Credit
Agreement, Waxman USA is currently negotiating with respect to a refinancing
of such credit facility. Although the Company believes, based on discussions
to date, that it will be able to refinance the Restated Credit Agreement
before its expiration, there can be no assurance that it will be able to do so
or as to the terms of any such refinancing it is able to obtain.
Revolving credit advances under the Restated Credit Agreement are
subject to borrowing base formulas and will bear interest at (i) the per annum
rate of 1.5% plus the highest of (a) the prime rate of Citibank, N.A. or (b)
the federal funds rate plus 0.5% and a formula with respect to three month
certificates of deposit of major United States money market banks or (ii)
LIBOR plus 3.0%. The Restated Credit Agreement includes a letter of credit
subfacility of $4.0 million. Restated Term Loans bear interest at a rate per
annum equal to 2.0% over the interest rate applicable to revolving credit
advances under the Restated Credit Agreement. Borrowings under the Restated
Credit Agreement are secured by the accounts receivable, inventory, certain
general intangibles and unencumbered fixed assets of Consumer Products and WOC
(the "Borrowers") and 65% of the capital stock of one subsidiary of TWI and
100% of the capital stock of another such subsidiary. In addition,
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Restated Term Loans are also secured by a pledge of 500,000 shares of Barnett
Common Stock owned by Waxman USA. The Restated Credit Agreement requires the
Borrowers to maintain cash collateral accounts into which all available funds
are depositedand applied to service the facility on a daily basis. The
Restated Credit Agreement prevents dividends and distributions by the
Borrowers except in certain limited instances including, so long as there is
no Default or Event of Default, and Waxman USA is in compliance with certain
financial covenants, the payment of interest on the Senior Subordinated Notes
and Exchange Notes, and will contain customary negative, affirmative and
financial covenants and conditions.
The Restated Credit Agreement contains only the events of default
contained in the Operating Companies Revolving Credit Facility, which include
the following: (i) any Borrower shall fail to make any payment of principal or
interest or any other amount due under the agreements related to the Restated
Credit Agreement or fail to perform any covenant (after the expiration of any
applicable grace period) thereunder, or any representation or warranty made in
connection therewith shall prove to have been incorrect in any material
respect when made or deemed made; (ii) the Company or any of its subsidiaries
shall fail to pay any indebtedness having a principal amount of $5,000,000 or
more; or any other event shall occur or condition shall exist under any
agreement or instrument relating to any such indebtedness, if the effect of
such event or condition is to accelerate, or to permit the acceleration of
(after the expiration of any applicable period of grace), the maturity of such
indebtedness; or any such indebtedness shall become or be declared to be due
and payable, or required to be repaid (other than by a regularly scheduled
required prepayment), or the Company or any of its subsidiaries shall be
required to repurchase or offer to repurchase such indebtedness, prior to the
stated maturity thereof; (iii) certain events of bankruptcy with respect to
the Company or any of its subsidiaries; (iv) there shall occur any Change of
Control (as defined in the Restated Credit Agreement; and (v) there shall
occur a Material Adverse Effect (as defined in the Restated Credit Agreement)
or an event which would have a Material Adverse Effect (as defined in the
Restated Credit Agreement).
THE OFFERING
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<CAPTION>
<S> <C>
Securities Offered.................... 2,950,000 Warrants to purchase shares of Common Stock. In addition, this
Prospectus relates to the 2,950,000 shares of Common Stock issuable
upon exercise of the Warrants, subject to adjustment in the event
of any recapitalization, reclassification, stock dividend, stock split,
reverse stock split, stock issuance below fair market value or other similar
transaction.
Underlying Common Stock............... Each Warrant is exercisable to purchase one share of
Common Stock subject to adjustment under certain
circumstances. See "Description of Warrants."
Exercise Price........................ $2.45 per share, subject to adjustment in certain
circumstances. See "Description of Warrants."
Exercise Period....................... The Warrants are currently exercisable. See
"Description of Warrants."
</TABLE>
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<CAPTION>
<S> <C>
Expiration Date....................... The Warrants expire at 5:00 p.m. New York City time
on June 1, 2004.
Warrant Agent......................... The Huntington National Bank is serving as Warrant
Agent under the Warrant Agreement.
Common Stock
Number of Shares...................... 2,950,000 shares, subject to adjustment in certain
circumstances, of Common Stock issuable upon the
exercise of the Warrants.
Common Stock Outstanding.............. 11,764,724 shares as of May 9, 1996 (including
9,559,586 shares of Common Stock and 2,205,138 shares of Class B Common
Stock).
NYSE symbol for
the Common Stock....................... WAX
Proceeds of the Offering............... All of the proceeds from the sale of Securities offered
hereby will be received by the Selling Security
Holders. The Company will not receive any of the
proceeds from this offering.
If all of the 2,950,000 Warrants offered hereby are exercised at the initial
exercise price of $2.45 per share, the Company would receive $7,227,500, which
would be added to the Company's working capital and used for general corporate
purposes, including repayment of debt.
</TABLE>
For more complete information regarding the Warrants, see "Description of
Warrants."
RISK FACTORS
Prospective purchasers of Securities offered hereby should carefully
consider the matters set forth under "Risk Factors," as well as the other
information and data included in this Prospectus.
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RISK FACTORS
Prospective purchasers of Securities offered hereby should carefully
read the entire Prospectus and, in particular, should consider, among other
things, the following risks.
LEVERAGE
The Company has a high degree of leverage. At March 31, 1996, the
outstanding consolidated indebtedness (excluding trade payables and accrued
liabilities) of the Company was approximately $204.2 million. At March 31,
1996 on a pro froma basis, after giving effect to the Exchange Offer and the
Barnett Public Offering and the application of the net proceeds therefrom, the
outstanding consolidated indebtedness (excluding trade payables and accrued
liabilities) of the Company would have been approximately $119.7 million. This
high degree of leverage may have important consequences to the Company,
including the following: (i) the ability of the Company to obtain additional
financing in the future for working capital, capital expenditures, debt
service requirements or other purposes may be impaired; (ii) a substantial
portion of the Company's cash flow from operations will be required to satisfy
its debt service obligations; (iii) the Company may be more highly leveraged
than its competitors, which may place it at a competitive disadvantage; and
(iv) the Company's high degree of leverage may make it more vulnerable in the
event of a downturn in its business and may limit its ability to capitalize on
business opportunities. Although the Company believes that its operating cash
flow as well as amounts available under the Restated Credit Agreement,
including any refinancing thereof, will be sufficient to fund working capital,
capital expenditures and debt service requirements for the next 12 months, the
Company's ability to satisfy its obligations will be dependent upon its future
performance, which is subject to prevailing economic conditions and financial,
business and other factors, including factors beyond the Company's control.
The Company currently believes that it must obtain a significant infusion of
funds, either through additional debt refinancing transactions or the sale of
equity and/or assets before any further significant deleveraging can occur.
The $5.7 million principal amount of Senior Subordinated Notes not exchanged
in the Exchange Offer mature in June 1999. In addition, cash interest on the
Notes is payable semi-annually commencing December 1999. The Company's
management's current projections indicate that there will not be sufficient
cash flow from operations to make the June 1999 $5.7 million principal payment
on the Senior Subordinated Notes not exchanged or the December 1999 cash
interest payment on the Notes. Accordingly, the Company's management currently
intends to pursue a sale of assets or other capital raising transaction to
satisfy such cash requirements. However, there can be no assurances that the
Company will be able to consummate any such sale or capital raising
transaction. There can also be no assurance that the Company will be able to
refinance the Senior Subordinated Notes, the Notes or the Exchange Notes,
respectively, at or prior to their respective maturities. In addition, the
Company is a holding company with no operations of its own and, therefore, its
ability to pay cash interest on the Notes commencing in December 1999, and any
principal payments for the $5.7 million principal amount of the Senior
Subordinated Notes not exchanged in the Exchange Offer, will require an
increase in the Company's cash flow from current levels or a substantial
reduction in the Company's level of indebtedness or the completion of other
capital raising transactions, including asset sales. There can be no assurance
that such increase in cash flow or reduction in indebtedness or other capital
raising transaction will occur.
To the Company's knowledge, its high degree of leverage has not
resulted in the refusal by any of its customers, suppliers or manufacturers to
do business with the Company or in the alteration of material terms which have
had a material impact on the Company's business.
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RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS; CONSEQUENCES OF FAILURE TO COMPLY
The terms and conditions of the instruments evidencing the Restated
Credit Agreement, as well as other indebtedness of the Company and Waxman USA,
impose restrictions that affect, among other things, the ability of the
Company and/or its subsidiaries to incur debt, pay dividends, make
acquisitions, create liens, sell assets and make certain investments. The
breach of any of the foregoing covenants would result in a default under the
applicable debt instrument permitting the holders of indebtedness outstanding
thereunder, subject to applicable grace periods, to accelerate such
indebtedness. Any such accelaration may cause a cross-default under the
instruments evidencing other indebtedness of the Company and/or Waxman USA,
and there can be no assurance that the Company and/or Waxman USA would have
sufficient funds to repay or assets to satisfy such obligations.
CONTROL BY PRINCIPAL STOCKHOLDERS; CERTAIN ANTI-TAKEOVER EFFECTS
Approximately 18.2% (and 14.0%, assuming the exercise of all of the
Warrants offered hereby) of the outstanding shares of the Company's common
stock, par value $.01 per share, and 83.4% of the outstanding shares of the
Company's Class B common stock are beneficially owned by Melvin and Armond
Waxman, brothers and the Chairmen of the Board and Co-Chief Executive Officer
and President and Co-Chief Executive Officer, respectively, of the Company
(the "Principal Stockholders"). These holdings represent 63.5% (and 58.1%,
assuming the exercise of all of the Warrants offered hereby) of the
outstanding voting power of the Company. Consequently, the Principal
Stockholders have sufficient voting power to elect the entire Board of
Directors of the Company and, in general, to determine the outcome of any
corporate transaction or other matter submitted to the stockholders for
approval, including any merger, consolidation, sale of all or substantially
all of the Company's assets or "going private" transactions, and to prevent or
cause a change in control of the Company. In addition, certain provisions in
the Company's Certificate of Incorporation, By-laws and debt instruments,
including the Change of Control provisions in the Indenture governing the
Notes, may be deemed to have the effect of discouraging a third party from
pursuing a non-negotiated takeover of the Company and preventing certain
changes in control.
DEFICIENCY OF EARNINGS TO FIXED CHARGES
For fiscal 1995, 1994, 1993, and for the nine months ended March 31,
1996, the Company's earnings were insufficient to cover its fixed charges by
$11.7 million, $3.1 million, $15.7 million and $16.4 million, respectively.
The Company believes that the successful implementation of its business
strategy described herein will enable it to reduce or eliminate the deficiency
of earnings to fixed charges. However, there can be no assurances regarding
when such deficiencies will be reduced or eliminated or that the deficiencies
experienced in the past will not reoccur.
FOREIGN SOURCING
For fiscal 1995, products manufactured outside of the United States
accounted for approximately 27.8% of the total product purchases made by the
Company. Foreign sourcing involves a number of risks, including the
availability of letters of credit, maintenance of quality standards, work
stoppages, transportation delays and interruptions, political and economic
disruptions, foreign currency fluctuations, expropriation, nationalization,
the imposition of tariffs and import and export controls and changes in
governmental policies
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(including United States' policy toward the foreign country where the products
are produced), which could have an adverse effect on the Company's business.
The occurrence of certain of these factors would delay or prevent the delivery
of goods ordered by the Company's customers, and such delay or inability to
meet delivery requirements could have an adverse effect on the Company's
results of operations and on the Company's relationships with its customers.
In addition, the loss of a foreign manufacturer could have a short-term
adverse effect on the Company's business until alternative supply arrangements
were secured.
RELIANCE ON KEY CUSTOMERS
For fiscal 1995 and the nine months ended March 31, 1996, Consumer
Products' largest customer, Kmart and subsidiaries, accounted for
approximately 13.5% and 10.7%, respectively, of the Company's total net sales
and 43.6% and 39.8%, respectively, of Consumer Products' total net sales.
During the same periods, the Company's ten largest customers accounted for
approximately 24.1% and 20.3%, respectively, of the Company's total net sales.
The loss of, or a substantial decrease in, the business of one or more of the
Company's largest customers could have a material adverse effect on the
Company's operations. In addition, certain articles in the financial press in
the past year have questioned the financial condition of Kmart, Consumer
Products' largest customer. Furthermore, Kmart has stated that it intends to
sell its Builders Square business, which accounted for approximately 24.7% and
24.5%, respectively, of Consumer Products' net sales in fiscal 1995 and the
nine months ended March 31, 1996, respectively. There can be no assurance that
any purchaser of Builders Square will continue to do business with the Company
or to the extent it does continue to do business with the Company, as to the
amount, terms or conditions of any sales by such purchaser. Since the
consummation of the Barnett Public Offering, the Company and Waxman USA rely
primarily on Consumer Products for cash flow. Consumer Products' customers
include D-I-Y warehouse home centers, home improvement centers, mass
merchandisers, hardware stores and lumberyards. Consumer Products may be
adversely effected by prolonged economic downturns or significant declines in
consumer spending. There can be no assurance that any such prolonged economic
downturn or significant decline in consumer spending will not have a material
adverse impact on Consumer Products' business and its ability to generate cash
flow.
PROCEEDS OF THE OFFERING
The Company will not receive any of the proceeds of this offering. All
of the proceeds of this offering will be received by the Selling Security
Holders.
ABSENCE OF PUBLIC MARKET; EFFECT OF MARKET PRICE OF BARNETT COMMON STOCK
At present, the Warrants are owned by a small number of investors and
there is no active trading market for the Warrants. If an active trading
market does not develop, purchasers of the Warrants may have difficulty
liquidating their investment and the Warrants may not be readily accepted as
collateral for loans. Accordingly, no assurances can be given as to the price
at which holders of the Warrants will be able to sell the Warrants, if at all.
The liquidity of and the market prices for the Warrants and Common
Stock can be expected to vary with changes in market and economic conditions,
the financial condition and prospects of the Company and other factors that
generally influence the market prices of securities, including fluctuations in
the market for warrants and common stock generally. In addition, the market
price of the Common Stock may be effected by the
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market price of the Barnett Common Stock, which may be affected by the factors
enumerated in the preceding sentence.
POSSIBLE FUTURE SALES OF SHARES BY THE SELLING SECURITY HOLDERS
Subject to the restrictions described under "Risk Factors -- Shares
Eligible for Future Sale" and applicable law, upon the effectiveness of the
Registration Statement of which this Prospectus forms a part, the Selling
Security Holders could cause the sale of any or all of the Warrants or
underlying shares of Common Stock they own. The Selling Security Holders may
determine to sell Warrants or the underlying shares of Common Stock from time
to time for any reason. Although the Company can make no prediction as to the
effect, if any, that sales of Warrants or shares of Common Stock owned by the
Selling Security Holders would have on the market price of Common Stock
prevailing from time to time, sales of substantial amounts of Warrants or
Common Stock, or the availability of such Warrants or shares of Common Stock
for sale in the public market, could adversely affect prevailing market prices
of the Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE
As of May 9, 1996, there were 9,559,586 shares of Common Stock
outstanding and 2,205,138 shares of Class B Common Stock outstanding
(convertible into 2,205,138 shares of Common Stock). To the extent such shares
are not held by "affiliates" or otherwise subject to restrictions on resale,
including those imposed by Section 16(b) of the Exchange Act, the Warrants,
and upon exercise of the Warrants, the shares of Common Stock which are
issuable upon exercise of the Warrants and offered hereby are eligible for
sale in the public market. Although the Company can make no prediction as to
the effect, if any, that sales of the Warrants and shares of Common Stock
referred to above would have on the market price of the Common Stock
prevailing from time to time, sales of a substantial amount of Warrants or
Common Stock, or the availability of such Warrants or shares of Common Stock
for sale in the public market could adversely affect prevailing market prices
of the Common Stock.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Securities offered hereby, all of which will be received by the Selling
Security Holders.
If all of the 2,950,000 Warrants offered hereby are exercised at the
initial exercise price of $2.45 per share, the Company would receive
$7,227,500, which would be added to the Company's working capital and used for
general corporate purposes.
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SELLING SECURITY HOLDERS
The following table sets forth certain information with respect to the
Securities beneficially owned and offered hereby by each Selling Security
Holder.
Name Warrants Owned Warrants Offered
- ---- ---------------- -----------------
American Express Trust Company 156,350 156,350
Bank Of New York 265,920 265,920
Bear Stern Securities Corp. 487,500 487,500
Brown (Alex) & Sons, Inc. 3,950 3,950
Donaldson, Lufkin & Jenrette 124,900 124,900
First Options of Chicago, Inc. 30,000 30,000
Goldman, Sachs & Co. 64,000 64,000
UMB Bank, N.A./IFTC 1,162,300 1,162,000
Lehman Brothers, Inc. 30,000 30,000
Merrill Lynch, Pierce, Fenner & Smith,
Inc. 150,000 150,000
Morgan Stanley & Co., Incorporated 44,000 44,000
Neuberger & Berman 36,500 36,500
Sanwa Bank California 11,080 11,080
SSB Custodian 324,500 324,500
T.D. Partners 59,000 59,000
--------- ---------
Total 2,950,000 2,950,000
- ---------------
The Company is registering, on behalf of each Selling Security Holder,
the offer and sale of the number of Warrants set forth opposite such Selling
Security Holder's name under the column captioned "Warrants Offered" and the
same number of shares of Common Stock, subject to adjustment in certain
circumstances, issuable upon exercise of the Warrants. As of the date hereof,
no Warrants have been exercised to purchase shares of Common Stock.
Because the Selling Security Holders may offer all or some part of the
Securities pursuant to this Prospectus and because this offering is not being
underwritten on a firm commitment basis, no estimate can be given as to the
amount of Securities to be offered for sale by the Selling Security Holders
nor the amount of Securities that will be held by the Selling Security Holders
upon termination of this offering. See "Plan of Distribution." To the extent
required, the specific amount of Securities to be sold by the Selling Security
Holders in connection with a particular offer will be set forth in an
accompanying Prospectus supplement.
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DESCRIPTION OF THE WARRANTS
The Warrants were issued pursuant to the terms of a Warrant Agreement,
dated as of May 20, 1994 (the "Warrant Agreement"), by and between the Company
and The Huntington National Bank, as warrant agent (the "Warrant Agent"), on
behalf of the original purchasers of the Warrants. The following summary of
the material provisions of the Warrant Agreement and the Warrant Certificate
attached thereto (the "Warrant Certificate") does not purport to be complete,
and where reference is made to particular provisions of the Warrant Agreement
or the Warrant Certificate, such provisions, including the definitions of
certain terms, are qualified in their entirety by reference to all of the
provisions of the Warrant Agreement and Warrant Certificate, which have been
filed or incorporated by reference as exhibits to the Registration Statement
of which this Prospectus forms a part.
The Warrants are currently exercisable. The Warrants will expire June
1, 2004. Upon exercise, each Warrant entitles the holder to receive one
Warrant Share at a cash exercise price of $2.45, subject to adjustment in
certain circumstances.
Holders of the Warrants do not have any of the rights or privileges of
the stockholders of the Company, including voting rights to receive dividends,
prior to exercise of the Warrants. The Company has reserved out of its
authorized but unissued shares a sufficient number of shares of Common Stock
for issuance upon exercise of the Warrants. The Common Stock issuable on
exercise of the Warrants will be, when issued, fully paid and nonassessable.
ANTI-DILUTION
The Warrants contain customary anti-dilution provisions, including
adjustments in the event of a reclassification, recapitalization, stock
dividend, stock split, reverse stock split, stock issuance below fair market
value or other similar transaction, and including protections in the event of
a transaction in which the Company is not the surviving entity.
METHOD OF EXERCISE
The Warrants may be exercised by surrendering to the Warrant Agent the
Warrant Certificates evidencing such Warrants, with the accompanying form of
election to purchase properly completed and executed. Upon surrender of the
Warrant Certificates and payment in cash of the exercise price, the Warrant
Agent will deliver, or cause to be delivered, to or upon the written order of
such holder, certificates representing the Warrant Shares to which such holder
is entitled.
Warrant Certificates will be issued in registered form only and no
service charge shall be made for registration of transfer or exchange upon
surrender of any Warrant Certificate at the office of the Warrant Agent
maintained for that purpose. The Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Warrant
Certificates.
AMENDMENT
From time to time, the Company and the Warrant Agent, without the
consent of the holders of the Warrants, may amend or supplement the Warrant
Agreement for certain purposes, including curing defects or
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inconsistencies or making any change that does not adversely affect the rights
of any holder. Any amendment or supplement to the Warrant Agreement that has
an adverse effect on the interests of holders or that affects the
anti-dilution provisions contained therein shall require the written consent
of registered holders of a majority of the then outstanding Warrants. The
consent of each holder of an Warrant affected shall be required for any
amendment pursuant to which the number of Warrant Shares which could be
acquired upon exercise of Warrants would be decreased or the exercise period
for the Warrants would be modified in any manner.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 2,000,000
shares of Preferred Stock, $.01 par value, 22,000,000 shares of Common Stock,
$.01 par value, and 6,000,000 shares of Class B Common Stock, $.01 par value.
As of May 9, 1996, no shares of Preferred Stock, 9,559,586 shares of Common
Stock and 2,205,138 shares of Class B Common Stock were issued and
outstanding.
COMMON STOCK AND CLASS B COMMON STOCK
Each share of Common Stock entitles the holder to one vote on all
matters submitted to the stockholders, including the election of directors,
and each share of Class B Common Stock entitles the holder to ten votes on all
such matters. Except as set forth below, all actions submitted to a vote of
stockholders are voted on by holders of Common Stock and Class B Common Stock
voting together as a single class. The holders of Common Stock and Class B
Common Stock vote separately as classes with respect to any amendments to the
Company's Certificate of Incorporation that alter or change the powers,
preferences or special rights of their respective classes of stock so as to
affect them adversely, and with respect to such other matters as may require
class votes under the Delaware General Corporation Law.
Dividends on the Class B Common Stock may not exceed those on the
Common Stock. Each share of Common Stock and Class B Common Stock is equal in
respect of rights to dividends and other distributions in stock or property of
the Company (including distributions upon liquidation of the Company), except
that in the case of dividends or other distributions payable on the Common
Stock and the Class B Common Stock in shares of such stock, including
distributions pursuant to split-ups or divisions of the Common Stock or the
Class B Common Stock, only Common Stock will be distributed with respect to
Common Stock and only Class B Common Stock will be distributed with respect to
Class B Common Stock. In no event will either the Common Stock or the Class B
Common Stock be split, divided or combined unless the other is split, divided
or combined equally.
The Class B Common Stock is not transferable by a holder except to or
among such holder's spouse, certain of such holder's relatives and certain
trusts established for their benefit. The Class B Common Stock is convertible
into Common Stock on a share-for-share basis at any time.
If the number of outstanding shares of Class B Common Stock at any
time falls below 250,000 (as adjusted for any stock splits, combinations,
stock dividends or further issuances of Class B Common Stock), the outstanding
shares of Class B Common Stock will automatically be converted into shares of
Common Stock.
The Class B Common Stock may tend to have an anti-takeover effect.
Since voting control of the Company is vested primarily in the holders of the
Class B Common Stock, the issuance of the Class B Common Stock could render
more difficult, or discourage, a hostile merger proposal, a tender offer or a
proxy contest,
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even if such actions were favored by a majority of the holders of Common
Stock. As of May 9, 1996, Melvin Waxman and Armond Waxman beneficially owned
an aggregate of approximately 83.4% of the outstanding Class B Common Stock
and 63.5% of the aggregate outstanding voting power of the Company.
The transfer agent and registrar for the Common Stock and Class B
Common Stock is American Stock Transfer & Trust Company, New York, New York.
PREFERRED STOCK
The Preferred Stock may be issued from time to time in one or more
series, and the Board of Directors is authorized to fix the dividend rights
and terms, any conversion rights, any voting rights, any redemption rights and
terms (including sinking fund provisions), the rights in the event of
liquidation and any other rights, preferences, privileges and restrictions of
any series of Preferred Stock, as well as the number of shares constituting
such series and the designation thereof. The Preferred Stock, if issued, will
rank senior to the Company Common Stock as to dividends and as to liquidation
preference. Holders of Preferred Stock will have no preemptive rights. The
issuance of shares of Preferred Stock could have an anti-takeover effect under
certain circumstances. The issuance of shares of Preferred Stock could enable
the Board of Directors to render more difficult or discourage an attempt to
obtain control of the Company by means of a merger, tender offer or other
business combination transaction directed at the Company by, among other
things, placing shares of Preferred Stock with investors who might align
themselves with the Board of Directors, issuing new shares to dilute stock
ownership of a person or entity seeking control of the Company or creating a
class or series of Preferred Stock with voting rights. The issuance of shares
of the Preferred Stock as an anti-takeover device might preclude stockholders
from taking advantage of a situation which they believed could be favorable to
their interests. No shares of Preferred Stock are outstanding, and the Company
has no present plans to issue any shares of Preferred Stock.
PLAN OF DISTRIBUTION
Any or all of the Securities may be sold from time to time to
purchasers directly by the Selling Security Holders. Alternatively, the
Selling Security Holders may from time to time offer the Securities through
underwriters, dealers or agents who may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Security
Holders and/or the purchasers of Securities for whom they may act as agents.
The Selling Security Holders and any such underwriters, dealers or agents that
participate in the distribution of Securities may be deemed to be underwriters
under the Securities Act, and any profit on the sale of the Securities by them
and any discounts, commissions or concessions received by them may be deemed
to be underwriting discounts and commissions under the Securities Act. The
Securities may be sold from time to time in one or more transactions at a
fixed offering price, which may be changed, or at varying prices determined at
the time of sale or at negotiated prices. The distribution of Securities by
the Selling Security Holders may be effected in one or more transactions that
may take place on the NYSE or the over-the-counter market, including ordinary
broker's transactions, privately-negotiated transactions or through sales to
one or more broker-dealers for resale of such shares as principals, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. Usual and customary or specifically
negotiated brokerage fees, discounts and commissions may be paid by the
Selling Security Holders in connection with such sales of securities.
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At the time a particular offer of Securities is made, to the extent
required, a supplement to this Prospectus will be distributed (or, if
required, a post-effective amendment to the Registration Statement of which
this Prospectus is a part will be filed) which will identify the specific
Securities being offered and set forth the aggregate amount of Securities
being offered, the purchase price and the terms of the offering, including the
name or names of the Selling Security Holders and of any underwriters, dealers
or agents, the purchase price paid by any underwriter for Securities purchased
from the Selling Security Holders, any discounts, commissions and other items
constituting compensation from the Selling Security Holders and/or the Company
and any discounts, commissions or concessions allowed or reallowed or paid to
dealers, including the proposed selling price to the public. In addition, an
underwritten offering will require clearance by the National Association of
Securities Dealers, Inc. of the underwriter's compensation arrangements. The
Company will not receive any of the proceeds from the sale by the Selling
Security Holders of the Securities offered hereby. All of the filing fees and
other expenses of this Registration Statement will be borne in full by the
Company, other than any underwriting fees, discounts and commissions relating
to this offering.
Pursuant to the Equity Registration Rights Agreement, the Company will
use its best efforts to keep the Registration Statement of which this
Prospectus forms a part effective under the Act for a period of three years
following the initial effective date of such Registration Statement (or such
shorter period as permitted under the Equity Registration Rights Agreement)
and the Company will pay substantially all of the expenses incident to the
offering and sale of the Securities to the public, other than underwriting
fees, discounts and commissions. The Equity Registration Rights Agreement
provides for cross-indemnification of the Selling Security Holders and the
Company, to the extent permitted by law, for losses, claims, damages,
liabilities and expenses arising, under certain circumstances, out of any
registration of the Securities. The Equity Registration Rights Agreement also
provides that in connection with an underwriting offering, the Company will
indemnify the underwriters thereof, their officers and directors and each
person who controls such underwriters (within the meaning of the Securities
Act) to the same extent as provided with respect to the indemnification of the
Selling Security Holders signatory to such agreement, except with respect to
information provided by such underwriters specifically for inclusion within
the appropriate registration statement. The period beginning on the date the
Equity Registration Statement is first declared effective by the Commission
and ending on the date which is three years after the expiration of the
Warrants or, if earlier, the date on which all Warrants and Warrant Shares
have been sold pursuant to the Equity Registration Statement or the date three
years after all Warrants have been exercised, is referred to as the
"Effectiveness Period." In the event that the Equity Registration Statement is
not filed or effective by, or continuously effective through, the dates
referred to above or prior to the end of the Effectiveness Period, the
Commission shall have issued a stop order suspending the effectiveness of the
Equity Registration Statement or the prospectus contained in the Equity
Registration Statement, as amended or supplemented, shall (x) not contain
current information required by the Securities Act and the rules and
regulations promulgated thereunder or (y) contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading, the Company agreed to pay, or cause
to be paid, as liquidated damages and not as a penalty, to each holder of a
Warrant or Warrant Share, an amount equal to $0.0025 per week per Warrant or
Warrant Share, as the case may be, for each week beginning on such date and
ending 90 days thereafter. Such liquidated damages shall be increased by
$0.0025 per week per Warrant or Warrant Share, as the case may be, at the
beginning of each subsequent 90-day period up to a maximum aggregate amount of
$0.01 per week per Warrant or Warrant Share, as the case may be. The Company
agreed to pay all expenses incident to the Company's performance of or
compliance with the Equity Registration Rights Agreement, including the
reasonable fees and expenses of counsel to the original purchasers of the
Warrants but excluding any underwriting fees, discounts or commissions
attributable to the sale of the Warrants or Warrant Shares. Each of the
Company and the Warrant Agent, on behalf of the original
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purchasers of the Warrants, pursuant to the Equity Registration Rights
Agreement, agreed to indemnify the other party, its officers, directors and
controlling persons in respect of certain liabilities and expenses arising,
under certain circumstances, out of any registration of the Securities
pursuant to the Equity Registration Rights Agreement.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the Securities may not simultaneously
engage in market making activities with respect to the Securities for a period
of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, the Selling Security Holders will
be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including without limitation Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of the Securities
by the Selling Security Holders.
In order to comply with certain states' securities laws, if
applicable, the Securities will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In certain states the Securities
may not be sold unless the Securities have been registered or qualified for
sale in such state, or unless an exemption from registration or qualification
is available and is obtained.
The Warrants originally issued by the Company in the Private Exchange
Offer contained legends as to their restricted transferability. In addition,
the certificates for Common Stock issuable upon exercise of the Warrants would
contain, legends as to their restricted transferability. Upon the
effectiveness of the Registration Statement of which this Prospectus forms a
part and the transfer of the Securities pursuant thereto, these legends will
no longer be necessary, and accordingly, new certificates representing such
Securities will be issued to the transferee without any such legends unless
otherwise required by law.
In addition to sales pursuant to the Registration Statement of which
this Prospectus forms a part, the Warrants and the shares of Common Stock
issuable upon exercise of the Warrants may be sold in accordance with Rule 144
under the Securities Act.
LEGAL MATTERS
The legality of the securities covered by this Prospectus has been
passed upon by Shereff, Friedman, Hoffman & Goodman, LLP, New York, New York,
counsel to the Company.
EXPERTS
The consolidated financial statements of the Company as of June 30,
1994 and June 30, 1995 and for each of the three years in the period ended
June 30, 1995 appearing in the Company's Annual Report and incorporated by
reference in this Prospectus and elsewhere in this Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
Reference is made to said report, which includes an explanatory paragraph with
respect to the change in the method of accounting for certain warehousing and
catalog costs as discussed in Note 4 to the consolidated financial statements.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS,
OTHER THAN THOSE HEREIN, IN CONNECTION WITH
THIS OFFER AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, ANY OF THESE SECURITIES IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN
SUCH JURISDICTION. THE DELIVERY OF THIS
PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
----------------
TABLE OF CONTENTS PAGE
----
Available Information............................ 4
Incorporation of Certain Documents by
Reference........................................ 4
Prospectus Summary............................... 5
Risk Factors..................................... 11
Use of Proceeds.................................. 14
Selling Security Holders......................... 15
Description of Warrants.......................... 16
Description of Capital Stock..................... 17
Plan of Distribution............................. 18
Legal Matters.................................... 20
Experts.......................................... 20
<PAGE>
WAXMAN INDUSTRIES, INC.
2,950,000
WARRANTS TO
PURCHASE COMMON STOCK
----------------
2,950,000
SHARES OF
COMMON STOCK
PAR VALUE $.01 PER SHARE
----------------
PROSPECTUS
----------------
MAY 24, 1996
----------------
