<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
WAXMAN INDUSTRIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WAXMAN INDUSTRIES, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
/X/ No fee required.
/ / Fee computed 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 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part 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:
(4) Date filed:
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<PAGE> 2
WAXMAN INDUSTRIES INC. [LOGO]
24460 Aurora Road
Bedford Heights, Ohio 44146
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 26, 1996
------------------
To Our Stockholders:
The Annual Meeting of Stockholders (the "Annual Meeting") of Waxman
Industries, Inc. (the "Company") will be held at the offices of the Company,
24460 Aurora Road, Bedford Heights, Ohio on November 26, 1996 at 11:00 a.m.
Cleveland time to consider and act on the following matters:
1. The election of seven directors of the Company to serve until the
1997 Annual Meeting of Stockholders and until their successors are elected
and qualified;
2. The approval of the Company's 1996 Non-Employee Directors'
Restricted Share Plan;
3. The approval of grants of Stock Appreciation Rights to certain
executive officers;
4. The ratification of the appointment of Arthur Andersen LLP as the
independent public accountants of the Company; and
5. Such other business as may properly come before the Annual Meeting
and any adjournment thereof.
The foregoing matters are described in more detail in the Proxy Statement
which follows.
The Board of Directors has fixed the close of business on October 21, 1996
as the record date for determining stockholders entitled to notice of, and to
vote at, the Annual Meeting and any adjournments or postponements thereof.
Accordingly, only holders of record of shares of Common Stock and Class B Common
Stock of the Company at the close of business on such date will be entitled to
notice of, and to vote at, the Annual Meeting and any adjournments or
postponements thereof. A copy of the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1996, as amended by an amendment on Form 10-K/A,
is enclosed herewith.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL
MEETING, PLEASE MARK, DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN
THE RETURN STAMPED ENVELOPE PROVIDED. PROXIES ARE REVOCABLE BY WRITTEN NOTICE TO
THE SECRETARY OF THE COMPANY AT ANY TIME PRIOR TO THEIR BEING VOTED OR BY
APPEARANCE AT THE ANNUAL MEETING TO VOTE IN PERSON. YOUR PROMPT RETURN OF THE
PROXY WILL BE OF GREAT ASSISTANCE IN PREPARING FOR THE ANNUAL MEETING AND IS
THEREFORE STRONGLY REQUESTED.
By Order of the Board of Directors
/s/ Kenneth Robins
KENNETH ROBINS, Secretary
October 28, 1996
<PAGE> 3
WAXMAN INDUSTRIES INC. [LOGO]
PROXY STATEMENT
------------------
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 26, 1996
------------------
INTRODUCTION
This Proxy Statement is being furnished to stockholders of Waxman
Industries, Inc. (the "Company") in connection with the Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held at 11:00 a.m.,
Cleveland time, on Tuesday, November 26, 1996, at the offices of the Company.
The enclosed proxy is solicited on behalf of the Board of Directors of the
Company and is subject to revocation at any time prior to the voting of the
proxy as provided below. Unless a contrary choice is indicated, all duly
executed proxies received by the Company will be voted for (i) the election of
the seven nominees for directors; (ii) the proposal to approve the Waxman
Industries, Inc. 1996 Non-Employee Directors' Restricted Share Plan; (iii) the
approval of grants of Stock Appreciation Rights to certain executive officers;
and (iv) the ratification of the appointment of Arthur Andersen LLP as the
independent public accountants of the Company. The approximate date on which
this Proxy Statement and the enclosed proxy card are first being sent to
stockholders is October 28, 1996.
Stockholders of record at the close of business on October 21, 1996 are
entitled to notice of, and to vote at, the Annual Meeting and any adjournment or
postponement thereof. On that date, there were outstanding 9,703,728 shares of
common stock, $.01 par value, of the Company ("Common Stock"), and 2,153,046
shares of Class B common stock, $.01 par value, of the Company ("Class B Common
Stock"). Each share of Common Stock is entitled to one vote on all matters to
come before the Annual Meeting, and each share of Class B Common Stock is
entitled to ten votes on all matters to come before the Annual Meeting.
Directors will be elected by a plurality of the votes of the shares present in
person or represented by proxy at the Annual Meeting and entitled to vote on the
election of directors. Action on the other matters scheduled to come before the
Annual Meeting will be authorized by the affirmative vote of the majority of
shares present in person or represented by proxy at the meeting and entitled to
vote on such matters. For purposes of determining whether a matter has received
a majority vote, abstentions will be included in the vote totals, with the
result that an abstention has the same effect as a negative vote. In instances
where brokers are prohibited from exercising discretionary authority for
beneficial owners who have not returned a proxy (so-called "broker non-votes"),
those shares will not be included in the vote totals, will only be counted for
purposes of determining whether a quorum is present at the Annual Meeting and
therefore will have no effect on the vote. The Company currently has no class of
voting securities outstanding other than Common Stock and Class B Common Stock.
Shares cannot be voted at the Annual Meeting unless the holder thereof is
present or represented by proxy. When proxies in the accompanying form are
returned, properly executed, the shares represented thereby will be voted as
specified thereon. Any stockholder giving a
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proxy has the right to revoke it at any time prior to its exercise, either in
writing delivered to the Secretary of the Company at its executive offices, or
in person at the Annual Meeting.
COMMON STOCK OWNERSHIP
CAPITAL STOCK
The following table sets forth, as of September 20, 1996 (except as noted
in footnote 8 and 9 below), the number of shares of Common Stock beneficially
owned by each director, by the directors and executive officers of the Company
as a group and by each holder of at least five percent of Common Stock known to
the Company, and the respective percentage ownership of the outstanding Common
Stock and Class B Common Stock and voting power held by each such holder and
group. The mailing address for Messrs. Melvin and Armond Waxman is the executive
office of the Company.
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF SHARES OWNERSHIP
BENEFICIALLY OWNED -----------------
----------------------- CLASS
CLASS B B PERCENTAGE
NAME AND COMMON COMMON COMMON COMMON OF AGGREGATE
BENEFICIAL OWNER STOCK STOCK STOCK STOCK VOTING POWER
- -------------------------------- --------- --------- ------ ------ ------------
<S> <C> <C> <C> <C> <C>
Melvin Waxman(1)................ 980,300 1,011,932 10.0% 47.0% 35.4%
Armond Waxman(2)................ 880,882 770,282 9.0 35.8 27.4
Laurence S. Waxman(3)........... 103,525 55,252 1.1 * 2.1
William Pray(4)................. 66,875 -- * -- *
Irving Friedman(5).............. 10,000 -- * -- *
Samuel J. Krasney(6)............ 16,750 6,750 * * *
Judy Robins(7).................. 79,750 75,250 * 3.5 2.7
Directors and officers as
a group (9 individuals)....... 2,138,082 1,919,466 21.2 89.1 67.4
Weiss, Peck & Greer(8).......... 1,286,400 -- 13.3 -- 4.1
One New York Plaza
New York, NY 10004
Monarch Management
Group, Ltd.(9)............. 1,141,789 -- 11.8 -- 3.7
767 Fifth Avenue
New York, New York 10153
<FN>
- ---------------
* less than 1%
(1) Includes 150,000 shares of Common Stock subject to options granted to Mr.
Waxman pursuant to the 1992 Non-Qualified and Incentive Option Plan (the
"1992 Plan") and 100 shares of Common Stock owned by a member of Mr. Melvin
Waxman's immediate family, as to which shares Mr. Waxman disclaims
beneficial interest. Does not include 200,000 shares of Common Stock subject
to stock appreciation rights granted to Mr. Waxman by the Board of
Directors, which are subject to stockholder approval at the Annual Meeting.
(2) Includes 150,000 shares of Common Stock subject to options granted to Mr.
Waxman pursuant to the 1992 Plan and 100 shares of Common Stock owned by a
member of Mr. Waxman's immediate family, as to which shares Mr. Waxman
disclaims beneficial interest. Does not include 200,000 shares of Common
Stock subject to stock appreciation rights granted to Mr. Waxman by the
Board of Directors, which are subject to stockholder approval at the Annual
Meeting.
(3) Includes 28,750 shares of Common Stock subject to options granted to Mr.
Waxman pursuant to the 1992 Plan and 27,100 shares of Common Stock for which
Mr. Waxman is custodian to his minor children. Does not include 100,000
shares of Common Stock subject
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to stock appreciation rights granted to Mr. Waxman by the Board of
Directors, which are subject to stockholder approval at the Annual Meeting.
(4) Includes 41,875 shares of Common Stock subject to options granted to Mr.
Pray pursuant to the 1992 Plan.
(5) Includes 10,000 shares of Common Stock subject to options granted to Mr.
Friedman pursuant to the 1994 Non-Employee Directors Stock Option Plan (the
"1994 Directors Plan"). Does not include 5,000 shares of Common Stock
granted to Mr. Friedman pursuant to the 1996 Non-Employee Directors'
Restricted Share Plan, which is subject to stockholder approval at the
Annual Meeting.
(6) Includes 10,000 shares of Common Stock subject to options granted to Mr.
Krasney pursuant to the 1994 Directors Plan and 4,500 shares of Common Stock
and 4,500 shares of the Class B Common Stock owned by Mr. Krasney's wife, as
to which shares Mr. Krasney disclaims beneficial interest. Does not include
15,000 shares of Common Stock granted to Mr. Krasney pursuant to the 1996
Non-Employee Directors' Restricted Share Plan, which is subject to
stockholder approval at the Annual Meeting.
(7) Includes 10,000 and 5,000 shares of Common Stock subject to options granted
to Mrs. Robins as director and her spouse as Corporate Secretary of the
Company, respectively, pursuant to the 1994 Directors Plan. Does not include
15,000 shares of Common Stock granted to Mrs. Robins pursuant to the 1996
Non-Employee Directors' Restricted Share Plan, which is subject to
stockholder approval at the Annual Meeting.
(8) The information set forth in the table with respect to Weiss, Peck & Greer
was obtained from Amendment No. 4 to a Statement on Schedule 13G, dated
February 9, 1996, filed with the Securities and Exchange Commission. Such
statement reflects Weiss, Peck & Greer's beneficial ownership as of December
31, 1995.
(9) The information set forth in the table with respect to Monarch Management
Group, Ltd. was obtained from Amendment No. 2 to a Statement on Schedule
13D, dated July 16, 1996, filed with the Securities and Exchange Commission.
Such statement reflects Monarch Management Group, Ltd.'s beneficial
ownership as of July 15, 1996.
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is required to identify any officer, director or beneficial
owner of more than 10% of the Company's equity securities who failed to timely
file with the Securities and Exchange Commission a required report relating to
ownership and changes in ownership of the Company's equity securities. Based on
material provided to the Company by such officers, directors and beneficial
owners of more than 10% of the Company's equity securities, it believes that
during the fiscal year ended June 30, 1996, all such filing requirements were
complied with.
I.
ELECTION OF DIRECTORS
The authorized number of directors of the Company previously had been fixed
at six, but was increased by the Board of Directors to seven upon the election
of Laurence Waxman in July 1996. Management recommends that seven directors be
elected to serve until the next Annual Meeting of Stockholders and until their
respective successors are elected and qualified.
Unless otherwise directed, all proxies (unless revoked or suspended) will
be voted for the election of the seven nominees for director set forth below.
If, for any reason, any nominee is unable to accept such nomination or to serve
as a director, an event not currently anticipated, the persons named as proxies
reserve the right to exercise their discretionary authority to substitute such
other person or persons, as the case may be, as a management nominee, or to
reduce the number of management nominees to such extent as they shall deem
advisable. The Company is not aware of any reason why any nominee should become
unavailable for election,
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or if elected, should be unable to serve as a director. Set forth below is
certain information with respect to the nominees. All of the nominees are
currently directors of the Company. Armond and Melvin Waxman are brothers, Judy
Robins is their sister and Laurence Waxman is Melvin Waxman's son.
<TABLE>
<CAPTION>
NAME, AGE AND OTHER
POSITIONS WITH THE COMPANY BUSINESS EXPERIENCE
- ----------------------------------- --------------------------------------------------------
<S> <C>
Melvin Waxman, 62 Mr. Melvin Waxman was elected Co-Chairman of the Board
Chairman of the Board and and Co-Chief Executive Officer of the Company in June
Co-Chief Executive Officer 1995. Upon the consummation of the initial public
offering (the "Barnett Public Offering") of Barnett Inc.
("Barnett") in April 1996, Mr. Waxman became the
Chairman of the Board and Co-Chief Executive Officer of
the Company. Mr. Waxman has been a Chief Executive
Officer of the Company for over 20 years and has been a
director of the Company since 1962. Mr. Waxman was
Chairman of the Board of the Company since August 1976.
Mr. Waxman is the Chairman of the Board of Barnett.
Armond Waxman, 57 Mr. Armond Waxman was elected Co-Chairman of the Board
President, Co-Chief Executive and Co-Chief Executive Officer and Treasurer of the
Officer and Director Company in June 1995. Upon the consummation of the
Barnett Public Offering in April 1996, Mr. Waxman became
the President and Co-Chief Executive Officer of the
Company. Mr. Waxman has been the President and Treasurer
of the Company since August 1976. Mr. Waxman has been a
director of the Company since 1962 and was Chief
Operating Officer of the Company from August 1976 to May
1988. Mr. Waxman is the Vice- Chairman of the Board of
Barnett.
Laurence Waxman, 39 Mr. Laurence Waxman was elected Senior Vice President of
Senior Vice President Waxman Industries in November 1993 and is also President
and Director of Consumer Products, a position he has held since 1988.
Mr. Waxman joined the Company in 1981. Mr. Waxman was
appointed to the board of directors of the Company in
July 1996.
William R. Pray, 49 Mr. Pray was elected President and Chief Operating
Director Officer of the Company in June 1995. Mr. Pray served as
Senior Vice President of the Company from February 1991
and is also the President of Barnett, a position he has
held since 1987. Mr. Pray joined Barnett in 1979 as Vice
President of sales and marketing. Upon the consummation
of the Barnett Public Offering in April 1996, Mr. Pray
resigned from his position as an officer of the Company,
but remains a director. He is presently the President
and Chief Executive Officer and a Director of Barnett.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
NAME, AGE AND OTHER
POSITIONS WITH THE COMPANY BUSINESS EXPERIENCE
- ----------------------------------- --------------------------------------------------------
<S> <C>
Samuel J. Krasney, 71 Mr. Krasney has been a director of the Company since
Director 1977. In September 1993, Mr. Krasney retired from his
position of Chairman of the Board, President and Chief
Executive Officer of Banner Aerospace, Inc., a
distributor of parts in the aviation aftermarket, a
position he had held since June 1990. In September 1993,
Mr. Krasney also retired from The Fairchild Corporation
(formerly Banner Industries, Inc.) where he had been
Vice Chairman of the Board since 1985. Fairchild is a
manufacturer and distributor of fasteners to the
aerospace industry and is a shared tenant provider of
telecommunication services to office buildings. Mr.
Krasney is also a director of FabriCenters of America,
Inc.
Irving Z. Friedman, 63 Mr. Friedman has been a director of the Company since
Director 1989. Mr. Friedman has been a certified public
accountant with the firm of Krasney Polk Friedman &
Fishman for more than the past five years. Mr. Friedman
is the brother-in-law of Samuel Krasney.
Judy Robins, 47 Mrs. Robins has been a director of the Company since
Director 1980. Mrs. Robins has owned and operated an interior
design business for more than the past five years. Mrs.
Robins' husband is the Secretary of the Company.
</TABLE>
INFORMATION RELATING TO THE BOARD
OF DIRECTORS AND CERTAIN COMMITTEES OF THE BOARD
The Board of Directors held three meetings during the fiscal year ended
June 30, 1996 and on numerous occasions took action by unanimous written
consent. The Company has an Executive Committee, Audit Committee, Compensation
Committee and Stock Option Committee. Messrs. Melvin and Armond Waxman and
Krasney serve on the Executive Committee, Messrs. Friedman and Krasney serve on
the Audit Committee and the Stock Option Committee and Mrs. Robins and Messrs.
Krasney and Friedman serve on the Compensation Committee. The Company does not
have a nominating committee.
AUDIT COMMITTEE
The Audit Committee acts as a liaison between the Company's independent
auditors and the Board of Directors, reviews the scope of the annual audit and
the management letter associated therewith, reviews the Company's annual and
quarterly financial statements and reviews the sufficiency of the Company's
internal accounting controls. The Audit Committee held one meeting during fiscal
1996.
COMPENSATION COMMITTEE
The Compensation Committee determines the salaries and bonuses of Messrs.
Melvin and Armond Waxman (members of the Board of Directors who are also
officers of the Company). Although the Compensation Committee held no meetings
during fiscal 1996, on several occasions it took action by unanimous written
consent.
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STOCK OPTION COMMITTEE
The Stock Option Committee administers both the 1992 Non-Qualified and
Incentive Stock Option Plan of the Company and the Employee Stock Purchase Plan
of the Company. The Stock Option Committee held one meeting during fiscal 1996.
DIRECTOR REMUNERATION
Each director who is not an employee of the Company received a fee of
$3,000 per fiscal quarter for services as a director during fiscal 1996 plus a
fee of $1,000 plus traveling expenses for each board meeting he or she attended.
In addition, during fiscal 1996, each director who is not an employee of the
Company was automatically granted 5,000 shares of restricted Common Stock for
each five full years of service such director served on the Board of Directors
pursuant to the Waxman Industries, Inc. 1996 Non-Employee Directors' Restricted
Share Plan, which Plan is subject to stockholder approval at the Annual Meeting.
See "II. Approval of the Waxman Industries, Inc. 1996 Non-Employee Directors'
Restricted Share Plan."
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid for services
rendered during fiscal 1996 to the Co-Chief Executive Officers and the four
other most highly compensated executive officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------
ANNUAL COMPENSATION(1) SECURITY ALL OTHER
NAME AND ------------------------- UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(2) OPTIONS(#) ($)(3)
- ------------------------------------- ---- --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Melvin Waxman 1996 300,000 250,000 200,000(4) 90,961
Chairman of the Board and 1995 311,065 -- -- 111,397
Co-Chief Executive Officer 1994 325,000 100,000 300,000 45,604
Armond Waxman 1996 350,000 400,000 200,000(4) 73,834
President and 1995 353,277 100,000 -- 97,080
Co-Chief Executive Officer 1994 366,923 200,000 300,000 86,776
William R. Pray 1996 244,423 129,760 -- 58,870
Former President 1995 229,738 57,607 32,500 39,968(5)
and Chief Operating Officer 1994 206,250 75,000 92,500 --
John S. Peters 1996 96,154 20,750 -- 12,500
Senior Vice President 1995 136,119 22,500 -- 12,500
- -- Operations 1994 130,018 42,500 52,500 12,500
Laurence S. Waxman 1996 189,098 50,000 50,000 12,549
Senior Vice President 1995 190,480 50,000 -- 12,544
1994 151,826 65,000 57,500 11,589
Michael J. Vantusko(6) 1996 84,461 102,150 40,000 --
Vice President -- Finance and Chief
Financial Officer
<FN>
- ---------------
(1) Certain executive officers received compensation in fiscal 1994, 1995 and
1996 in the form of perquisites, the amount of which does not exceed
reporting thresholds.
(2) Messrs. Peters and Vantusko received their bonuses under the Company's
Profit Incentive Plan. In addition, Mr. Vantusko received a $75,000
discretionary bonus during fiscal 1996. Mr. Pray received $100,000 and
$25,000 discretionary bonuses in fiscal 1996 and 1994, respectively. Mr.
Laurence Waxman received his bonus pursuant to his Employment Agreement.
Messrs. Armond and Melvin Waxman received their bonuses at the discretion of
the Board of Directors.
(3) Unless otherwise noted, amounts principally represent premiums on
split-dollar life insurance policies.
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<PAGE> 9
(4) On March 29, 1996, each of Messrs. Melvin and Armond Waxman were awarded a
stock appreciation right ("SAR") with respect to 200,000 shares of the
Common Stock of the Company. Each SAR vests in whole three years after the
date of grant but not prior thereto, except in certain limited
circumstances. The SARs are subject to stockholder approval at the Annual
Meeting.
(5) Includes the grant of 25,000 shares of Common Stock to Mr. Pray in June 1995
and the accrual of a tax "gross up" payment with respect thereto.
(6) Mr. Vantusko joined the Company in October 1995.
</TABLE>
EMPLOYMENT AGREEMENTS
Mr. Peters entered into an employment agreement with the Company which
became effective as of January 1, 1992, was amended as of October 23, 1995, and
terminates on June 30, 1997. Pursuant to such employment agreement, Mr. Peters
is to serve as Senior Vice President, Operations of the Company, and is also to
serve in such substitute or further offices or positions with the Company or any
subsidiary or affiliate of the Company as shall, from time to time, be assigned
by the Board of Directors of the Company. Mr. Peters' employment agreement
provides for a minimum annual salary of $125,000, which salary will be reviewed
annually by the Company (and shall be reduced by a corresponding percentage
reduction in hours worked in the sole discretion of the Company). Mr. Peters'
annual salary was decreased to $90,000 in fiscal 1996 due to a corresponding
reduction in hours to three days per week and $60,000 in the first quarter of
fiscal 1997 due to a corresponding reduction in hours to two days per week.
Increases in salary and the granting of bonuses to Mr. Peters will be determined
by the Company, in its sole discretion, based on such individual's performance
and contributions to the success of the Company, his responsibilities and duties
and the salaries of other senior executives of the Company. The employment
agreement provides that upon termination of employment for any reason other than
death, disability (as defined therein) or cause (as defined therein), Mr. Peters
will be entitled to receive all of the compensation he would otherwise be
entitled to through the end of the term of the agreement. The employment
agreement also contains provisions which restrict Mr. Peters from competing with
the Company during the term of the agreement and for two years following the
termination thereof.
Upon the consummation of the Barnett Public Offering, Mr. Pray resigned
from his office at the Company. Mr. Pray entered into an employment agreement
with Barnett which became effective as of July 1, 1990, was amended as of
January 1, 1996 and terminates on January 1, 2006. Pursuant to such employment
agreement, Mr. Pray is to serve as President and Chief Executive Officer of
Barnett and will provide services to Barnett in such managerial areas as Mr.
Pray served in the past and such additional duties as shall be assigned to Mr.
Pray by the Chairman and Vice-Chairman of the Board of Directors of Barnett. Mr.
Pray's employment agreement provides for a minimum annual salary of $260,000 for
the first year of the employment agreement and provides that for each year
thereafter the minimum annual salary will be increased by eight percent (8%) of
the prior year's base salary until such base salary reaches $300,000 per year,
after which time the base salary shall be increased (but not decreased) each
year by (1) changes in the applicable Consumer Price Index (the "CPI"), or (2)
such greater amount as may be determined by the Board of Directors of Barnett,
in its discretion. If the increase in the CPI for 1997 is greater than 8%, Mr.
Pray's base salary for 1998 shall be increased above $300,000 by the percentage
arrived at by subtracting 8% from the increase in the CPI for 1997. Mr. Pray is
eligible to receive discretionary bonuses as may from time to time be determined
in the sole discretion of the Board of Directors of Barnett. In addition,
pursuant to the terms of the employment agreement, Mr. Pray will continue to be
provided with certain benefits and perquisites currently provided to him, as
well as a $2,000,000 split dollar life insurance policy and has also entered
into a money purchase deferred compensation agreement pursuant to which Barnett
established an account into which it deposits approximately $59,000 annually.
The balance remaining in the account upon the termination of
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<PAGE> 10
employment of Mr. Pray shall be paid to him or his beneficiaries, as the case
may be. In the event that Mr. Pray's employment is terminated without Cause (as
defined therein) or in the event he terminates his employment for Good Reason
(as defined therein), he will be entitled to receive, in one lump sum, an amount
equal to the present value of the product of (i) the sum of (x) the base salary
(as such base salary would have been adjusted for the remainder of the term) and
(y) the average of the bonus compensation paid to Mr. Pray with respect to the
three years preceding the termination of the new employment agreement and (ii)
the greater of (a) the remaining number of years (or portions thereof) in the
term of the new employment agreement and (b) two; provided, however, that if any
portion of such compensation would constitute an "excess parachute payment"
under Section 280G of the Internal Revenue Code of 1986, as amended, the amount
of such compensation would be reduced to the highest amount that would not
constitute an excess parachute payment. The employment agreement also contains
provisions which restrict Mr. Pray from competing with Barnett during the term
of the agreement and for two years following termination thereof.
Mr. Laurence Waxman entered into an employment agreement with Waxman
Consumer Products Group Inc., a wholly owned subsidiary of the Company
("Consumer Products"), which became effective as of November 1, 1994 and
terminates on October 31, 1999. Pursuant to such employment agreement, Mr.
Laurence Waxman is to serve as President of Consumer Products, and is also to
serve in such further offices or positions with Consumer Products or any
subsidiary or affiliate of Consumer Products as shall, from time to time, be
assigned by the Board of Directors of Consumer Products. Mr. Laurence Waxman's
employment agreement provides for an annual salary of $200,000 for the first
year of the employment agreement and provides that for each year thereafter the
annual salary will be increased by six percent of the prior year's salary.
Additional increases in salary and the granting of bonuses to Mr. Laurence
Waxman will be determined by Consumer Products, in its sole discretion, based on
such individual's performance and contributions to the success of Consumer
Products, his responsibilities and duties and the salaries of other senior
executives of Consumer Products. A bonus in the amount of $50,000 was granted to
Mr. Laurence Waxman in fiscal 1996. During fiscal 1996, Mr. Waxman agreed to
temporarily reduce his annual salary in an effort to support the Company's cost
containment efforts. The employment agreement provides that upon termination of
employment by Mr. Laurence Waxman for good reason (as defined therein) or by the
Company for any reason other than death, disability (as defined therein) or
cause (as defined therein), Mr. Laurence Waxman will be entitled to receive all
of the compensation he would otherwise be entitled to through the end of the
term of the agreement. The employment agreement also contains provisions which
restrict Mr. Laurence Waxman from competing with the Company or Consumer
Products during the term of the agreement and for two years following the
termination thereof.
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<PAGE> 11
STOCK OPTION AND SAR GRANTS
The following table sets forth the information noted for all grants of
stock options made by the Company during fiscal 1996 to each of the executive
officers named in the Summary Compensation Table:
OPTION/SAR(1) GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT
ASSUMED ANNUAL
INDIVIDUAL GRANTS RATES OF STOCK
----------------------------------- PRICE
% OF TOTAL APPRECIATION
OPTIONS FOR OPTION
OPTIONS GRANTED TO EXERCISE TERM(1)
GRANTED EMPLOYEES IN PRICE EXPIRATION -----------------
NAME (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ---- ------- ------------ -------- -------------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Laurence S. Waxman 50,000 12.98% 1.00 Feb. 2, 2006 31,445 79,687
Michael J. Vantusko 25,000 6.49% 1.125 Oct. 11, 2005 17,688 44,824
15,000 3.90% 1.00 Feb. 2, 2006 9,433 23,906
</TABLE>
<TABLE>
<CAPTION>
% OF TOTAL
SAR'S
SAR'S GRANTED TO GRANT
GRANTED(2) EMPLOYEES IN PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ---- ---------- ------------ ----- -------------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Melvin Waxman 200,000 50% 3.375 Mar. 29, 2006 424,504 1,075,776
Armond Waxman 200,000 50% 3.375 Mar. 29, 2006 424,504 1,075,776
<FN>
- ---------------
(1) The potential realizable values represent future opportunity and have not
been reduced to present value in 1996 dollars. The dollar amounts included
in these columns are the result of calculations at assumed rates set by the
Securities and Exchange Commission for illustration purposes, and these
rates are not intended to be a forecast of the common stock price and are
not necessarily indicative of the values that may be realized by the named
executive officer.
(2) On March 29, 1996, each of Messrs. Melvin and Armond Waxman were awarded an
SAR with respect to 200,000 shares of the Common Stock of the Company. Each
SAR vests in whole three years after the date of grant but not prior
thereto, except in certain limited circumstances. Such SARs are subject to
stockholder approval at the Annual Meeting.
</TABLE>
STOCK OPTION AND SAR EXERCISES
The following tables set forth the information noted for all exercises of
stock options and SARs during fiscal 1996 by each of the executive officers
named in the Summary Compensation Table:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END($)
SHARES NUMBER OF UNEXERCISED OPTIONS ---------------------------
ACQUIRED ON VALUE AT FISCAL YEAR-END(#) NOT
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE EXERCISABLE
- ---- ----------- ----------- ----------------------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPTIONS:
Melvin Waxman -- -- 150,000/150,000 337,500 337,500
Armond Waxman -- -- 150,000/150,000 337,500 337,500
William R. Pray -- -- 41,875/58,125 101,327 152,108
John S. Peters 26,250 85,312 None/26,250 -- 59,062
Laurence S. Waxman -- -- 28,750/78,750 64,687 239,687
Michael J. Vantusko -- -- None/40,000 -- 136,875
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE-MONEY SAR'S AT
FISCAL YEAR-END($)
VALUE NUMBER OF UNEXERCISED SARS ---------------------------
ACQUIRED ON VALUE AT FISCAL YEAR-END(#) NOT
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE EXERCISABLE
- ---- ------------ ------------ --------------------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
SAR'S:(1)
Melvin Waxman -- -- None/200,000 None 225,000
Armond Waxman -- -- None/200,000 None 225,000
<FN>
- ---------------
(1) On March 29, 1996, each of Messrs. Melvin and Armond Waxman were awarded an
SAR with respect to 200,000 shares of the Common Stock of the Company. Each
SAR vests in whole three years after the date of grant but not prior
thereto, except in certain limited circumstances. Such SARs are subject to
stockholder approval at the Annual Meeting.
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
determines the compensation of the Company's Co-Chief Executive Officers. The
Committee is composed solely of non-employee directors who are not eligible to
participate in any of the executive compensation programs of the Company. The
proxy rules require the Committee to disclose the Committee's bases for
compensation of executive officers and for compensation reported for Melvin and
Armond Waxman, the Co-Chief Executive Officers of the Company, and to discuss
the relationship between the Company's performance during fiscal 1996 and
compensation.
The Company's compensation policy reflects its belief that the compensation
of its senior executive officers should provide total compensation reasonably
comparable and competitive to that offered by similarly situated companies and
to align the interests of its executive officers with the long term interests of
the Company's stockholders with the grant of equity based awards. The object of
these awards is to reinforce and advance the long-term interest of the Company
and its stockholders. These awards provide rewards to executives upon the
creation of incremental stockholder value and have the potential of providing
significant benefit to the executives without burdening the Company's cash
resources. Stock options only produce value to executives as the price of the
Company's stock appreciates, thereby directly linking the interests of
executives with those of stockholders.
Cash compensation of the Co-Chief Executive Officers is established by the
Committee. Grants of stock options and other stock based awards for all
executive officers and employees, including the Co-Chief Executive Officers, are
awarded by the Company's Stock Option Committee. Both members of the Stock
Option Committee are also members of the Compensation Committee.
While competitive practices are taken into account in determining cash
compensation, the Committee believes that the most important considerations in
setting annual compensation are individual merit, the Company's financial
performance and achievement of strategic objectives approved by the Board of
Directors. The Committee does not apply any specific quantitative formula in
making compensation decisions. The Committee appreciates the importance of
achievements that may be difficult to quantify, and accordingly recognizes
qualitative factors such as contributions of executive officers to the
achievement of the Company's strategic goals in a volatile business environment,
the managerial effectiveness and teamwork of individual executive officers and
the implementation of policies and measures that will benefit the Company's
long-term performance.
The compensation of the Company's Co-Chief Executive Officers has been
designed to provide them with a fair salary and to reward them for their efforts
towards enhancing the long-term performance of the Company and ultimately
increasing stockholder value. The Committee approved the base salary and cash
bonuses that were paid to each of them. The salary and bonuses were approved by
the Committees in order to compensate Messrs. Waxman for their
10
<PAGE> 13
continuing efforts to reduce the Company's high degree of leverage and position
the Company for a return to profitability.
In determining each of Messrs. Waxmans' compensation for fiscal 1996,
including the bonuses paid to them, the Committee considered Messrs. Waxmans'
efforts during fiscal 1996 in the continuous evaluation and pursuit of certain
transactions intended to deleverage the Company's capital structure and provide
it with greater stability and financial flexibility. As a result of these
efforts, in April 1996, the Company successfully completed (x) an initial public
offering (the "Barnett Public Offering") of approximately 55% of the common
stock of Barnett (the "Barnett Common Stock"), (b) a private exchange offer with
respect to the Company's 13 3/4% Senior Subordinated Notes due 1999 (the "Senior
Subordinated Notes") and (z) an interim extension of the Company's revolving and
term loan credit facilities.
In the Barnett Public 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 wholly-owned subsidiary of the
Company, at an initial public offering price of $14.00 per share, resulting in
aggregate net proceeds of $92.6 million, substantially all of which was used to
repay debt, including 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. The net proceeds received by
Waxman USA (approximately $21.0 million) not previously applied to repay debt
are intended to be used to (i) reduce additional outstanding indebtedness
borrowed by Consumer Products and WOC under the New Credit Agreement (as defined
herein) and/or (ii) retire the Company's 12 3/4% Senior Secured Deferred Coupon
Notes due 2004 (the "Deferred Coupon Notes") and/or the Company's 11 1/8% Senior
Notes due 2001 (the "Waxman USA Notes") and/or (iii) reinvest in Consumer
Products and/or WOC's businesses.
In connection with the Barnett Public Offering, Waxman USA entered into an
amendment and restatement of the existing revolving credit facility and term
loan to provide for, among other things, an approximate one year secured credit
facility and a release of Barnett from such lending arrangements. On June 28,
1996, Waxman USA refinanced such credit facility with a new credit facility
provided by BankAmerica Business Credit, Inc. The new credit agreement provides
for, among other things, an approximate three year secured credit facility
providing for revolving credit advances of up to $30.0 million and term loans of
up to $5.0 million. In addition, as part of the Company's efforts to decrease
its leverage and increase its financial flexibility, on April 3, 1996, Waxman
USA consummated a private exchange offer pursuant to which it exchanged
$43,026,000 principal amount of the Company's Senior Subordinated Notes
(representing approximately 88% of the outstanding issue) for a like amount of
Waxman USA 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
eliminated virtually all of the restrictive covenants and events of defaults
previously contained in such indenture. The private exchange offer decreased the
Company's cash interest burden and extended the maturity of the Senior
Subordinated Notes exchanged in the private exchange offer until June 2001.
Although the Company's capital structure remains highly leveraged, the
Company has been able to eliminate all near term debt maturities and to
successfully increase its liquidity, allowing the Company to focus on growing
its businesses. The Committee believes that each of Messrs. Armond and Melvin
Waxman demonstrated a high level of leadership and responsibility for evaluating
the various deleveraging transactions executed by the Company and for planning
and successfully executing these deleveraging transactions, which were a vital
step toward creating long term value for the Company's stockholders.
11
<PAGE> 14
The Committee does not establish the cash compensation levels for the
Company's other executive officers. The Board has delegated to the Co-Chief
Executive Officers the responsibility for establishing the salaries and bonuses
payable to those individuals. However, the grants of stock options and other
equity-based compensation are the responsibility of the Stock Option Committee.
As a result, the members of the Committee are able to review and have input into
the overall levels of compensation provided to executive officers and, in their
role as Board members, are in a position to review the performances of those
individuals with the Co-Chief Executive Officers.
As it does with respect to the Co-Chief Executive Officers, the Committee
supports the principle that stock ownership by the Company's executive officers,
encouraged by equity based compensation plans, aligns the interests of the
senior executive officers with the stockholders of the Company. By using
equity-based compensation over a period of time, the executive officers of the
Company will strengthen their identification with the stockholders of the
Company and make increasing stockholder value an important focus for the
Company's management group. To that end, in fiscal 1996, each of Messrs. Armond
and Melvin Waxman were granted, subject to stockholder approval, an SAR with
respect to 200,000 shares of Common Stock. The fair market value of the Common
Stock as of the date of grant was $3 3/8 per share. Each of the SARs vest in
whole three years after the date of grant but not prior thereto, except in
certain extraordinary circumstances.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), which was enacted in 1993, generally disallows a tax deduction for
compensation paid or accrued in excess of $1 million with respect to the chief
executive officer and each of the four most highly compensated employees of a
publicly held corporation. Qualifying performance based compensation will not be
subject to the deduction limit if certain requirements are met. The 1992 Plan
and the Non-Employee Directors Plan, complies with these requirements. The
Compensation Committee does not believe that the cash compensation to be paid to
the Co-Chief Executive Officers or such other highly paid executive officers
will exceed the deduction limit of Section 162(m).
MEMBERS OF THE COMMITTEE:
Samuel J. Krasney
Irving Z. Friedman
Judy Robins
The foregoing report of the Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference the Proxy
Statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporated this information by reference, and shall not
otherwise be deemed filed under such Acts.
12
<PAGE> 15
PERFORMANCE GRAPH
Set forth below is a graph comparing the yearly percentage change in the
cumulative total stockholder return of the Company's Common Stock, the Standard
& Poor's 500 Composite Stock Index and the Standard & Poor's Building Materials
Index for the period of five fiscal years commencing with fiscal 1992. The graph
assumes $100 invested on July 1, 1991 in the Company and each of the other
indices.
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN*
(in dollars)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD WAXMAN S&P BUILDING
(FISCAL YEAR COVERED) INDUSTRIES S & P 500 MATERIALS
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 118.80 113.41 114.29
1993 90.89 128.87 139.22
1994 57.23 130.68 127.32
1995 33.66 164.75 138.07
1996 121.19 207.59 167.18
<FN>
* Total Return Assumes Reinvestment of Dividends
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mrs. Judy Robins, a member of the Compensation Committee, owns a 13% equity
interest in Aurora Investment Company ("Aurora"). All of the other equity
interests in Aurora are owned by Melvin Waxman (34%), Armond Waxman (34%) and
members of their and Mrs. Robins' families (19%). Armond and Melvin Waxman are
brothers and Judy Robins is their sister. The Company, pursuant to a lease dated
June 30, 1992, which expires on June 30, 2002 (with an option to renew for one
additional term of five years), leases its office and warehouse facility located
at 24455 Aurora Road, Bedford Heights, Ohio, from Aurora. The annual rent on the
facility, consisting of approximately 125,000 square feet of space, is $314,200,
which management believes is competitive with other rates in the area.
CERTAIN RELATIONSHIPS
The Company and Barnett provide to and receive from each other certain
selling, general and administrative services and reimburse each other for
out-of-pocket disbursements related to those services. In connection with the
Barnett Public Offering, the Company and Barnett, among others, entered into a
New Intercorporate Agreement. Pursuant to the New Intercorporate
13
<PAGE> 16
Agreement, the Company provides certain managerial, administrative and financial
services to Barnett and Barnett pays the Company the allocable cost of the
salaries and expenses of the Company's employees while they are rendering such
services. Barnett also reimburses the Company for actual out-of-pocket
disbursements to third parties by the Company required for the provision of such
services by the Company. In addition to the services provided by the Company to
Barnett pursuant to the New Intercorporate Agreement, Barnett also continues to
provide certain services to the operating divisions of WOC Inc., including LeRan
Copper & Brass, U.S. Lock and Madison Equipment Company. These services include
the utilization of Barnett's management information systems, financial
accounting, order processing and billing and collection services. The Company
pays to Barnett the allocable cost of the salaries and expenses of Barnett's
employees while they are performing such services. The Company also reimburses
Barnett for all actual out-of-pocket disbursements to third parties by Barnett
required for the provisions of such services. The net effect of these charges is
not material. The arrangements provided in the New Intercorporate Agreement may
be modified and additional arrangements may be entered into pursuant to a
written agreement between Barnett and the Company.
II.
APPROVAL OF THE WAXMAN INDUSTRIES, INC.
1996 NON-EMPLOYEE DIRECTORS' RESTRICTED SHARE PLAN
The Board of Directors of the Company adopted the Waxman Industries, Inc.
1996 Non-Employee Directors' Restricted Share Plan (the "Non-Employee Directors'
Plan") on May 14, 1996, subject to stockholder approval within 12 months after
such date. The Non-Employee Directors' Plan will be administered by a committee
of the Board of Directors consisting of at least two directors, as appointed by
the Board of Directors. The purpose of the Non-Employee Directors' Plan is to
assist the Company in attracting, retaining and motivating non-employee
directors by providing for, or increasing the proprietary and vested interest of
the non-employee directors of the Company.
The following is a brief description of the material features of the
Non-Employee Directors' Plan; such description is qualified in its entirety by
reference to the full text of the Non-Employee Directors' Plan itself, as set
forth in Exhibit A to this Proxy Statement.
1996 NON-EMPLOYEE DIRECTORS' RESTRICTED SHARE PLAN
(a) Shares Subject to the Non-Employee Directors' Plan. Up to an aggregate
of 100,000 shares of Common Stock may be issued pursuant to the Non-Employee
Directors' Plan. Shares which are not issued prior to expiration or termination
of an award may thereafter be available for future awards under the Non-Employee
Directors' Plan. The Non-Employee Directors' Plan provides for appropriate
adjustments of shares available thereunder and of shares subject to outstanding
awards in the event of any changes in the outstanding Common Stock by reason of
any reorganization, merger, recapitalization, reclassification, capital
adjustments, stock dividend, stock split or other similar transaction.
(b) Upon the adoption of the Non-Employee Directors' Plan by the Board of
Directors, 5,000 Shares of restricted stock were automatically granted to each
non-employee director for each five full years of service such non-employee
director served on the Board of Directors, including service prior to the
inception of the Non-Employee Directors' Plan. After the date of adoption, each
non-employee director will be granted on each fifth anniversary of his or her
initial election an award of restricted stock equal to the excess of (x) the
product of 5,000 and the result obtained by dividing the number of full years of
service as a non-employee director by 5 over (y) the number of shares previously
awarded to such non-employee director. The purchase price of the Shares will be
equal to the par value of such shares. Such shares are subject to a required
holding period of two years after the date of grant during which the shares
14
<PAGE> 17
may not be transferred except in accordance with the laws of descent and
distribution or to certain family members and trusts. The two-year holding
period requirement will lapse on the earliest to occur of death, disability, a
change of control or certain other extraordinary events. Additional cash
payments will be made to the outside directors to enable them to satisfy
federal, state and local tax liabilities payable by reason of the grants of
restricted stock made to them.
(c) Amendments to the Non-Employee Directors' Plan. The Board of Directors
may amend the Non-Employee Directors' Plan, but not more than once every six
months with respect to provisions which relate to the amount, price and timing
of grants other than to comply with certain federal laws. Any amendment
increasing the total number of shares reserved, expanding the class of
individuals eligible for awards, increasing the period for granting awards or
which modifies the Non-Employee Directors' Plan in such a manner that requires
stockholder approval may only be adopted by the Board of Directors subject to
any required stockholder approval.
NEW PLAN BENEFITS/AWARDS GRANTED
WAXMAN INDUSTRIES INC.
1996 NON-EMPLOYEE DIRECTORS' RESTRICTED SHARE PLAN
<TABLE>
<CAPTION>
NUMBER OF
NAME AND POSITION DOLLAR VALUE(1) SHARES(2)
- ----------------- --------------- -----------------
<S> <C> <C>
Non-Executive Director Group $ 135,625 35,000
(4 individuals)
<FN>
- ---------------
(1) Based on closing sale price of the Common Stock on October 21, 1996.
(2) The group listed in the table may receive additional grants of restricted
Common Stock under the Non-Employee Directors Plan in the future (see
above).
</TABLE>
FEDERAL TAX CONSEQUENCES
Set forth below is a description of the federal income tax consequences
under the Code, of the grant of the benefits awarded under the Non-Employee
Directors' Plan. This description does not purport to be a complete description
of the federal income tax aspects of the Non-Employee Directors' Plan. The
summary does not include any discussion of state, local or foreign income tax
consequences or the effect of gift, estate or inheritance taxes, any of which
may be significant to a particular director eligible to receive restricted
stock.
The federal income tax treatment to a Director who receives an award under
the Non-Employee Directors' Plan will depend on whether or not he or she timely
files an election under 83(b) of the Code. If such an election is timely filed,
the Director will recognize ordinary income in an amount equal to the fair
market value of the shares received pursuant to the Non-Employee Directors' Plan
at the time of the award, without regard to any restrictions on such shares. If
the election is not timely filed, the Director will recognize ordinary income at
the time the shares vest in an amount equal to the fair market value of the
shares at that time.
Upon resale of the shares received pursuant to the Non-Employee Directors'
Plan, the Director will recognize capital gain or loss equal to the difference
(if any) between the sale price and his or her tax basis in such shares. Such
gain or loss (except forfeiture if an election under Section 83(b) is filed)
will be treated as capital gain or loss, and will qualify for long-term capital
gain or loss treatment if the shares have been held for more than one year. The
current maximum federal rate of tax on net capital gain (excess of net long-term
capital gain over net short-term capital loss) is 28%.
The Company will be entitled to a deduction in the same amount, and at the
same time, that a Director recognizes as income under the rules described above.
Section 162(m) of the Code, which generally disallows a tax deduction for
compensation over $1,000,000 paid to the Chief
15
<PAGE> 18
Executive Officer and certain other highly compensated employees, should not
apply to the Non-Employee Directors' Plan because employees of the Company are
not eligible to participate in the Non-Employee Directors' Plan.
Approval of the Non-Employee Directors' Plan requires an affirmative vote
of the holders of a majority of the voting securities of the Company represented
and voting at the Annual Meeting.
The Board of Directors recommends a vote FOR approval of the Non-Employee
Directors' Plan.
III.
APPROVAL OF THE GRANT TO CERTAIN EXECUTIVE OFFICERS STOCK
APPRECIATION RIGHTS
Subject to approval of the stockholders of the Company, the Stock Option
Committee of the Board of Directors (i) on March 29, 1996, granted to each of
Messrs. Armond and Melvin Waxman an SAR with respect to 200,000 shares of Common
Stock at a base price of $3 3/8 per share, the fair market value of the Common
Stock as of the date of such grant, and (ii) on September 27, 1996, granted to
Mr. Laurence Waxman an SAR with respect to 100,000 shares of Common Stock at a
base price of $3 3/8 per share, the fair market value for the Common Stock as of
the date of such grant.
The following is a brief description of the material provisions of the
SARs; such description is qualified in its entirety by reference to the full
text of the SAR Agreement executed by each recipient of the SARs, a form of
which is set forth in Exhibit B to this Proxy Statement.
DESCRIPTION OF THE SARS
General Information. Each SAR expires ten years from the date of grant and
vests in whole three years after the date of grant. Upon the exercise of the
SAR, the grantee is entitled to an amount equal to the excess of the fair market
value per share of the Common Stock on the date of exercise over the base price
of such SAR for each share with respect to which such SAR is exercised. Each SAR
is exercisable, at the election of the grantee, for either cash or Common Stock
valued at the date of exercise. The SAR ceases to be exercisable on the date of
the termination of the employment of the grantee with the Company, except that
if the grantee's employment is terminated due to death, disability or other than
"for cause" (as defined in the SAR Agreement), the grantee has the privilege of
exercising the unexercised portion of the SAR within one year of the grantee's
termination from employment with the Company. The Compensation Committee of the
Board of Directors may modify, extend or renew the SAR, subject to the consent
of the grantee of the SAR.
Other Terms of the SARs. Upon the exercise of an SAR, the grantee is
required to pay the Company the amount of the required federal and state
withholding taxes, if any; the grantee may elect to have cash or shares withheld
upon exercise for the payment of withholding taxes. The base price of the SAR
may be adjusted in the event that the Common Stock is subdivided or a stock
dividend is paid in respect of the Common Stock. The number of shares of Common
Stock with respect to which each SAR applies may also be adjusted upon such
events. A grantee has the right to exercise the SAR during the 90 days preceding
certain extraordinary events without regard to vesting provisions. A Grantee may
not sell, transfer, assign or otherwise dispose of the SAR without the consent
of the Compensation Committee of the Board of Directors except by will or the
laws of descent and distribution or to certain family members and trusts.
16
<PAGE> 19
RESTRICTIONS OF RESALE
Registration Under the Securities Act of 1933. Shares of Common Stock
received upon exercise of the SAR may not be sold, offered for sale, assigned,
pledged, hypothecated or otherwise disposed of unless a registration statement
is filed and declared effective with the Securities and Exchange Commission
("SEC") or unless an exemption is available under the Securities Act 1933, and
the rules and regulations of the SEC thereunder.
NEW PLAN BENEFITS/AWARDS GRANTED
GRANT TO CERTAIN EXECUTIVE OFFICERS
STOCK APPRECIATION RIGHTS
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE NUMBER OF SHARES
- ----------------- ------------ ----------------
<S> <C> <C>
Armond Waxman $100,000(1) 200,000
President, Co-Chief Executive Officer
and Director
Melvin Waxman $100,000(1) 200,000
Chairman of the Board, Co-Chief
Executive Officer and Director
Laurence S. Waxman $ 50,000(2) 100,000
Senior Vice President and Director
<FN>
- ---------------
(1) Based on difference between the base price of the SAR as of March 29, 1996
($3 3/8 per share) and the closing sale price of the Common Stock on October
21, 1996.
(2) Based on difference between the base price of the SAR as of September 27,
1996 ($3 3/8 per share) and the closing sale price of the Common Stock on
October 21, 1996.
</TABLE>
FEDERAL TAX CONSEQUENCES
Set forth below is a description of the federal income tax consequences
under the Code, of the grant and exercise of the SAR's awarded to certain
executive officers. This description does not purport to be a complete
description of the federal income tax aspects of the SARs. The summary does not
include any discussion of state, local or foreign income tax consequences or the
effect of gift, estate or inheritance taxes, any of which may be significant to
a particular director eligible to receive options.
An employee will not recognize any taxable income at the time he is granted
an SAR. Upon exercise of an SAR, the amount received by the executive will be
taxable to the executive as ordinary income.
The ordinary income recognized in accordance with the foregoing by a holder
of an SAR who is also an employee of the Company will be treated as wages for
tax purposes and will be subject to tax withholding by the Company.
The Company will generally be entitled to a tax deduction at such time and
in the amount that a holder of an SAR recognizes as ordinary income with respect
to an SAR. Section 162(m) of the Code, which generally disallows a tax deduction
for compensation over $1,000,000 paid to the Chief Executive Officer and certain
other highly compensated employees, should not apply because the SARs should be
considered "performance-based compensation."
Approval of the grants of SARs to Messrs. Armond, Melvin and Laurence
Waxman requires an affirmative vote of the holders of a majority of the voting
securities of the Company represented and voting at the Annual Meeting.
The Board of Directors recommends a vote FOR the approval of the grants of
SARs to Messrs. Armond, Melvin and Laurence Waxman.
17
<PAGE> 20
IV.
APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
At the Annual Meeting, the stockholders of the Company will be called upon
to ratify the appointment of the independent public accountants of the Company.
The Company's financial statements for the fiscal year ended June 30, 1996
have been examined by the firm of Arthur Andersen LLP, independent certified
public accountants. Arthur Andersen LLP have been the independent certified
public accountants of the Company since 1982. Representatives of Arthur Andersen
LLP are expected to be present at the Annual Meeting to make a statement if they
so desire and they are expected to be available to respond to appropriate
questions.
The Board of Directors recommends a vote FOR the ratification of the
appointment of Arthur Andersen LLP, Cleveland, Ohio, as independent public
accountants of the Company.
ANNUAL REPORT
The Annual Report on Form 10-K of the Company for the fiscal year ended
June 30, 1996, as amended by an amendment on Form 10-K/A, (without exhibits)
(the "Annual Report") is being furnished simultaneously herewith. The Annual
Report is not to be considered a part of this Proxy Statement. The Company will
furnish a copy of any exhibit to the Annual Report, as listed thereon, upon
request and upon payment of the Company's reasonable expenses of furnishing
such exhibit. Requests should be directed to the Chief Financial Officer,
Waxman Industries, Inc., 24460 Aurora Road, Bedford Heights, Ohio 44146.
STOCKHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
The Company intends to hold its 1997 annual meeting of stockholders in
November or December 1997. In order for a stockholder proposal to be included in
next year's proxy statement, it must be received by the Secretary of the Company
at its offices, 24460 Aurora Road, Bedford Heights, Ohio 44146, by July 7, 1997.
EXPENSES OF SOLICITATION
All expenses relating to the solicitation of proxies will be paid by the
Company. Solicitation will be made principally by mail, but officers and regular
employees may solicit proxies by telephone or personal contact with nominal
expense to the Company. The Company will request brokers and other nominees who
hold Common Stock or Class B Common Stock in their names to solicit proxies from
the beneficial owners thereof and will pay the standard charges and expenses
associated therewith.
OTHER MATTERS
The Board of Directors and management know of no other matters to be
presented for action at the Annual Meeting. If other matters properly come
before the Annual Meeting, it is intended that proxies in the accompanying form
will be voted thereon in accordance with the best judgment of the person or
persons voting the proxies.
MANAGEMENT RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE NOMINEES TO THE
BOARD OF DIRECTORS NAMED HEREIN, FOR PROPOSAL II (THE 1996 NON-EMPLOYEE
DIRECTORS' RESTRICTED SHARE PLAN), FOR PROPOSAL III (GRANTS OF STOCK
APPRECIATION RIGHTS TO CERTAIN EXECUTIVE OFFICERS) AND FOR PROPOSAL IV (THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP).
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ALL STOCKHOLDERS ARE URGED TO MARK, SIGN AND SEND IN THEIR PROXIES WITHOUT
DELAY IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION
WILL BE APPRECIATED.
By Order of the Board of Directors
/s/ Kenneth Robins
KENNETH ROBINS, Secretary
October 28, 1996
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EXHIBIT A
WAXMAN INDUSTRIES, INC.
1996 NON-EMPLOYEE DIRECTORS' RESTRICTED SHARE PLAN
1. Purpose. The 1996 Non-Employee Directors' Restricted Share Plan (the
"Plan") of Waxman Industries, Inc., a Delaware corporation (the "Corporation"),
is designed to increase the proprietary and vested interest of the non-employee
directors of the Corporation in the growth, development and financial success of
the Corporation by granting them awards of Restricted Shares (as defined below).
2. Amount and Source of Stock. The maximum number of shares of the
Corporation's common stock, $.01 par value per share (the "Shares") that may be
subject of awards under this Plan shall be 100,000. The Corporation shall
reserve such number of Shares for the purposes of the Plan, out of its
authorized but unissued Shares or out of Shares held in the Corporation's
treasury, or partly out of each. In the event that Shares that are awarded to a
non-employee director that are subject to the transfer and forfeitability
restrictions described in Section 5(c) (the "Restricted Shares") are forfeited
for any reason, such Shares shall thereafter again be available for award
pursuant to the Plan.
3. Administration of the Plan. The Plan shall be administered by a
committee (the "Committee") of the Board of Directors of the Corporation (the
"Board") comprised of two or more members of the Board, selected by the Board,
all of which members shall be "disinterested persons" as that term is defined in
Rule 16b-3(d)(3) (or any successor provision) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Committee is
hereinafter sometimes referred to as the "Administrative Body." The
Administrative Body shall have full authority to interpret the Plan, to
establish and amend rules and regulations relating to it and to make all other
determinations necessary or advisable for the administration of the Plan.
4. Non-Discretionary Grants. Each individual who is a non-employee
director of the Corporation serving on the Board of Directors of the Corporation
for five years or more at the time of the adoption of this Plan by the Board
shall receive, as of the date of the adoption of this Plan by the Board, an
award of 5,000 Restricted Shares for each five full years of service as a
non-employee director of the Corporation. Each individual who, after the date of
the adoption of the Plan, is a non-employee director of the Corporation shall
receive, on each fifth anniversary of their initial election as, or their
becoming a, non-employee director of the Board, an award of Restricted Shares in
an amount equal to the excess of (a) the product of (i) 5,000 and (ii) the
result (rounded down to the nearest whole number) obtained by dividing the
number of full years of service as a non-employee director of the Corporation by
5 over (b) the number of Restricted Shares previously awarded to such individual
pursuant to this Plan; provided that such person is a non-employee director of
the Corporation on the date the award is granted.
5.Terms of Awards; Acceptance of Awards; Price; Restrictions and
Conditions.
The Restricted Shares awarded hereunder shall be awarded only pursuant to a
written agreement, which shall be executed by the non-employee director to whom
an award of Restricted Shares is granted pursuant to the Plan (a "Participant")
and a duly authorized officer of the Corporation and which shall contain the
following terms and conditions:
(a) ACCEPTANCE OF AWARD. An award of Restricted Shares must be
accepted by the Participant within a period of sixty (60) days (or such
other period as the Board may specify at grant) after the award date.
(b) PRICE. The purchase price of each Restricted Share shall be equal
to its par value, and shall be payable by the Participant by check (or by
any other means acceptable to the
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Board) at the time the Participant executes the Restricted Share award
agreement, unless otherwise provided by the Board.
(c) RESTRICTIONS AND CONDITIONS. The Restricted Shares awarded to a
Participant pursuant to this Section 5 shall be subject to the following
restrictions and conditions:
(i) A Participant shall not be permitted to sell, transfer, pledge,
hypothecate, factualize, assign or otherwise encumber Restricted Shares
(or any interest therein) awarded under the Plan prior to the date on
which such Shares vest in accordance with clause (iii), except (x) in
accordance with the laws of descent and distribution and (y) to the
extent permitted by applicable laws, in connection with a sale, transfer
or assignment to (1) the spouse or any lineal ancestor or descendant of
such Participant or (2) any trust, the sole beneficiaries of which are
any or all of such Participant or the spouse or any lineal ancestor or
descendant of such Participant.
(ii) Except as provided in clause (i) and this clause (ii), the
Participant shall have, with respect to the Restricted Shares, all of
the rights of a stockholder of the Corporation, including the right to
vote the Shares and to receive any cash dividends declared on them.
Stock dividends, if any, issued with respect to Restricted Shares shall
be treated as additional Restricted Shares that are subject to the same
restrictions and other terms and conditions that apply with respect to
the Restricted Shares with respect to which such dividends are issued.
(iii) Subject to the applicable provisions of the Restricted Share
award agreement and this Section, a Participant's interest in each award
of Restricted Shares shall immediately become fully vested and
nonforfeitable, and the restrictions set forth in this Section 5(c)
shall lapse, upon the earliest to occur of (x) the last day of the
second consecutive year during which the Participant shall serve as a
non-employee director commencing from the date of each award of
Restricted Shares pursuant to Section 4 (such two year vesting period
referred to herein as the "Term"), (y) the Participant's death or total
disability, or (z) a Change in Control Date (as defined herein).
Notwithstanding the foregoing, if a Participant resigns as a
non-employee director for any reason or is removed for cause prior to
the end of the Term for which he was awarded Restricted Shares, all such
Restricted Shares that have not vested in accordance with the preceding
sentence shall be forfeited immediately, and the Corporation shall
reimburse the Participant an amount equal to his purchase price for such
forfeited Restricted Shares. All determinations as to whether a
non-employee director has become totally disabled shall be made by the
Administrative Body, in good faith, upon the basis of such evidence as
it deems necessary or desirable, and shall be final and binding on all
interested persons.
(d) STOCK CERTIFICATES. A stock certificate registered in the name of
each Participant receiving a Restricted Share award shall be issued in
respect of such Restricted Shares. Such certificate shall bear whatever
appropriate legend referring to the terms, conditions, and restrictions
applicable to such award as the Administrative Body shall determine. The
Administrative Body may, in its sole discretion, require that the stock
certificates evidencing Restricted Shares be held in custody by the
Corporation until the restrictions thereon shall have lapsed. If and to the
extent a Participant's interest in Restricted Shares becomes fully vested,
certificates for an appropriate number of unrestricted Shares shall be
delivered to the Participant promptly.
6. Adjustments Upon Certain Events.
If the outstanding Shares are subdivided, consolidated, increased,
decreased, changed into, or exchanged for a different number or kind of shares
or other securities of the Corporation through reorganization, merger,
recapitalization, reclassification, capital adjustment or similar transaction,
or if the Corporation shall issue additional Shares as a dividend or pursuant to
a
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stock split or other similar corporate event affects the Shares such that an
adjustment is required in order to preserve the benefits or potential benefits
intended under this Plan then adjustment shall be made to any or all of the
number and kind of Shares which thereafter may be awarded under the Plan, or the
number and kind of Shares subject to outstanding awards. Distributions to the
Corporation's stockholders consisting of property other than Shares of the
Corporation or its successor and distributions to stockholders of rights to
subscribe for Shares shall not result in the adjustment of the Shares subject to
outstanding awards. Adjustments under this paragraph shall be made by the
Administrative Body, whose determination thereof shall be conclusive and
binding. Any fractional Share resulting from adjustments pursuant to this
paragraph shall be eliminated from any then outstanding award. Nothing contained
herein or in any award agreement shall be construed to affect in any way the
right or power of the Corporation to make or become a party to any adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge, consolidate, dissolve, liquidate or otherwise transfer
all or any part of its business or assets.
7. General Restrictions.
(a) No award of Restricted Shares hereunder shall be granted if the
Corporation shall at any time determine that (i) the listing upon any securities
exchange, registration or qualification under any state or federal law of any
Shares otherwise deliverable upon such grant, or (ii) the consent or approval of
any regulatory body or the satisfaction of withholding tax or other withholding
liabilities, is necessary or appropriate in connection with such grant. In any
of the events referred to in clause (i) or clause (ii) above, the grant of such
awards shall be suspended and shall not be effective unless and until such
withholding, listing, registration, qualifications or approval shall have been
effected or obtained free of any conditions not acceptable to the Corporation in
its sole discretion, notwithstanding any termination of any option or any
portion of any option during the period when such grant has been suspended.
(b) The Administrative Body may require, as a condition to the right to
receive an award, that the Corporation receive from the Participant, at the time
of any such award, representations, warranties and agreements to the effect that
the Shares are being held by the Participant for investment only and without any
present intention to sell or otherwise distribute such Shares and that the
Participant will not dispose of such Shares in transactions which, in the
opinion of counsel to the Corporation, would violate the registration provisions
of the Securities Act of 1933, as then amended, and the rules and regulations
thereunder. The certificates issued to evidence such Shares shall bear
appropriate legends summarizing such restrictions on the disposition thereof.
8. Extraordinary Event Provisions.
(a) IMPACT OF EVENT.
Upon the occurrence of an Extraordinary Event (as defined below), the
transferability and forfeiture restrictions placed on any Restricted Shares by
Section 5 shall lapse on the Extraordinary Event Date (as defined below) and
such Shares shall be deemed fully vested and owned by the Participant as of such
date.
(b) DEFINITION OF EXTRAORDINARY EVENT.
For purposes of the Plan, an Extraordinary Event means the happening of any
of the following:
(i) any "person," as such term is used in Section 13(d) and 14(d) of
the Exchange Act (other than the Corporation or any subsidiary in which the
Corporation owns fifty percent (50%) or more of the total combined voting
power, or any trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation or any such subsidiary) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly
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or indirectly, of securities of the Corporation representing twenty percent
(20%) or more of the combined voting power of the Company's then
outstanding securities.
(ii) during any period of two consecutive years beginning on or after
the Effective Date, individuals who at the beginning of such period
constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the
Corporation to effect a transaction described in clause -- (iii) or (iv) of
this Section 8) whose election by the Board or nomination for election by
the Corporation's stockholders was approved by a vote of at least
two-thirds ( 2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved (unless the approval of the
election or nomination for election of such new directors was in connection
with an actual or threatened election or proxy contest), cease for any
reason to constitute at least a majority thereof;
(iii) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation, other than (a)
a merger or consolidation which would result in the voting securities of
the Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than eighty percent (80%)
of the combined voting power of the voting securities of the Corporation or
such surviving entity outstanding immediately after such merger or
consolidation or (b) a merger or consolidation effected to implement a
recapitalization of the Corporation (or similar transaction) in which no
"person" -- as such term is used in Section 13(d) and 14(d) of the Exchange
Act (other than the Corporation or any subsidiary in which the Corporation
owns fifty (50%) or more of the total combined voting power, or any trustee
or other fiduciary holding securities under an employee benefit plan of the
Corporation or any such subsidiary) acquired more than twenty percent (20%)
of the combined voting power of the Corporation's then outstanding
securities;
(iv) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or disposition
by the Corporation of all or substantially all of the Corporation's assets
or any transaction having a similar effect; or
(v) there is a corporate separation or division, including, but not
limited to, a split-up, spin-off or extraordinary distribution of cash,
securities or other property.
The "Extraordinary Event" shall be the earliest date on which one of the events
described in this Section 8 occurs.
Notwithstanding anything in this definition to the contrary, an event or
occurrence (or a series of events or occurrences) which would otherwise
constitute an Extraordinary Event under the foregoing shall not constitute an
Extraordinary Event for purposes of this Plan if the Board, by majority vote,
determines that an Extraordinary Event does not result therefrom; but only if
Continuing Directors constitute a majority of the directors voting in favor of
such determination. Further, an event or occurrence (or a series of events or
occurrences) which would not otherwise constitute an Extraordinary Event under
the foregoing shall be deemed to constitute an Extraordinary Event for purposes
of this Plan if the Board, by majority vote, determines that an Extraordinary
Event does result therefrom; but only if Continuing Directors constitute a
majority of the directors voting in favor of such determination. A determination
by the Board under the provisions of this paragraph shall be made solely for
purposes of this Plan and shall not directly or indirectly affect any
determination or analysis of whether an Extraordinary Event results for any
other purpose. Any determination made with respect to whether an Extraordinary
Event results for purposes of any other plan or agreement of the Company shall
have no effect for purposes of this Plan.
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9. Amendment. The Board shall have full authority to amend the Plan;
provided, however, that the Board shall not amend the Plan more than once every
six months, with respect to the provisions of the Plan which relate to the
amount, price and timing of grants, other than to comport with changes in the
Internal Revenue Code (the "Code"), Employee Retirement Income Security Act
("ERISA"), or the rules thereunder. Except as provided in Section 10, any
amendment that (i) increases the total number of Shares reserved for the
purposes of the Plan, (ii) expands the class of individuals eligible to receive
grants under the Plan, (iii) increases the period for granting awards as
provided herein, or (iv) modifies the Plan in any other way if such modification
requires stockholder approval shall only be adopted by the Board subject to any
required stockholder approval. No amendment to the Plan shall, without the
consent of the Participant, materially and adversely affect his or her rights
under any award theretofore granted.
10. Termination. Unless the Plan shall theretofore have been terminated as
provided hereinafter and in Section 13, the Plan shall terminate on May 14,
2006, and no awards may be granted under the Plan thereafter; provided, however,
that the Board may at any time, in its sole discretion, terminate the Plan prior
to the foregoing date. No termination of the Plan by the Board shall, without
the consent of the Participant, materially and adversely affect his or her
rights under such award theretofore granted.
11. Taxable Income and Section 83(b) Election. Taxable income recognized
by each Participant as a result of the award of Restricted Shares hereunder, and
the withholding liability and withholding date with respect thereto, would be
affected by a decision by each Participant to make an election under Section
83(b) of the Code (an "83(b) Election") with respect to the Restricted Shares
within 30 days of the date of award. Each Participant will have the sole
responsibility for determining whether to make an 83(b) Election with respect to
the Restricted Shares, and for properly making such election and filing the
election with the relevant taxing authorities on a timely basis. Each
Participant will not rely on the Corporation for any advice in connection with
the decision to whether to make, or procedures for making the 83(b) Election and
each Participant should consult his or her own tax advisor with respect to the
desirability of and procedures for making an 83(b) Election with respect to the
Restricted Shares. Each Participant should submit to the Corporation a copy of
any 83(b) Election with respect to the Restricted Shares immediately upon filing
such election with the relevant taxing authority.
12. Certain Additional Payments by the Corporation.
(i) Each Participant shall be entitled to receive a payment (the "Gross-Up
Payment") in an amount equal to the additional federal, state and local taxes
payable by the Participant attributable to each award of Restricted Shares and
the Gross-Up Payment such that the net amount of the award and the Gross-Up
Payment, after the calculation and deduction of any such taxes with respect to
such amounts, shall be equal to the award. In determining this amount: (a) the
amount of the Gross-Up Payment shall be reduced by the amount of federal, state
and local income taxes that could be obtained by the deduction of the portion of
the Gross-Up Payment attributable to federal, state and local income taxes; (b)
in the case of any tax which applies only to income below a certain level, no
Gross-Up Payment will be payable with respect to such tax, except to the extent
that the award or the Gross-Up Payment results in additional tax liability; and
(c) the Gross-Up Payment shall be reduced by income or excise tax withholding
payments made by the Corporation to any federal, state or local taxing authority
with respect to the award and/or Gross-Up Payment that was not deducted from
compensation payable to the Participant.
(ii) All determinations required to be made under this Section 12,
including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, except as specified in Section 12(i) above, shall be made by the
Corporation, which shall provide detailed supporting calculation to
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the Participant within 15 business days after the earlier to occur of the making
of an 83(b) Election by the Participant or the end of the Term. The
determination of tax liability made by the Corporation shall be subject to
review by the Participant's tax advisor, and, if the Participant's tax advisor
does not agree with the determination reached by the Corporation, then the
Corporation's independent auditors (the "Accounting Firm") and the Participant's
tax advisor shall jointly make the determination. All fees and expenses of the
Accounting Firm, but not tax advisors retained by the Participant, shall be
borne by the Corporation. Any Gross-Up Payment, as determined pursuant to this
Section 12, shall be paid by the Corporation to the Participant within five days
after the receipt of the determination.
(iii) As a result of the uncertainty in the application of federal, state
and local income taxes at the time of the initial determination hereunder, it is
possible that Gross-Up Payments will not have been made by the Corporation that
should have been made consistent with the calculations required to be made
hereunder ("Underpayment"). In the event that the Participant thereafter is
required to make a payment of any Taxes, any such Underpayment shall be promptly
paid by the Corporation to or for the benefit of the Participant. In the event
that the Gross-Up Payment exceeds the amount subsequently determined to be due,
such excess shall constitute a loan from the Corporation to the Participant
payable on the fifth day after demand by the Corporation (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code).
(iv) The Gross-Up Payments determined under this Section 12 are payable to
the Participant not later than five days prior to the date on which federal
estimated tax payments are due for the calendar quarter in which the Participant
recognizes gross income with respect to the award for federal income tax
purposes.
13. Stockholder Approval. The Plan shall be submitted to the stockholders
of the Corporation not later than at the 1996 Annual Meeting of the
Corporation's stockholders. Any awards granted hereunder prior to such
stockholder approval shall not be exercisable unless and until such approval is
obtained. If such approval is not obtained by such date, the Plan and any awards
granted hereunder shall terminate.
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EXHIBIT B
FORM OF SAR AGREEMENT
This SAR AGREEMENT (the "SAR Agreement") is made and entered into as of
[Date of Grant] (the "Date of Grant"), by and between Waxman Industries, Inc., a
Delaware corporation (the "Company"), and [Grantee] ("Grantee").
The Compensation Committee of the Board of Directors of the Company (the
"Committee") has authorized the grant to Grantee of a stock appreciation right
("SAR") with respect to [ ] shares of the Company's common stock,
par value $0.01 per share (the "Common Stock"), upon the terms and subject to
the conditions set forth in this SAR Agreement.
The Company and Grantee agree as follows:
I. GRANT OF SAR.
The Company hereby grants to Grantee a SAR with respect to
[ ] shares of Common Stock (the "Shares"), upon the terms and
subject to the conditions set forth in this SAR Agreement. If, and to the
extent, required by applicable law or the rules and regulations of any stock
exchange or similar body to which the Company is subject, the SAR will be
submitted for the approval of the Company's stockholders within 12 months after
Date of Grant. The date of stockholder approval of the SAR, if so required, is
the "Approval Date." The SAR may be granted prior to such stockholder approval;
provided, however, that, to the extent such stockholder approval is required,
the SAR shall not be exercisable prior to the Approval Date; provided, further,
that if such required approval has not been obtained at the end of said 12 month
period, the SAR shall thereupon be canceled and become null and void.
II. TERM OF SAR.
The SAR shall terminate and expire on the tenth anniversary of the Date of
Grant, unless sooner terminated as provided herein.
III. EXERCISE PERIOD.
A. Subject to the provisions of Sections 3(b), 5, 7(c), 7(d) and 8 of this
SAR Agreement, the SAR shall become exercisable (in whole or in part) upon and
after the third anniversary of the Date of Grant.
B. Notwithstanding anything to the contrary contained in this SAR
Agreement, the SAR may not be exercised, in whole or in part, unless and until
any then-applicable requirements of all federal, state and local laws and
regulatory agencies shall have been fully complied with to the satisfaction of
the Company and its counsel.
IV. EXERCISE OF SAR.
A. There is no obligation to exercise the SAR, in whole or in part. The SAR
may be exercised, in whole or in part, only by delivery to the Company of:
1. written notice of exercise stating the number of Shares with
respect to which the SAR is then being exercised (the "Exercised Shares")
and the percentage or sum of the total amount the Grantee is entitled to
receive with respect to the Exercised Shares which the Grantee elects to
receive in cash ( a "Cash Election"), and the percentage or sum of the
total amount the Grantee is entitled to receive with respect to the
Exercised Shares which the Grantee elects to receive in shares of Common
Stock; and
2. if requested by the Company, in the event the Grantee elects to
receive shares of Common Stock, a letter of investment intent in such form
and containing such provisions as the Company may require.
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B. Upon the exercise of the SAR, the holder thereof, subject to Section
4(e), shall receive, based on the holder's election, either:
1. that number of shares of Common Stock (the "Purchased Shares")
equal to the quotient computed by dividing the Spread (as defined in
Section 4(c) below) by the per share Fair Market Value (as defined by
Section 4(d) below) of the Common Stock on the date of exercise of the SAR;
provided, however, that in lieu of fractional shares, the Company shall pay
in cash an amount equal to the same fraction of the per share Fair Market
Value of the Common Stock on the date of exercise of the SAR; or
2. an amount of money payable in cash equal to the Spread; or
3. a combination of an amount payable in cash and a number of
Purchased Shares calculated as provided in Section 4(b)(i) above (after
reducing the Spread by such cash amount); plus any amounts payable in lieu
of any fractional shares as provided above.
C. The term "Spread," with respect to any SAR exercised, shall mean an
amount equal to the product computed by multiplying (A) the excess of (x) the
Fair Market Value per share of Common Stock on the date the SAR is exercised,
over (y) the initial valuation of the SAR of $3 3/8 per share (the "Initial
Valuation"); by (B) the number of Shares with respect to which such SAR is being
exercised.
D. The per share "Fair Market Value" of shares of Common Stock on any
particular date shall be determined as follows: (i) if the Common Stock is
listed on an exchange or exchanges, or admitted for trading in a market system
(a "Market System") which provides last sale data under Rule 11Aa3-1 of the
General Rules and Regulations of the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the last reported sales price per share on the last business day prior to
such date on the principal exchange on which it is traded, or in a Market
System, as applicable, or if no sale was made on such day on such principal
exchange or in such Market System, as applicable, the last reported sales price
per share on the most recent day prior to such date on which a sale was reported
on such exchange or such Market System, as applicable; or (ii) if the Common
Stock is not then traded on an exchange or in a Market System, the average of
the closing bid and asked prices per share for the Common Stock in the
over-the-counter market as quoted on NASDAQ on the day prior to such date; or
(iii) if the Common Stock is not listed on an exchange or quoted on NASDAQ, an
amount determined in good faith by the Committee; provided, however, that, for
purposes of determining the Fair Market Value of the Shares of Common Stock
deliverable to Grantee pursuant to Section 4(b) above, if all of the shares of
Common Stock receivable by the Grantee pursuant to Section 4(b) hereof are not
freely transferable by the recipient thereof upon the receipt thereof pursuant
to a exemption from the registration requirements of the Securities Act of 1933
as amended (the "Act") or pursuant to a registration statement with respect to
the offer and sale of such shares of Common Stock which has been declared
effective by the SEC, the Fair Market Value of the Purchased Shares shall
reflect a discount to take into account the diminution in value of such shares
of Common Stock resulting from the restrictions on the free transferability
thereof, such discount to be determined by the Committee.
E. Notwithstanding the provisions of this Section, the SAR may not be
exercised during the first six months following its Date of Grant.
V. TERMINATION OF EMPLOYMENT.
A. If Grantee shall have been an officer, director, employee or consultant
of the Company at the Date of Grant, and thereafter shall cease to serve the
Company or any subsidiary of the Company in any such capacity for any reason
other than "for cause" (as defined below), death or permanent disability,
Grantee shall have the right, subject to the provisions of Section 5(b) below,
to exercise the SAR with respect to all shares with respect to which the SAR was
exercisable at the date Grantee's employment terminated as to which the SAR had
not
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previously been exercised at any time within one (1) year after the date Grantee
ceased to be an officer or director or director of, or to be employed by, or to
be a consultant to the Company or any subsidiary of the Company, but not later
than the SAR Expiration Date; and to the extent unexercised at the end of this
period, the SAR shall terminate. The Committee, in its sole and absolute
discretion, shall determine whether or not authorized leaves of absence shall
constitute termination of employment for purposes of this SAR Agreement.
B. If Grantee shall be terminated "for cause" by the Company, the SAR shall
terminate upon the date of termination. For Purposes of this SAR Agreement, "for
cause" shall mean: (a) Grantee's willful misconduct or gross neglect in the
performance of his duties as an employee of, or consultant to, the Company, as
the case may be, which in either case has resulted, or is likely to result, in
material economic damage to the Company, (b) the material breach by Grantee of
his employment or consulting duties, as the case may be, which has resulted, or
is likely to result, in material economic damage to the Company or (c) the
conviction of Grantee of a felony which constitutes a crime of moral turpitude.
For purposes of this Section 5(b), no act, or failure to act, on Grantee's part,
will be considered "willful" unless done or omitted to be done by him not in
good faith and without a reasonable belief that his action or omission was in
furtherance of the Company business.
C. If Grantee shall die or become permanently disabled while in the employ
of, or a consultant to, the Company or any subsidiary of the Company, then
Grantee, Grantee's executors or administrators or any person or persons
acquiring the SAR directly from Grantee by bequest or inheritance, shall have
the right to exercise the SAR in full, to the extent the SAR had not previously
been exercised, at any time within one (1) year after such death or permanent
disability but not later than the SAR Expiration Date; and to the extent the SAR
is unexercised at the end of that period, the SAR will terminate. Grantee shall
be deemed to be permanently disabled in the event Grantee shall be unable to
render the services or perform his duties to the Company by reason of illness,
injury or incapacity (whether physical, mental, emotional or psychological) for
a period of either (i) one hundred eighty (180) consecutive days or (ii) two
hundred seventy (270) days in any consecutive three hundred sixty-five (365) day
period.
VI. RESTRICTIONS ON PURCHASED SHARES.
None of the Purchased Shares shall be transferred (with or without
consideration), sold, offered for sale, assigned, pledged, hypothecated or
otherwise disposed of (each a "Transfer") and the Company shall not be required
to register any such Transfer and the Company may instruct its transfer agent
not to register any such Transfer, unless and until all of the following events
shall have occurred:
A. the Purchased Shares are Transferred pursuant to and in conformity
with (i) (x) a registration statement filed with, and declared effective
by, the SEC pursuant to the Act or (y) an exemption from the registration
requirements of the Act; and (ii) the securities laws of any state of the
United States; and
B. Grantee has, prior to the Transfer of such Purchased Shares, and if
requested by the Company, provided all relevant information to Company's
counsel so that upon Company's request, the Company's counsel is able to,
and actually prepares and delivers to the Company a written opinion that
the proposed Transfer (i) is pursuant to a registration statement which has
been filed with the SEC and is then effective, or (ii) is exempt from the
registration requirements of the Act as then in effect, and the Rules and
Regulations of the SEC thereunder. The Company shall bear all reasonable
costs of preparing such opinion.
Any attempted Transfer which is not in full compliance with this Section 6
shall be null and void ab initio, and of no force and effect.
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VII. ADJUSTMENTS UPON RECAPITALIZATION.
Subject to any required action by the stockholders of the Company:
A. If the outstanding shares of the Common Stock shall be subdivided
into a greater number of shares of the Common Stock, or a dividend in
shares of Common Stock or other securities of the Company convertible into
or exchangeable for shares of the Common Stock (in which latter event the
number of shares of Common Stock issuable upon the conversion or exchange
of such securities shall be deemed to have been distributed) shall be paid
in respect of the shares of Common Stock, the Initial Valuation in effect
immediately prior to such subdivision or at the record date of such
dividend shall, simultaneously with the effectiveness of such subdivision
or immediately after the record date of such dividend, be proportionately
reduced, and conversely, if the outstanding shares of Common Stock shall be
combined into a smaller number of shares of Common Stock, the Initial
Valuation in effect immediately prior to such combination shall,
simultaneously with the effectiveness of such combination, be
proportionately increased.
B. When any adjustment is required to be made in the Initial
Valuation, the number of Shares with respect to which the SAR applies shall
be adjusted to that number of Shares determined by (i) multiplying an
amount equal to the number of Shares with respect to which the SAR applies
immediately prior to such adjustment by the Initial Valuation in effect
immediately prior to such adjustment, and then (ii) dividing that product
by the Initial Valuation in effect immediately after such adjustment.
C. In the case of any capital reorganization, any reclassification of
the Common Stock (other than a change in par value or recapitalization
described in Section 7(a) of this SAR Agreement), or the consolidation of
the Company with, or a sale of all or substantially all of the assets of
the Company to (which sale is followed by a liquidation or dissolution of
the Company), or merger of the Company with another person (a
"Reorganization Event"), the Committee shall be obligated to determine, in
its sole and absolute discretion, whether the Reorganization Event shall
constitute a "Liquidity Event," and to deliver to the Grantee at least 15
days prior to such Reorganization Event (or at least 15 days prior to the
date of record for stockholders entitled to share in the securities or
property distributed in the Reorganization Event, if a record date is set)
a notice which shall (i) indicate whether the Reorganization Event shall be
considered a Liquidity Event and (ii) advise the Grantee of his rights
pursuant to this SAR Agreement. If the Reorganization Event is determined
to be a Liquidity Event, (i) in its sole and absolute discretion, the
surviving corporation may, but shall not be obligated to, tender stock
appreciation rights to the Grantee with respect to the surviving
corporation which shall contain terms and provisions that substantially
preserve the rights and benefits of this SAR, or (ii) in the event that no
stock appreciation rights have been tendered by the surviving corporation
pursuant to the terms of item (i) immediately above, the Grantee shall have
the right, exercisable during a 10 day period ending on the fifth day prior
to the Reorganization Event (or ending on the fifth day prior to the date
of record for stockholders entitled to share in the securities or property
distributed in the Reorganization Event, if a record date is set), to
exercise in whole or in part his SAR, without regard to the vesting
provisions of this SAR Agreement, on the condition, however, that the
Reorganization Event is actually effected; and if the Reorganization Event
is actually effected, such exercise shall be deemed effective (and, if
applicable, the Grantee shall be deemed a stockholder with respect to the
Purchased Shares, if any) immediately preceding the effective time of the
Reorganization Event (or on the date of record for stockholders entitled to
share in the securities or property distributed in the Reorganization
Event, if a record date is set). If the Reorganization Event is not
determined to be a Liquidity Event, the Grantee shall thereafter be
entitled upon exercise of the SAR to receive the cash and/or to purchase
the kind and number of shares of stock or other securities or property of
the surviving corporation receivable upon such event by a holder of the
number of shares of the Common Stock which the SAR would have entitled the
Grantee to receive
B-4
<PAGE> 32
and/or purchase from the Company if the Reorganization Event had not
occurred, and in any such case, appropriate adjustment shall be made in the
application of the provisions set forth in this SAR Agreement with respect
to the Grantee's rights and interests thereafter, to the end that the
provisions set forth in this SAR Agreement (including the specified changes
and other adjustments to the Initial Valuation) shall thereafter be
applicable in relation to any shares or other property thereafter
purchasable upon exercise of the SAR.
D. To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Committee,
and its determination shall be final, binding and conclusive.
E. The provisions of this Section 7 are intended to be exclusive, and
Grantee shall have no other rights upon the occurrence of any of the events
described in this Section 7.
F. The grant of the SAR shall not affect in any way the right or power
of the Company to make adjustments, reclassifications, reorganizations or
changes in its capital or business structure, or to merge, consolidate,
dissolve or liquidate, or to sell or transfer all or any part of its
business or assets.
VIII. EXTRAORDINARY EVENT PROVISIONS.
(1) Impact of Event.
Upon the occurrence of an Extraordinary Event (as defined below), the
Grantee shall have the right, exercisable during the 90 day period preceding the
occurrence of the Extraordinary Event to exercise in whole or in part his SAR
without respect to the vesting provisions of this SAR Agreement, on the
condition, however, that the Extraordinary Event actually occurs, and if the
Extraordinary Event actually occurs, such exercise shall be deemed effective
(and, if applicable, the Grantee shall be deemed a stockholder with respect to
the Purchased Shares, if any), immediately preceding the occurrence of the
Extraordinary Event (or the date of record for stockholders entitled to share in
such Extraordinary Event, if a record date is set).
(a) Definition of Extraordinary Event
For purposes hereof an Extraordinary Event means the happening of any of
the following:
(i) any "person," as such term is used in Section 13(d) and 14(d) of
the Exchange Act (other than the Company or any subsidiary in which the
Company owns fifty percent (50%) or more of the total combined voting
power, or any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any such subsidiary) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing twenty
percent (20%) or more of the combined voting power of the Company's then
outstanding securities.
(ii) during any period of two consecutive years beginning on or after
the Date of Grant, individuals who at the beginning of such period
constitute the Board of Directors of the Company (the "Board"), and any new
director (other than a director designated by a person who has entered into
an agreement with the Company to effect a transaction described in clause -
(iii) or (iv) of this Section 8) whose election by the Board or nomination
for election by the Company's stockholders was approved by a vote of at
least two-thirds ( 2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved (unless the approval of
the election or nomination for election of such new directors was in
connection with an actual or threatened election or proxy contest), cease
for any reason to constitute at least a majority thereof;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (a) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto
B-5
<PAGE> 33
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than eighty
percent (80%) of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger
or consolidation or (b) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" -- as such term is used in Section 13(d) and 14(d) of the Exchange
Act (other than the Company or any subsidiary in which the Company owns
fifty (50%) or more of the total combined voting power, or any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or any such subsidiary) acquired more than twenty percent (20%) of
the combined voting power of the Company's then outstanding securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets or any transaction having a similar effect; or
(v) there is a corporate separation or division, including, but not
limited to a split-up, spin-off or extraordinary distribution of cash,
securities or other property.
The date of the occurrence of an "Extraordinary Event" shall be the earliest
date on which one of the events described in this Section 8 occurs.
IX. WAIVER OF RIGHTS TO PURCHASE STOCK.
By signing this SAR Agreement, Grantee acknowledges and agrees that neither
the Company nor any other person or entity is under any obligation to sell or
transfer to Grantee any stock appreciation right, option or equity security of
the Company, other than the Shares subject to the SAR and any other right or
option to purchase Common Stock which was previously granted to Grantee by the
Committee, and hereby specifically waives all rights which he or she may have
had prior to the date of this SAR Agreement to receive any such stock
appreciation right, option or equity security of the Company.
X. INVESTMENT INTENT.
Grantee represents and agrees that if he or she exercised the SAR in whole
or in part and if at the time of such exercise this SAR Agreement and/or the
Purchased Shares have not been registered under the Act, he or she will acquire
the Purchased Shares upon such exercise for the purpose of investment and not
with a view to the distribution of such Purchased Shares in violation of the
Act, and that upon each exercise of the SAR he or she will furnish to the
Company a written statement to such effect and such other documentation as the
Company may request.
XI. LEGEND ON STOCK CERTIFICATES.
Grantee agrees that all certificates representing the Purchased Shares will
be subject to such stock transfer orders and other restrictions (if any) as the
Company may deem advisable under the rules, regulations and other requirements
of the SEC, any stock exchange upon which the Common Stock is then listed and
any applicable federal or state securities laws, and the Company may cause a
legend or legends to be put on such certificates to make appropriate reference
to such restrictions.
XII. NO RIGHTS AS STOCKHOLDER.
Except as may be otherwise provided herein, Grantee shall have no rights as
a stockholder with respect to the Shares until the date of the issuance to
Grantee of a stock certificate or stock certificates evidencing Purchased
Shares. Except as may be provided in Section 7 or 8 of this SAR Agreement, no
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued.
B-6
<PAGE> 34
XIII. MODIFICATION.
The Committee may modify, extend or renew the SAR or accept the surrender
of, and authorize the grant of a new stock appreciation right in substitution
for the SAR (to the extent not previously exercised). No modification of the SAR
shall be made, without the consent of Grantee, which would alter or impair any
rights of the Grantee under the SAR.
XIV. WITHHOLDING.
A. The Company shall be entitled to require as a condition of delivery of
any cash or Purchased Shares upon exercise of any SAR that the Grantee agree to
remit, at the time of such delivery or at such later date as the Company may
determine, an amount sufficient to satisfy all federal, state and local
withholding tax requirements relating thereto, and Grantee agrees to take such
other action required by the Company to satisfy such withholding requirements.
B. With the consent of the Committee, and in accordance with any rules and
procedures from time to time adopted by the Committee, Grantee may elect to
satisfy his obligations under Section 14(a) above by (i) directing the Company
to withhold a portion of the cash or Purchased Shares otherwise deliverable or
to tender back to the Company a portion of the Purchased Shares issued where the
Grantee is a Section 16(b) Person and has not made an election under Section
83(b) of the Code (a "Withholding Right"); or (ii) tendering other shares of the
Common Stock of the Company which are already owned by Grantee which in all
cases have a fair market value (as determined in accordance with the provisions
of Section 4(d) hereof) on the date as of which the amount of tax to be withheld
is determined (the "Tax Date") equal to the amount of taxes to be paid by such
method.
C. To exercise a Withholding Right, the Grantee must follow the election
procedures set forth below, together with such additional procedures and
conditions set forth in this SAR Agreement or otherwise adopted by the
Committee:
1. the Grantee must deliver to the Company his written notice of
election (the "Election") and specify whether all or a stated percentage of
the applicable taxes will be paid in accordance with Section 14(b) above
and whether the amount so paid shall be made in accordance with the "flat"
withholding rates for supplemental wages or as determined in accordance
with Grantee's Form W-4 (or comparable state or local form);
2. unless disapproved by the Committee as provided in Subsection (iii)
below, the Election once made will be irrevocable; and
3. no Election is valid unless the Committee has approved such
Election, and such Election may be disapproved by the Committee, in its
sole discretion, with or without cause or reason therefor; provided, if the
Committee has not approved or disapproved the Election on or prior to the
Tax Date, the Election will be deemed approved.
XV. GENERAL PROVISIONS.
A. Further Assurances. Grantee shall promptly take all actions and execute
all documents requested by the Company which the Company deems to be reasonably
necessary to effectuate the terms and intent of this SAR Agreement.
B-7
<PAGE> 35
B. Notices. All notices, requests, demands and other communications under
this SAR Agreement shall be in writing and shall be given to the parties hereto
as follows:
1. If to the Company, to:
Waxman Industries, Inc.
24460 Aurora Road
Bedford Heights, Ohio 44146
Attn: Chief Financial Officer
2. If to Grantee, to the address set
forth in the records of the Company,
or at such other address or addresses as may have been furnished by such either
party in writing to the other party hereto. Any such notice, request, demand or
other communication shall be effective (i) if given by mail, 72 hours after such
communication is deposited in the mail by first-class certified mail, return
receipt requested, postage prepaid, addressed as aforesaid, or (ii) if given by
any other means, when delivered at the address specified in this subparagraph
(b).
C. Transferability of SAR. Grantee may not, without the prior consent of
the Committee, sell, transfer, assign or otherwise dispose of the SAR except by
will or the laws of descent and distribution and the SAR may be exercised during
the lifetime of the Grantee, only by the Grantee or by his or her guardian or
legal representative; provided, however, that Grantee, to the extent permitted
by applicable laws, may sell, transfer, assign or otherwise dispose of the SAR
to, and, in the event of any such sale, transfer, assignment or disposition, the
SAR may be exercised by, (i) Grantee's spouse or any lineal ancestor or
descendant of Grantee or (ii) any trust or partnership, the sole beneficiaries
or partners, as the case may be, of which are any one or all of Grantee or the
spouse or any lineal ancestor or descendant of Grantee..
D. Successors and Assigns. Except to the extent specifically limited by
the terms and provisions of this SAR Agreement, this SAR Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, assigns, heirs and personal representatives.
E. Governing Law. THIS SAR AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE
IN, AND TO BE PERFORMED WITHIN, THAT STATE.
F. Miscellaneous. Titles and captions contained in this SAR Agreement are
inserted for convenience of reference only and do not constitute a part of this
SAR Agreement for any other purpose. Except as specifically provided herein,
neither this SAR Agreement nor any right pursuant hereto or interest herein
shall be assignable by any of the parties hereto without the prior written
consent of the other party hereto.
The Company and the Grantee each hereby agrees to be bound by all of the
terms and conditions of this SAR Agreement.
WAXMAN INDUSTRIES, INC.
By: _________________________________
_____________________________________
[Name of Grantee]
B-8
<PAGE> 36
PROXY WAXMAN INDUSTRIES, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
ANNUAL MEETING OF STOCKHOLDERS - NOVEMBER 26, 1996
The undersigned appoints each of Melvin Waxman and Armond Waxman, each with the
power to appoint his substitute, as proxies of the undersigned, and hereby
authorizes them to represent and to vote, as designated on the reverse side of
this Proxy Card, all the shares of Common Stock and Class B Common Stock of
Waxman Industries, Inc. held of record by the undersigned on October 21, 1996,
at the Annual Meeting of Stockholders of Waxman Industries, Inc. to be held on
November 26, 1996.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
A /X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except as marked to vote for
to the contrary below) all nominees
1. Election of / / / / Nominees: Melvin Waxman
Directors Armond Waxman
Laurence S.Waxman
Irving Z. Friedman
Samuel J. Krasney
Judy Robins
William R. Pray
(INSTRUCTIONS: To withhold authority to vote for
any individual nominee, write that nominee's name
on the space provided below.)
- --------------------------------------------------
FOR AGAINST ABSTAIN
2. Approval of the Company's 1996 Non- / / / / / /
Employee Directors' Restricted Share Plan.
3. Approval of the grants of Stock / / / / / /
Appreciation Rights to certain executive
officers.
4. Ratification of the appointment of Arthur / / / / / /
Andersen LLP as independent public accountants.
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment
thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL NOMINEES AND IN FAVOR OF PROPOSALS II, III AND IV.
__________________ ____________________________ DATED: __________, 1996
SIGNATURE SIGNATURE IF HELD JOINTLY
NOTE: Please sign exactly as name or names appear hereon. When shares are held
by jointly tenants, both must sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the president or other
authorized officer. If a partnership, please sign in partnership name by
any authorized person.
