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Exhibit 10.1
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AGREEMENT
This agreement (the "Agreement"), dated as of December 8, 1999, is
entered into by and among Waxman Industries, Inc., a Delaware corporation
("WI"), Waxman USA, Inc., a Delaware corporation and a wholly owned subsidiary
of WI ("USA") (WI and USA are collectively referred to as the "Company"), and
each of the undersigned holders (each, a "Consenting Noteholder") of the 12 3/4%
Deferred Coupon Secured Notes, due 2004 issued pursuant to that certain
indenture dated as of May 20, 1994 by and between WI and The Huntington National
Bank as trustee (the "DC Notes Indenture" and the "Trustee"), current
approximate accreted principal amount outstanding $92.797 million (the "DC
Notes"), some of whom also hold the 11 1/8% Senior Notes, due 2001 issued
pursuant to that certain indenture dated as of April 1, 1996 (together with the
DC Notes Indenture, the "Indentures"), by and between USA and the United States
Trust Company of New York as trustee (together with the Trustee, the "Indenture
Trustees"), current approximate principal amount outstanding $35.855 million
(the "Senior Notes") (the DC Notes and the Senior Notes are collectively
referred to as the "Notes").
RECITALS
WHEREAS Xxxxxxx, Inc. ("Xxxxxxx") has issued a press release (the
"Press Release") announcing its engagement of BT Xxxx Xxxxx Incorporated to
advise it with respect to strategic alternatives to maximize stockholder value,
and the Company, the Committee (as defined below), and their respective
financial advisors have been advised by Xxxxxxx and its financial advisor that
these alternatives will include the pursuit of a sale of Xxxxxxx, which, if
consummated, would include the sale of all common stock of Xxxxxxx currently
held by USA (the "Xxxxxxx Stock");
WHEREAS the Company has contacted certain of the holders of the Notes
to discuss a restructuring based upon the expectation that proceeds realized
from the sale of the Xxxxxxx Stock will be sufficient to satisfy all outstanding
obligations under the Senior Notes, but insufficient to satisfy all outstanding
obligations under the DC Notes;
WHEREAS the Company and an unofficial committee comprised of certain of
the holders of the Notes (the "Committee") holding in the aggregate $81,269,000
principal amount of the DC Notes and $22,706,000 principal amount of the Senior
Notes, have engaged in good faith negotiations with the objective of reaching an
agreement concerning the sale of the Xxxxxxx Stock, the reorganization of WI and
a restructuring of the DC Notes (the "Restructuring").
WHEREAS the Company and the Consenting Noteholders now desire to
implement the Restructuring on the terms set forth in the term sheet attached
hereto as Exhibit A (the "Term Sheet") and incorporated into this Agreement as
if fully set forth herein;
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WHEREAS the Company and the Consenting Noteholders have agreed in
principle to the satisfaction of the Senior Notes through the sale of the
Xxxxxxx Stock and the repayment by USA of the outstanding obligation in respect
of the Senior Notes;
WHEREAS the Company and the Consenting Noteholders have agreed in
principle to implement the proposed Restructuring of WI through the confirmation
of a joint "pre-packaged" plan of reorganization (the "Plan") in a case (the
"Chapter 11 Case") commenced under chapter 11 of title 11 of the United States
Code, 11 U.S.C. Section 101 et seq. (the "Bankruptcy Code") and to be filed in
the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy
Court"); and
WHEREAS to expedite and ensure implementation of the Plan, the
Consenting Noteholders are prepared to commit, on the terms and subject to the
conditions of this Agreement and applicable bankruptcy law, to vote to accept
the Plan when solicited to do so, to support confirmation of the Plan, and to
perform their other obligations hereunder.
NOW THEREFORE, in consideration of the foregoing recitals, terms and
conditions set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each of the
undersigned agrees as follows:
1. MEANS FOR EFFECTING THE PAYMENT OF THE SENIOR NOTES. The Company,
the Committee and the Consenting Noteholders agree that the satisfaction of
USA's obligations under the Senior Notes shall be accomplished by the sale by
USA of the Xxxxxxx Stock and the immediate repayment of all amounts outstanding
on the Senior Notes including all principal and accrued interest as of the
redemption thereof, and the deposit of the Net Proceeds (as defined in the Term
Sheet) into a specially dedicated bank account, all as provided in the Term
Sheet.
2. MEANS FOR EFFECTING THE RESTRUCTURING OF WI. WI, the Committee and
the Consenting Noteholders agree that the Restructuring of WI shall be
accomplished by the preparation and filing of the Plan, a disclosure statement
in regard to the Plan (the "Disclosure Statement"), and other related documents
incorporating the terms set forth in the Term Sheet.
3. PREPARATION OF RESTRUCTURING DOCUMENTS. Promptly upon execution of
this Agreement, WI shall instruct its counsel to prepare for the review and
approval by the parties hereto of the following: (a) all documents needed to
effectuate the Restructuring as contemplated in the Term Sheet; (b) a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code in respect of WI
(the "Petition"); (c) a stipulation for the use of the Cash Collateral (as such
term is defined in the Bankruptcy Code) or other financing, if necessary; (d)
the Plan, the Disclosure Statement and orders thereon; and (e) all schedules,
motions, pleadings, and other papers necessary or useful in connection with the
filing of the Petition (collectively, the "Restructuring Documents"). WI and the
Committee shall coordinate with one another in the preparation of the
Restructuring Documents. The Company shall use its reasonable best efforts to
comply with the time deadlines set forth in the Term Sheet and in the schedule
agreed to contemporaneously herewith.
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4. CONDITIONS TO THE COMMENCEMENT OF THE CHAPTER 11 CASE. The Chapter
11 Case shall not commence and the Plan shall not be filed with the Bankruptcy
Court unless and until the following occur: (a) the Plan shall be consistent
with all material provisions of the Term Sheet; (b) the Plan shall have been
approved by counsel for WI and counsel for the Committee, such approvals not to
be withheld if the Plan is consistent with the Term Sheet; (c) the Committee,
through counsel, shall have approved in form and substance all pleadings and
orders to be filed concurrently with the Petition and the Plan which pertain to
provisions of the Term Sheet and this Agreement; and (d) the Required DC
Noteholders (as that term is defined below) and the Consenting Noteholders shall
have provided their votes in support of the Plan to WI, in accordance with the
consent solicitation. Counsel for WI shall prepare and file any additional
documents deemed necessary or appropriate by the Committee pertaining to and
which are consistent with the provisions of the Term Sheet. The Company and each
Consenting Noteholder hereby further covenant and agree to negotiate the
definitive documents relating to the Restructuring, including, without
limitation, the Restructuring Documents, in good faith.
5. SUPPORT OF THE RESTRUCTURING. So long as this Agreement has not been
terminated under Paragraphs 7, 8 or 9 hereof, the Consenting Noteholders shall:
(a) exercise all votes to which they are entitled to accept the Plan and to
approve any other action or document necessary to implement the Restructuring
(including entry of WI's first day orders to the extent such orders are not
inconsistent with the Term Sheet); and (b) allow the Company to operate its
businesses in the ordinary course. So long as this Agreement has not been
terminated under Paragraphs 7, 8 or 9 hereof, the Committee shall recommend
acceptance of the Plan by all voting creditors (including providing a letter for
inclusion in the Disclosure Statement which expresses support for the Plan and
recommends that other holders of the DC Notes vote to accept the Plan). So long
as this Agreement has not been terminated under Paragraphs 7, 8 or 9 hereof, the
Consenting Noteholders shall oppose any motion, action or objection by any party
that would result in the occurrence of a Noteholders Termination Event, a
Company Termination Event or a General Termination Event (each, as defined
below). So long as this Agreement has not been terminated under Paragraphs 7, 8
and 9 hereof, WI and each Consenting Noteholder shall not: (a) object to the
consummation of the Restructuring or otherwise commence any proceeding to oppose
the Restructuring or any of the Restructuring Documents so long as the
Restructuring Documents are consistent with the Term Sheet; (b) vote for,
consent to, support or participate in the formulation of any other out-of-court
restructuring or chapter 11 plan of reorganization or liquidation in respect of
WI proposed or filed or to be proposed or filed (other than one agreed to in
writing by WI and the Consenting Noteholders) (an "Alternative Proposal"); (c)
directly or indirectly seek, solicit, support or encourage any other
out-of-court restructuring, plan, proposal or offer of dissolution, winding up,
liquidation, reorganization, merger or restructuring of WI (other than one
agreed to in writing by WI and the Consenting Noteholders); (d) take any other
action, including but not limited to initiating any legal proceedings that is
inconsistent with, or that would delay consummation of, the Restructuring;
PROVIDED, HOWEVER, that in the event of the filing of the Chapter 11 Case, none
of the Consenting Noteholders shall be barred from objecting to approval of the
Disclosure Statement or other documents received by the
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Consenting Noteholders if the Disclosure Statement or such other documents
contain terms that are materially inconsistent with the Term Sheet, provided
that the Disclosure Statement or such other documents were not previously
reviewed and approved by the Committee or its Counsel. Each Consenting
Noteholder agrees to promptly notify WI of any Alternative Proposal of which the
Consenting Noteholder becomes aware, including the material terms thereof.
6. ACKNOWLEDGMENT. This Agreement and the terms of the Restructuring
are the product of negotiations between the Company, the Consenting Noteholders
and the Committee. Neither this Agreement nor the Term Sheet is or shall be
deemed to constitute an offer with respect to any securities or a solicitation
for consents to the Plan or the Restructuring. Acceptance of the Restructuring
will not be solicited from any holder of the Notes until it has received the
disclosures required under or otherwise in compliance with Bankruptcy Code
section 1125 or other applicable law. Notwithstanding anything contained herein,
the Consenting Noteholders shall be under no requirement to vote to accept the
Plan if the Plan presented for voting is materially inconsistent with the Term
Sheet, unless the Committee has approved any such modifications or amendments to
the Term Sheet or the Plan.
7. TERMINATION OF THE CONSENTING NOTEHOLDERS' OBLIGATIONS. Each of the
Consenting Noteholders may terminate its obligations hereunder and rescind its
acceptance of the Plan or the Restructuring (which acceptance or vote shall be
null and void and have no further force or effect) by giving written notice
thereof to the other Consenting Noteholders and the Company, if any of the
following occur (each, a "Noteholders Termination Event"): (a) the Restructuring
Documents provide or are modified to provide for any terms that are materially
adverse to or materially inconsistent with any of the terms or conditions of the
Term Sheet unless the Committee has approved such modifications; (b) the Company
fails to use its reasonable best efforts to complete the Restructuring Documents
or related transactions and events; (c) the Company materially breaches this
Agreement or fails to satisfy any of the terms or conditions of the Term Sheet,
including completion of the Restructuring no later than June 30, 2000; (d) a
bankruptcy case is commenced by or against WI without the prior written consent
of holders of at least a majority in number and 66 2/3% of the outstanding
principal amount of the DC Notes (the "Required DC Holders"); or (e) any plan of
reorganization other than the Plan is proposed by the Company. If any
Noteholders Termination Event occurs at a time when permission of the Bankruptcy
Court is required for a Consenting Noteholder to change or withdraw (or cause to
be changed or withdrawn) its vote(s) to accept the Plan, WI shall not oppose any
attempt by any Consenting Noteholder to change or withdraw (or cause to be
changed or withdrawn) such vote(s) at such time .
8. TERMINATION OF THE COMPANY'S OBLIGATIONS. The Company shall have the
right to terminate this Agreement by the giving of written notice thereof to
each of the Consenting Noteholders (a "Company Termination Event") (a) in the
event of a material breach of this Agreement by any Consenting Noteholder(s)
(the "Breaching Noteholders") and provided that non-Breaching Noteholders no
longer constitute the Required DC
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Noteholders, or (b) in the event that any plan of reorganization other than the
Plan is supported by the Consenting Noteholders.
9. GENERAL TERMINATION EVENTS. Each of the Consenting Holders or the
Company may terminate their obligations hereunder and rescind their acceptance
of the Plan or the Restructuring (which acceptance shall be void and null and
have no further force or effect) by giving written notice thereof to each of the
other Consenting Noteholders and the Company upon the occurrence of any of the
following (each, a "General Termination Event"): (a) the Bankruptcy Court
refuses to confirm or denies confirmation of the Plan, or the Bankruptcy Court's
order confirming the Plan is reversed or vacated on appeal; (b) WI's Chapter 11
Case is dismissed or converted to a case under chapter 7 of the Bankruptcy Code;
(c) a trustee is appointed in WI's Chapter 11 Case; or (d) the sale of the
Xxxxxxx Stock, on terms set forth in the Term Sheet, does not occur by a
deadline mutually acceptable to the Committee and the Company.
10. EFFECTS OF TERMINATION. Subject to Paragraph 26 hereof, upon the
occurrence of a Noteholders Termination Event, a Company Termination Event or a
General Termination Event, in each case resulting in the termination of the
Consenting Noteholders' obligations or the Company's obligations (as the case
may be) under the terms of Paragraphs 7, 8 or 9 hereof, this Agreement shall
terminate and no party hereto shall have any continuing liability or obligation
to pay any other party hereunder; PROVIDED, HOWEVER, that no such termination
shall relieve any party from liability for its breach or non-performance of its
obligations hereunder prior to the date of such termination.
11. IMPACT OF APPOINTMENT TO CREDITORS' COMMITTEE. Notwithstanding
anything to the contrary, if any Consenting Noteholder is appointed to and
serves on an official committee duly appointed in the Chapter 11 Case, the terms
of this Agreement shall not be construed so as to limit such Consenting
Noteholder's exercise (in its sole discretion) of its fiduciary duties to any
person arising from its service on such committee, and any such exercise (in the
sole discretion of such Consenting Noteholder) of such fiduciary duties shall
not be deemed to constitute a breach of the terms of this Agreement, and the
fact of such service on such committee shall not otherwise affect the continuing
validity or enforceability of this Agreement; provided, however, that such
Consenting Noteholder agrees to take all actions, including the exercise of all
voting or similar rights, with respect to its service on such committee to
facilitate, support and implement the expeditious approval and effectuation of
the Plan, consistent with the provisions of the Term Sheet, unless, in the
written advice of counsel to such Consenting Noteholder, the taking of any such
action would result in a violation of such Consenting Noteholder's fiduciary
obligations as a member of such committee. Notwithstanding the foregoing, so
long as no Noteholders Termination Event, Company Termination Event or General
Termination Event shall have occurred and this Agreement remains in effect, the
foregoing shall not modify or limit obligations of the Consenting Noteholders to
vote their claims and take other actions set forth in Paragraph 5 hereof. If the
United States Trustee seeks to appoint a committee of creditors comprised, in
whole or in part, of holders of the DC Notes, the Consenting Noteholders will
seek to be appointed to such committee.
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12. FORBEARANCE; RESTRICTIONS ON TRANSFERS. So long as this Agreement
has not been terminated under Paragraphs 7, 8 or 9 hereof: (a) the Consenting
Noteholders (i) will not file a notice of default or sale or take any other
action to collect on the Notes or foreclose on any collateral therefor,
including, without limitation, instructing the Indenture Trustees on how to
proceed in the exercise of any and all remedies, and (ii) will give instructions
to the Indenture Trustees, if and when reasonably appropriate, to desist from
taking action that is inconsistent with this Agreement or the Restructuring; and
(b) each of the Consenting Noteholders will not, directly or indirectly, sell,
assign, transfer, hypothecate or otherwise dispose of (i) any Notes beneficially
owned by it or as to which it has investment authority or discretion (including
Notes acquired after the date hereof), (ii) any claim (as that term is defined
in section 101(5) of the Bankruptcy Code) arising from, based on or related to
the Notes, or (iii) any option, interest in, or right to acquire any Notes or
claim referred to in clauses (i) and (ii) above, UNLESS the transferee is (x) an
"accredited investor" within the meaning of Rule 501 under the Securities Act of
1933, as amended, and (y) agrees in writing to be bound by the terms of this
Agreement and to be a member of the Committee.
13. THE COMPANY'S UNDERTAKINGS. So long as this Agreement is in effect,
absent the prior written consent of the Required DC Noteholders, the Company
shall not take any action materially inconsistent with the Agreement, including,
but not limited to, the sale of any substantial portion of the Company's assets
(except sales undertaken in the ordinary course of business) or obtaining
additional financing, excluding debtor in possession financing. If required, WI
shall take, and the Consenting Noteholders will support and cooperate in the
taking of, all reasonable steps necessary and desirable to obtain an order of
the Bankruptcy Court confirming the Plan as expeditiously as possible under the
Bankruptcy Code and other applicable law, and use its reasonable best efforts to
obtain any and all requisite regulatory and/or third party approvals for the
Restructuring.
14. FEES AND EXPENSES. Upon the execution of this Agreement by the
Consenting Noteholders, the Company shall, notwithstanding any agreement to the
contrary, pay in full the reasonable fees and costs of counsel to the Committee,
and shall timely pay in the ordinary course of business any additional bills
submitted to the Company by such counsel through consummation of the
Restructuring, subject to any rules and restrictions contained in the Bankruptcy
Code, Bankruptcy Rules and any applicable local rules of the bankruptcy court.
In addition, five (5) business days prior to the filing of the Petition, the
Company shall pay in full any outstanding bills of the Committee's counsel plus
an estimate of such counsel's unbilled fees and costs up to the filing of the
Petition. The Company shall also pay the fees and costs of the financial advisor
to the Committee, in accordance with terms of the engagement letter between the
Committee's financial advisor and the Company. Notwithstanding the foregoing, in
no event, unless the Company shall otherwise agree in writing, shall the Company
be responsible for any fees and expenses incurred after the date of a
Noteholders Termination Event, a Company Termination Event or a General
Termination Event. In addition, if any party brings an action against any other
party based upon a breach by such other party of its obligations hereunder, the
prevailing party shall be entitled to all reasonable expenses
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incurred, including reasonable attorneys', accountants' and financial advisors'
fees in connection with such action.
15. NOTICES. Notices given under this Agreement shall be to:
FOR THE COMMITTEE:
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Xxxx X. Xxxxxxx, Esq.
Milbank, Tweed, Xxxxxx & XxXxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
FOR THE COMPANY:
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Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and
Xxxx Xxxxxx, Chief Financial Officer
Waxman Industries, Inc.
00000 Xxxxxx Xxxx
Xxxxxxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000, ext. 3552
Telecopy: (000) 000-0000
FOR THE CONSENTING NOTEHOLDERS:
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At the addresses and telephone numbers
set forth on the signature pages of this Agreement.
16. RESERVATION OF RIGHTS. This Agreement and the Restructuring are
part of a proposed settlement of a dispute among the parties hereto. Except as
expressly provided in this Agreement, nothing herein is intended to, or does, in
any manner waive, limit, impair or restrict the ability of each Consenting
Noteholder and each of the Indenture Trustees to protect and preserve its
rights, remedies and interests, including without limitation, its claims against
the Company. Nothing herein shall be deemed an admission of any kind. Nothing
contained herein effects a modification of the Consenting Noteholders' or the
Indenture Trustees' rights under the Indentures, the Notes or other documents
and agreements unless and until the Restructuring becomes effective. If the
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transactions contemplated herein are not consummated or this Agreement is
terminated for any reason, the parties hereto fully reserve any and all of their
rights. Pursuant to Federal Rule of Evidence 408 and any applicable state rules
of evidence, this Agreement and all negotiations relating thereto shall not be
admissible into evidence in any proceeding other than a proceeding to enforce
its terms.
17. COUNTERPARTS. This Agreement may be executed by facsimile by one of
more of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts when taken together shall
constitute one and the same instrument. Except as expressly provided for herein,
no modification, amendment or waiver of any provision of this Agreement or the
Term Sheet shall be effective unless such modification, amendment or waiver is
in writing and signed by each of the parties hereto. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that nothing contained in this
Paragraph shall be deemed to permit sales, assignments or transfers other than
in accordance with Paragraph 12.
18. REPRESENTATIONS AND WARRANTIES. Each Consenting Noteholder
represents and warrants to the Company and each other that it is an accredited
investor, owns the Notes that represent a beneficial interest in the total
principal amount (of record and/or beneficially) set forth immediately below its
name and the signature(s) of its authorized representative(s) on that certain
letter from such Consenting Noteholders to WI, dated December 8, 1999, or as to
which such holder or its Affiliates (as that term is defined in Rule 12b-2 under
the Securities Exchange Act of 1934, as amended, and over whom the Consenting
Noteholder exercises sufficient control to insure enforcement of the provisions
of this Agreement) has investment authority or discretion, and such Notes
constitute all of such Notes so owned or controlled by such holder and its
Affiliates. Each party hereunder represents and warrants that the following
statements are true, correct and complete as of the date hereof.
(a) POWER, AUTHORITY AND AUTHORIZATION. Execution, delivery
and performance of this Agreement by such party has been duly
authorized by all necessary corporate action on the part of such party,
and the person executing this Agreement on behalf of such party is duly
authorized to do so;
(b) NO CONFLICTS. The execution, delivery and performance of
this Agreement by such party does not and shall not (i) violate any
provision of law, rule or regulation applicable to it or any of its
subsidiaries or its organizational documents or those of any of its
subsidiaries or (ii) except to the extent previously disclosed in
writing to the Committee, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under
any material contractual obligations to which it or any of its
subsidiaries is a party or under its organizational documents;
(c) GOVERNMENTAL CONSENTS. The execution, delivery and
performance by it of this Agreement do not and shall not require any
registration
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or filing with consent or approval of, or notice to, or other action
to, with or by, any Federal, state or other governmental authority or
regulatory body, except such filing as may be necessary and/or required
for disclosure by the Securities and Exchange Commission and, in
connection with the commencement of the Chapter 11 Case, the approval
of the Disclosure Statement and confirmation of the Plan;
(d) BINDING OBLIGATION. This Agreement is the legally valid
and binding obligation of each of the undersigned, enforceable against
it in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability;
(e) POTENTIAL SALES. Except as contemplated in the Term Sheet,
each party is unaware of any letter of intent, other binding agreement
or other binding understanding (whether oral or written) or any written
indication of interest for the potential sale or other transaction
concerning USA or WI, excluding sales of inventory and the creation of
accounts receivable in the ordinary course.
19. EFFECTIVENESS; AMENDMENTS; CONSENTING HOLDERS. This Agreement shall
not become effective and binding on the parties hereto unless and until
counterpart signature pages hereto have been executed and delivered by the
Company and each Consenting Noteholder. Once effective, this Agreement may not
be modified, amended or supplemented except in writing signed by the Company and
each Consenting Noteholder.
20. DISCLOSURE OF INDIVIDUAL HOLDINGS. Unless required by applicable
law or regulation, the Company shall not disclose (i) the amount of a Consenting
Noteholder's holdings of Notes, or (ii) the terms of this Agreement, without the
prior written consent of such Consenting Noteholder or the Consenting
Noteholders, as applicable; and if such announcement or disclosure is required
by law or regulation, the Company shall afford the Consenting Noteholder(s) a
reasonable opportunity to review and comment upon any such announcement or
disclosure prior to such announcement or disclosure by the Company. The
foregoing shall not prohibit the Company from disclosing the approximate
aggregate holdings of Notes by the Consenting Noteholders or the holders of the
Notes as a group.
21. ENTIRE AGREEMENT. This Agreement, including the Term Sheet,
exhibits to the Term Sheet, the Restructuring Documents and all agreements and
consents executed contemporaneously herewith constitute the entire agreement
among the parties pertaining to the subject matter hereof and supersedes all
prior agreements and understandings of the parties in connection therewith.
22. REPRESENTATION BY COUNSEL. Each party hereto acknowledges that it
has been represented by counsel in connection with this Agreement and the
transactions contemplated by this Agreement. Accordingly, any rule of law or
legal decision that would provide any party hereto with a defense to the
enforcement of the terms of this Agreement against such party shall have no
application and is expressly waived. The
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provisions of this Agreement shall be interpreted in a reasonable manner to
effect the intent of the parties hereto.
23. CONSIDERATION. Each party hereto acknowledges the receipt and
sufficiency of good and valuable consideration in exchange for its agreement to
undertake its duties and obligations under this Agreement.
24. GOVERNING LAW; JURISDICTION. This Agreement is governed by and
construed in accordance with the internal laws of the State of New York, without
regard to any conflicts of law provision that would require the application of
the law of any other jurisdiction. By its execution and delivery of this
Agreement, each of the parties hereto hereby irrevocably and unconditionally
agrees for itself that any legal action, suit or proceeding against it with
respect to any matter under or arising out of or in connection with this
Agreement or for recognition or enforcement of any judgment rendered in any such
action, suit or proceeding, shall be brought in a federal court of competent
jurisdiction in the Southern District of New York. By execution and delivery of
this Agreement, each of the parties hereto hereby irrevocably accepts and
submits to the nonexclusive jurisdiction of such court, generally and
unconditionally, with respect to any such action, suit or proceeding.
Notwithstanding the foregoing consent to jurisdiction, upon the commencement of
the Chapter 11 Case in the Bankruptcy Court for the District of Delaware, each
of the parties hereto hereby agrees that the Bankruptcy Court in Delaware shall
have exclusive jurisdiction over all matters arising out of or in connection
with this Agreement.
25. SPECIFIC PERFORMANCE. It is understood and agreed by each of the
parties hereto that money damages would not be a sufficient remedy for any
breach of this Agreement by any party (other than a breach by the Company of
Paragraph 14 hereof) and each non-breaching party shall be entitled to specific
performance and injunctive or other equitable relief as a remedy of any such
breach.
26. SURVIVAL. Notwithstanding the sale of the Notes in accordance with
Paragraph 12 hereof or the termination of the Consenting Noteholders'
obligations hereunder in accordance with Paragraph 7 or 9 hereto, the Company's
obligations and agreements set forth in Paragraph 14 (with respect to fees and
expenses incurred through the date of such termination) and 20 (with respect to
disclosure of certain information) hereof shall survive such termination and
shall continue in full force and effect for the benefit of the Consenting
Noteholders in accordance with the terms hereof.
27. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of the parties and their respective successors, assigns,
heirs, executors, administrators and representatives. The agreements,
representations and obligations of the Consenting Noteholders under this
Agreement are, in all respects, several and not joint.
28. NO THIRD PARTY BENEFICIARIES. Unless expressly stated herein, this
Agreement shall be solely for the benefit of the parties hereto and no other
person or entity.
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29. HEADINGS. The headings of the sections, paragraphs and subsections
of this Agreement are inserted for convenience only and shall not affect the
interpretation thereof.
30. PRESS RELEASE. The Company agrees to prepare and disseminate a
press release addressing the Restructuring, within three business days of the
execution of this Agreement.
IN WITNESS WHEREOF, each of the parties below have executed a
counterpart of this Agreement, the terms of which shall be effective upon
execution by the Company and the Consenting Noteholders.
Dated: December 9, 1999 WAXMAN INDUSTRIES, INC. and
WAXMAN USA INC.
By: /s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
Individually, with respect to Paragraph
18(e) only, and as both Co-CEO/Chairman of
Waxman Industries, Inc. and Chairman/Co-CEO
of Waxman USA Inc. with respect to the
entire Agreement
By: /s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
Individually, with respect to Paragraph
18(e) only, and as both Co-CEO/President of
Waxman Industries, Inc., and
Chairman/Co-CEO/President of Waxman USA Inc.
with respect to the entire Agreement
00000 Xxxxxx Xxxx
Xxxxxxx Xxxxxxx, Xxxx 00000
Tel.: (000) 000-0000
Fax: (000) 000-0000
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Dated: December 9, 1999 MORGENS, WATERFALL, VINTIADIS & CO., INC.,
acting on behalf of various investment
advisory clients
By: /s/ Xxxx Xxxxxxxxx
-----------------------------------------
Xxxx Xxxxxxxxx
Its: Group Portfolio Manager
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel.: (000) 000-0000
Fax: (000) 000-0000
Dated: December 8, 1999 OAKTREE CAPITAL MANAGEMENT, LLC,
as agent and on behalf of certain funds
and accounts
By: /s/ Xxxxxxx Xxxxx
----------------------------------------
Xxxxxxx Xxxxx
Its: Managing Director and General Counsel
By: /s/ Xxxxxx X. Xxxx
----------------------------------------
Xxxxxx X. Xxxx
Its: Senior Vice President
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Tel.: (000) 000-0000
Fax: (000) 000-0000
12
13
Dated: December 9, 1999 POST ADVISORY GROUP
By: /s/ Xxxxxxxx X. Post
----------------------------------------
Xxxxxxxx X. Post
Its: President
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Tel.: (000) 000-0000
Fax: (000) 000-0000
Dated: December 9, 1999 VARDE PARTNERS, INC.
By: /s/ Xxxxxx Page
----------------------------------------
Xxxxxx Page
Its: Vice President
0000 Xxxx 00xx Xxxxxx, #000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Tel.: (000) 000-0000
Fax: (000) 000-0000
13
14
EXHIBIT A
---------
THIS OUTLINE DOES NOT CONSTITUTE AN OFFER
WITH RESPECT TO ANY SECURITIES, OR
THE SOLICITATION OF ACCEPTANCES OF A CHAPTER 11 PLAN.
ANY SUCH OFFER OR SOLICITATION WILL BE MADE
IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS
OR THE BANKRUPTCY CODE.
OUTLINE OF PRINCIPAL TERMS OF
A RESTRUCTURING AND JOINT
CHAPTER 11 PLAN OF REORGANIZATION
---------------------------------
This Outline (the "Term Sheet") describes certain of the principal
terms of a proposed reorganization of certain of the outstanding indebtedness
and liabilities of Waxman Industries, Inc. ("WI") and the satisfaction of
certain indebtedness of Waxman USA Inc. ("USA," and together with WI, the
"Company"). The Company contemplates implementation of the proposed
reorganization for USA without a bankruptcy case and for WI through confirmation
of a joint pre-packaged reorganization plan (the "Plan") under chapter 11 of
title 11 of the United States Code, 11 U.S.C. Section 101 et seq. (the
"Bankruptcy Code"). The Company expects that the Plan will have the support of
the unofficial committee (the "Committee") of holders of the 12-3/4% Deferred
Coupon Secured Notes, due 2004, issued by WI, current approximate accreted
principal amount outstanding $92,797,000 (the "DC Notes") and the 11-1/8% Senior
Notes, due 2001, issued by USA, current approximate principal amount outstanding
$35,855,000 (the "Senior Notes") (the DC Notes and Senior Notes shall
collectively be referred to as the "Notes") (holders of the Notes shall
collectively be referred to as "Noteholders") and Noteholders in sufficient
number and amount to ensure the successful completion of the reorganization of
WI and confirmation of the Plan. The transactions described in this Outline
remain subject in all respects to, among other things, definitive documentation,
described below.
I. CLASSIFICATION AND TREATMENT OF ALLOWED CLAIMS AGAINST AND INTERESTS IN WI
A. Unclassified Claims (not entitled to vote)
Administrative Claims: Unless otherwise agreed by the holder of the
claim, each holder will receive payment in
full (in cash) of the unpaid portion of any
allowed administrative claim on the Plan
effective date (the "Effective Date") or as
soon thereafter as practicable.
Priority Tax Claims: Unless otherwise agreed by the holder of the
claim, at the option of WI, each holder will
receive either (i) payment in full (in cash)
on the Effective Date or as soon thereafter
as practicable or (ii) payment over a
six-year
A-1
15
period from the date of assessment as
provided in section 1129(a)(9)(C) of the
Bankruptcy Code with interest payable as may
be required by the Bankruptcy Code.
B. Unimpaired Claims (deemed to accept)
Class 1 - Other Priority
Claims (if any): Each holder will receive payment in full (in
cash) on the Effective Date or as soon
thereafter as practicable.
Class 2 - Secured Claims: At the option of WI, WI will (i) reinstate
(if any, including, without such allowed secured claim by curing all
limitation, to the extent outstanding defaults with all legal,
that it has a secured claim, equitable and contractual rights remaining
the secured claim of Congress unaltered, (ii) pay in full in cash (with
Financial Corporation ("CFC") interest, as required) such allowed secured
claim by delivering the collateral securing
such claim and paying any interest required
to be paid under section 506(b) of the
Bankruptcy Code.
Class 3 - General Unsecured At the option of WI, WI will (i) reinstate
Claims: (if any) such allowed unsecured claim by curing all
outstanding defaults with all legal,
equitable and contractual rights remaining
unaltered or (ii) pay in full in cash (with
interest, as required) such allowed
unsecured claim on the Effective Date or as
soon thereafter as practicable.
C. Impaired Claims (entitled
to vote)
Class 4 - DC Notes: On the Effective Date or as soon thereafter
as practicable, each holder of an allowed
claim consisting of a DC Note will receive
its pro rata share of (i) the Net Proceeds
(the "Net Proceeds" are defined as the gross
proceeds (the "Gross Proceeds") from the
sale of the Xxxxxxx Stock (as defined below)
less a) the Taxes (as hereinafter defined
and calculated), b) up to $2,000,000 of
restructuring expenses, c) $35,855,000 in
aggregate principal amount of the 11 1/8%
Senior Notes, d) interest accrued on the 11
1/8% Senior Notes between September 1, 1999
and the date on which the Senior Notes
A-2
16
are fully paid and e) approximately
$5,916,000 representing the December 1, 1999
interest payment actually paid in cash on
the DC Notes (the "Coupon Payment")) and
(ii) all accrued interest or other
investment proceeds earned on the Net
Proceeds from the date of closing of the
asset sale described in Section III.A.,
below, through the date of distribution of
such funds to the holders of the DC Notes in
full and complete satisfaction of any and
all claims relating to the DC Notes. "Taxes"
shall mean the aggregate amount of federal,
state and local income (howsoever
denominated, including alternative minimum)
taxes payable by the consolidated group of
which WI is the common parent (the "Company
Group") with respect to the sale of the
Xxxxxxx Stock for the taxable year in which
the Xxxxxxx Stock is sold and shall be
calculated (which calculation shall be done
separately for each taxing jurisdiction in
which any member of the Company Group is
taxable) on an amount of taxable income
equal to the excess of (x) the gross amount
realized by the Company Group on the sale of
the Xxxxxxx Stock over (y) the sum of,
without duplication, (I) the Company Group
adjusted tax basis of the Xxxxxxx Stock,
(II) any expenses of the sale of the Xxxxxxx
Stock payable by the Company Group, (III)
the expenses of restructuring the debt of
the Company Group, (IV) deductible interest
on the debt being restructured and the
Senior Notes, (V) the deduction for state
taxes attributable to the sale of the
Xxxxxxx Stock computed in a manner analogous
to this computation, (VI) the aggregate net
operating loss carryforwards to such taxable
year, reduced by $3,000,000 and (VII) the
total losses resulting from the operation of
the Company Group for such taxable year,
i.e. the amount, if any, by which the
deductions of the Company Group for such
taxable year (excluding those referred to in
the preceding clauses (II) through (VI))
exceed the gross income of the Company Group
for such
A-3
17
taxable year (computed without regard to the
gross proceeds realized on the sale of the
Xxxxxxx Stock). Illustrations of the
calculation of Taxes have been agreed to by
the Committee and the Company
contemporaneously herewith. The recovery of
the DC Noteholders under the Plan shall be a
cash amount equal to a) the Net Proceeds, b)
all accrued interest and other investment
proceeds earned on the Net Proceeds from the
date of closing of the asset sale described
in Section III.A., below, through the date
of distribution to the holders of the DC
Notes and c) additional consideration, if
any, contemplated by Section IV.A., below.
D. Interests (unimpaired)
Class 5 Equity Interests: Holders of allowed interests in WI and USA
shall retain such interests without
alteration, entitling such holders to the
same legal, equitable and contractual rights
that existed prior to the chapter 11 case
contemplated herein, except as provided by
Section IV.A., below.
E. Other Necessary Classes: The Plan will also contain classes for any
other necessary claims and/or equity
interests that are to be unimpaired and will
contain such other provisions as are
required or appropriate under the Bankruptcy
Code or otherwise to accomplish the
restructuring contemplated herein.
II. PAYMENT OF SENIOR NOTES In connection with the closing of the sale
of the Xxxxxxx Stock (described below) each
holder of a Senior Note will receive its pro
rata share of $35,855,000 together with any
and all interest accrued between September
1, 1999 and the date on which the Senior
Notes are paid in full, in cash, and in
complete satisfaction of any and all claims
relating to the Senior Notes.
III. FUNDING OF NOTEHOLDER
PAYMENTS
A. Sale by USA of approximately As set forth in the timetable agreed to by the
7.2 million
A-4
18
shares of the outstanding Noteholders and the Company
outstanding common stock contemporaneously herewith (the
of Xxxxxxx Inc. (the "Timetable"), Xxxxxxx will engage in an
"Xxxxxxx Stock"), which orderly sale process to sell itself,
constitutes approximately and USA will cooperate to sell the Xxxxxxx
44.4% of the outstanding Stock, to an independent, strategic or
stock of Xxxxxxx, Inc. financial third party. The sale process
("Xxxxxxx"). shall be conducted by BT Xxxx Xxxxx
Incorporated or such other reputable and
independent investment bank as Xxxxxxx
chooses to employ ("Xxxx Xxxxx"). The terms
and conditions of and documentation for the
sale, to the extent requiring that the
parties hereto are parties to such
documentation, shall be mutually agreed upon
by Xxxxxxx, the Company and the Committee.
Throughout the course of the sale of
Xxxxxxx, USA will fully cooperate with the
Committee and its Advisors (as defined
below), and will use its best efforts to
cause Xxxxxxx and Xxxx Xxxxx to cooperate
fully with the Committee and its Advisors,
including but not limited to, providing the
Committee and its Advisors: (i) the
opportunity to meet with the Company,
Xxxxxxx and Xxxx Xxxxx on a weekly (or more
frequent if necessary) basis to discuss the
sale of Xxxxxxx; (ii) copies of any and all
relevant documents (including lists of
potential buyers and information being made
available to potential buyers); (iii)
unlimited access to Xxxx Xxxxx and the work
product of Xxxx Xxxxx related to the sale of
Xxxxxxx; (iv) an opportunity to meet with
each of WI's and USA's boards of directors,
before these boards vote to approve the sale
of the Xxxxxxx Stock, to discuss the sale of
Xxxxxxx. Proceeds from the sale of the
Xxxxxxx Stock shall be immediately paid to
the holders of the Senior Notes as described
above and the Net Proceeds shall be placed
in a specially dedicated bank account in the
name of USA (the "USA Proceeds Account") the
sole purpose of which will be to repay the
DC Notes as provided herein. The USA
Proceeds Account shall contain no monies
other than the Net Proceeds (and interest
and earnings thereon) remaining from the
sale of
A-5
19
the Xxxxxxx Stock following the payment to
holders of the Senior Notes as provided in
Section II., above. During the term of the
lock-up agreement, dated as of December 8,
1999 (the "Lock-up Agreement"), USA shall
not grant or allow any (and shall take any
and all reasonable action to prevent the
granting or allowance of any) security
interest, lien, encumbrance or other
interest of any kind or nature whatsoever in
the USA Proceeds Account or monies held
therein to any individual or entity without
the written consent of the Committee. During
the term of the Lock-up Agreement, no monies
shall be used or transferred from the USA
Proceeds Account except to (i) fund a
dividend in the amount of the Net Proceeds
plus accrued interest (with interest and
earnings thereon) from USA to WI, which
shall be used by WI to fund payments under
the Plan to pay holders of the DC Notes on
the Effective Date (the "Dividend"), or (ii)
to otherwise pay the DC Notes as provided
herein. During the term of the Lock-up
Agreement and pending the distribution of
monies held in the USA Proceeds Account in
accordance with this Term Sheet, all monies
held in the USA Proceeds Account shall be
invested in short-term government
obligations or money market funds, as
directed by USA and subject to an
irrevocable direction that USA and WI may
only distribute any and all monies held in
the USA Proceeds Account to holders of the
DC Notes. All officers and directors of USA
and WI and WI, as the sole equity holder of
USA, shall acknowledge and agree to the
foregoing in writing.
B. Additional Funding USA shall draw on its existing credit
facilities or guarantee note for funding all
sums necessary to satisfy the Company's
portion of the restructuring expenditures.
C. Additional Security In order to provide the Company with
sufficient working capital to make the
Coupon Payment, and to forestall any
potential need WI and/or USA may
A-6
20
otherwise have to monetize a portion of the
Xxxxxxx Stock other than in furtherance of
the reorganization contemplated herein, in
addition to the amendments set forth in
Section V., below, all Noteholders who are
members of the Committee have consented to
the adoption of amendments to the Senior
Notes indenture and DC Notes indenture which
(i) permit USA to grant CFA a first priority
perfected security interest in and to an
additional 500,000 shares of the Xxxxxxx
Stock (for a total of one million shares of
the Xxxxxxx Stock) and (ii) are indicated in
the two forms of the First Supplemental
Indenture, annexed hereto as Exhibit "A-1."
IV. ADDITIONAL FEATURES OF THE
PLAN
A. Additional Consideration
from WI If the Company or any portion thereof is
sold or the Company sells additional equity
securities, whether preferred or common, and
such transaction(s) generate in the
aggregate proceeds in excess of $15 million
within one year from the Effective Date of
the Plan ("Excess") then 50% of such Excess
shall immediately be paid in kind by WI to
the holders of the DC Notes.
B. Conditions to Effective
Date of the Plan 1. The Company and the Noteholders must
enter into mutual general releases regarding
any and all claims for the time period
preceding the Effective Date of the Plan.
2. There shall be no material adverse change
in the ability of the Company to perform its
obligations hereunder and in particular with
respect to the sale of the Xxxxxxx Stock or
the ability of USA to draw on its existing
credit facilities.
3. The Coupon Payment, the Dividend and
payments of the DC Notes and the Senior
Notes, as provided herein, must be made in
accordance with this Term Sheet, must be
lawful and no action must have been
commenced and not dismissed to avoid or
recover such payments as a fraudulent
conveyance, preference or other similar
A-7
21
avoidable payment.
4. Except as contemplated by this Term
Sheet, Xxxxxx and Xxxxxx Xxxxxx shall each
certify in writing that, as of the Effective
Date of the Plan, except as disclosed to the
Committee in writing, they are unaware of
any letter of intent, binding agreement or
other binding understanding (whether oral or
written) or any written indication of
interest for the potential sale or other
transaction concerning USA or WI, excluding
sales of inventory and the creation of
accounts receivable in the ordinary course.
C. Timing The Company shall use its best efforts to
comply with the Timetable.
D. Documentation All of the documents necessary or
appropriate to facilitate the restructuring
of the Company will be in form and substance
satisfactory to the Company and the
Committee, including without limitation, the
Plan, the disclosure statement, all
bankruptcy court orders and the Lock-up
Agreement.
E. Other Terms The Company will pay the reasonable fees and
expenses of counsel to the Committee and the
financial advisors to the Committee
(collectively, the "Advisors"), as provided
in the Lock-up Agreement.
No later than the date on which the sale of
the Xxxxxxx Stock is consummated, the
President, Chairman, CEO or other
duly-authorized officer of USA acceptable to
the Committee, shall execute and issue to
the Committee a certificate stating (i) all
assets and liabilities (both direct and
indirect) of USA, (ii) that holders of the
Senior Notes are, together with CFC, the
sole creditors of USA, (iii) that USA was
solvent prior to the sale of the Xxxxxxx
Stock contemplated by this Term Sheet and
the Plan and (iv) further stating that USA
will not become insolvent as a result of the
sale of the Xxxxxxx Stock
A-8
22
contemplated by this Term Sheet and the
Plan.
No later than the date on which the sale of
the Xxxxxxx Stock is consummated, and
provided the Lock-up Agreement remains in
effect, CFC shall execute and issue to USA
and members of the Committee a certificate
(i) waiving any and all rights CFC might
otherwise have to proceeds from the sale of
the Xxxxxxx Stock and the USA Proceeds
Account and (ii) consenting to the payment
a) of the Senior Notes and b) payment of the
Dividend or other payment of the DC Notes as
provided herein.
V. INDENTURE AMENDMENTS All of the holders of the DC Notes who are
members of the Committee will, prior to the
filing of WI's petition, agree to consent to
the adoption of amendments to the DC Notes
indenture, as indicated in the Third
Supplemental Indenture annexed hereto as
Exhibit "A-2," which amendments shall become
effective immediately upon execution by WI
and the Trustee and consent by all of the
holders of the DC Notes who are members of
the Committee.
VI. WAIVERS AND RELEASES The Committee and Noteholders (in their
capacities as members of the Committee and
individually) will support the granting of
broad releases and waivers under the Plan to
WI, USA, Xxxxxxx, the Committee, and all of
their subsidiaries, affiliates, officers,
directors, shareholders, employees, agents,
attorneys, accountants and financial
advisors (the "Released Parties") from any
and all claims and causes of action that
could be asserted by any and all creditors
and/or equity holders of WI, or in the case
of the Committee, by the Company, in
connection with any claims arising from
their financial condition, pre-petition
activities and/or the Plan. The Committee
and Noteholders (in their capacities as
members of the Committee and individually)
will support a release and waiver under the
Plan of any Bankruptcy Code and state law
avoidance
A-9
23
actions that can be asserted against any of
the Released Parties.
VII. SUPPORT OF INCENTIVE
COMPENSATION The Committee will support an appropriate
compensation program to be implemented by
WI, if the Committee, in its reasonable
discretion, determines that such
compensation program is reasonable and
appropriate.
A-10
24
Exhibit A-1
25
FIRST SUPPLEMENTAL INDENTURE
----------------------------
First Supplemental Indenture, dated as of December __, 1999, to the
Indenture dated as of May 20, 1994 (the "Indenture"), between Waxman
Industries, Inc., a Delaware corporation (the "Company"), and the Huntington
National Bank, as trustee (the "Trustee").
RECITAL
-------
The Indenture provides that the Company and the Trustee may, with the
written consent of the Holders of at least a majority in aggregate principal
amount of the Company's outstanding 12 3/4% Senior Secured Deferred Coupon
Notes due June 1, 2004 (the "Securities"), amend or supplement the Indenture or
the Securities. The Company has received signed consents of the Holders of at
least a majority in aggregate principal amount of the Securities approving the
amendments to the Indenture and the Securities contained in this First
Supplemental Indenture.
NOW, THEREFORE, the parties agree as follows for their mutual benefit
and for the equal and ratable benefit of the Holders of the Securities:
1. Capitalized terms not defined herein shall have the meanings given
to them in the Indenture.
2. Section 1.01 of the Indenture is hereby amended by adding thereto
the following definition in its appropriate alphabetical order:
"Additional Xxxxxxx Stock Amount" means up to an additional
500,000 shares of the common stock, $.01 par value per share, of
Xxxxxxx Inc., as such number may be proportionately adjusted for stock
splits, non cash stock dividends, reclassifications and similar
events."
3. Paragraph 4.13 of the Indenture is hereby amended by adding a new
clause (k) following immediately after the end of clause (j);
"(k) In addition to the Liens permitted by clause (j) above,
Liens on the Additional Xxxxxxx Stock Amount to secure Indebtedness
incurred pursuant to Sections 4.10(b) or (i) hereof or any permitted
refinancing thereof pursuant to Section 4.10(j) hereof."
4. This First Supplemental Indenture is an indenture to and in
implementation of the Indenture, and the Indenture and this First Supplemental
Indenture shall henceforth be read together.
5. The Trustee accepts the trusts created by the Indenture, as
supplemented by this First Supplemental Indenture, and agrees to perform the
same upon the terms and conditions in the Indenture, as supplemented by this
First Supplemental Indenture.
Exhibit A-1, Page 1
26
6. The Indenture as amended and supplemented by this First
Supplemental Indenture is in all respects confirmed and preserved.
7. This First Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same
instrument.
8. The provisions of this First Supplemental Indenture will take
effect immediately upon its execution and delivery by the Trustee.
9. This First Supplemental Indenture shall be governed by the internal
laws of the State of New York.
10. If any provision of this First Supplemental Indenture shall be
declared by a court of competent jurisdiction to be unenforceable, invalid or
void, the same shall not impair any of the other provisions of this First
Supplemental Indenture, nor shall any party have liability to the other parties
as a result of such unenforceable, invalid or void provision.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the day and year first above
written.
WAXMAN INDUSTRIES, INC.
By: _________________________
Name:
Title:
Attest:______________________
Name:
Address:
THE HUNTINGTON NATIONAL BANK,
as Trustee
By: _________________________
Name:
Title:
Exhibit A-1, Page 2
27
FIRST SUPPLEMENTAL INDENTURE
----------------------------
First Supplemental Indenture, dated as of December __, 1999, to the
Indenture dated as of April 1, 1996 (the "Indenture"), between Waxman USA Inc.,
a Delaware corporation (the "Company"), and The United States Trust Company of
New York, as trustee (the "Trustee").
RECITAL
-------
The Indenture provides that the Company and the Trustee may, with the
written consent of the Holders of at least a majority in aggregate principal
amount of the Company's outstanding 11c% Senior Notes due 2001 (the
"Securities"), amend or supplement the Indenture or the Securities. The Company
has received signed consents of the Holders of at least a majority in aggregate
principal amount of the Securities approving the amendments to the Indenture
and the Securities contained in this First Supplemental Indenture.
NOW, THEREFORE, the parties agree as follows for their mutual benefit
and for the equal and ratable benefit of the Holders of the Securities:
1. Capitalized terms not defined herein shall have the meanings given
to them in the Indenture.
2. Section 1.01 of the Indenture is hereby amended by adding thereto
the following definition in its appropriate alphabetical order:
"Permitted Xxxxxxx Secured Indebtedness" means Indebtedness
of the Company or any of its Subsidiaries in an aggregate principal
amount not to exceed the greater of (i) $10.0 million and (ii) the
fair value of 1.0 million shares (as such number may be
proportionately adjusted for stock splits, stock dividends,
reclassifications and similar events) of Xxxxxxx Common Stock that is
secured by a Lien described under clause (h) of the definition of
Permitted Liens, less the principal amount of Permitted Xxxxxxx
Secured Indebtedness permanently prepaid pursuant to Section 4.17
hereof."
3. The definition of Permitted Liens contained in Section 1.01 of the
Indenture is hereby amended by deleting clause (h) thereof and substituting the
following new clause (h) in its place:
"Liens on up to the greater of (i) $10.0 million fair value
of Xxxxxxx Common Stock and (ii) 1.0 million shares of Xxxxxxx Common
Stock;"
4. This First Supplemental Indenture is an indenture to and in
implementation of the Indenture, and the Indenture and this First Supplemental
Indenture shall henceforth be read together.
Exhibit A-1, Page 3
28
5. The Trustee accepts the trusts created by the Indenture, as
supplemented by this First Supplemental Indenture, and agrees to perform the
same upon the terms and conditions in the Indenture, as supplemented by this
First Supplemental Indenture.
6. The Indenture as amended and supplemented by this First
Supplemental Indenture is in all respects confirmed and preserved.
7. This First Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same
instrument.
8. The provisions of this First Supplemental Indenture will take
effect immediately upon its execution and delivery by the Trustee.
9. This First Supplemental Indenture shall be governed by the internal
laws of the State of New York.
10. If any provision of this First Supplemental Indenture shall be
declared by a court of competent jurisdiction to be unenforceable, invalid or
void, the same shall not impair any of the other provisions of this First
Supplemental Indenture, nor shall any party have liability to the other parties
as a result of such unenforceable, invalid or void provision.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the day and year first above
written.
WAXMAN USA INC.
By: _________________________
Name:
Title:
Attest:______________________
Name:
Address:
THE UNITED STATES TRUST COMPANY OF
NEW YORK
as Trustee
By: _________________________
Name:
Title:
Exhibit A-1, Page 4
29
Exhibit A-2
30
THIRD SUPPLEMENTAL INDENTURE
----------------------------
Third Supplemental Indenture, dated as of December __, 1999, to the
Indenture dated as of May 20, 1994, between WI, Inc., a Delaware corporation
(the "Company"), and the Huntington National Bank, as trustee (the "Trustee"),
as amended by a First Supplemental Indenture dated as of January __, 1996
between the Company and the Trustee and a Second Supplemental Indenture dated as
of December 1, 1999 between the Company and the Trustee (as so amended, the
"Indenture").
RECITAL
The Indenture provides that the Company and the Trustee may, with the
written consent of the Holders of at least a majority in aggregate principal
amount of the Company's outstanding 12 3/4% Senior Secured Deferred Coupon Notes
due June 1, 2004 (the "Securities"), amend or supplement the Indenture or the
Securities. The Company has received signed consents of the Holders of at least
a majority in aggregate principal amount of the Securities approving the
amendments to the Indenture and the Securities contained in this Third
Supplemental Indenture.
NOW, THEREFORE, the parties agree as follows for their mutual benefit
and for the equal and ratable benefit of the Holders of the Securities:
1. Capitalized terms not defined herein shall have the meanings given to
them in the Indenture.
2. Section 1.01 of the Indenture is hereby amended by adding thereto the
following definitions in their appropriate alphabetical order:
"Initial Accreted Value" means the sum of the Base Principal
and the aggregate Initial OID Amount, or $539.02, per $1,000 principal
amount of Securities.
"Accrued PIC Interest" means, as of any date, an amount per
$1,000 principal amount of Securities that is equal to the portion of
the excess of the principal amount of such Securities over the Initial
Accreted Value which shall have been amortized through such date, such
amount to be so amortized on a daily basis and compounded semi-annually
on each June 1 and December 1 at the rate of 12 3/4% per annum from
June 1, 1994 through the date of determination but not later than June
1, 1999, computed on the basis of a 360-day year of twelve 30-day
months."
Exhibit A-2, Page 1
31
"Base Principal" means the remainder of $539.02 per $1,000
principal amount of securities, less the Initial OID Amount.
"OID Amount" means an amount per $1,000 principal amount of
Notes equal to the amount of the accrued but unpaid original issue
discount (as such amount is determined pursuant to Section 1273 of the
Internal Revenue Code) on the Notes as calculated to the Maturity Date
of the Notes, exclusive of the Accrued PIC Interest.
3. Section 6.10 of the Indenture is hereby amended by deleting said section in
its entirety and replacing it with the following:
"If the Trustee collects any money pursuant to this Article
Six, it shall pay out the money, and such payments shall be allocated,
in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for accrued and unpaid cash interest on the
Securities pursuant to paragraph 1 of the Securities to and including
the date on which the Default Amount becomes immediately due and
payable pursuant to Section 6.02 above, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for such accrued interest;
Third: to Holders for the Initial OID Amount in respect of the
Securities, ratably without preference or priority of any kind;
Fourth: to Holders for principal amounts owing under the
Securities in respect of Accrued PIC Interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Securities;
Fifth: to Holders for the Base Principal owing under the
Securities, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities; and
Sixth: to the Company or any other obligor on the Securities,
as their interests may appear, or as a court of competent jurisdiction
may direct.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Holders pursuant to this Section
6.10. It is the intent of the foregoing allocation that all payments on
the Notes prior to maturity shall be applied in payment of all interest
which has accrued and remains unpaid on the Notes prior to the
application of any payments to the Base Principal."
Exhibit A-2, Page 2
32
4. Paragraph 1 of the Securities is hereby amended by adding the following
immediately after the end of the second sentence of the first paragraph thereof:
"Notwithstanding the foregoing sentence, the Company may pay accrued
interest on the Securities and the OID Amount in respect of the
Securities at any time, or from time to time, in addition to, but not
later than, the scheduled Interest Payment Dates."
5. Paragraph 5(b) of the Securities is hereby amended by adding the following
immediately after the end of the second sentence on the first paragraph thereof:
"Payments with respect to redemptions of the Securities, whether in
whole or in part, shall be allocated in the following order of
priority: (i) first, to accrued and unpaid interest on the Securities,
if any, to the Redemption Date; (ii) second, to premiums, if any, paid
upon redemption of the Securities in an amount equal to (x) if the
Securities are being redeemed in whole, and not in part, that portion
of the redemption price of the Securities (as determined in accordance
with this paragraph (5)) in excess of the Accreted Value of the
Securities as at the Redemption Date and (y) if the Securities are
being redeemed in part, that portion of the redemption price that is
equal to the difference between (A) aggregate amount, excluding accrued
and unpaid cash interest, being paid for redemption (the "Total
Payment"), and (B) the quotient of the Total Payment divided by a
fraction (I) the numerator of which is the absolute value of the
applicable redemption price which is stated as a percentage of the
Accreted Value as set forth below and (II) the denominator of which is
one hundred (100); (iii) third, to the OID Amount in respect of the
Securities; (iv) fourth, to Accrued PIC Interest owing under the
Securities; and (v) fifth, to Base Principal owing under the
Securities. The Company may, on any Redemption Date, pay all accrued
and unpaid interest on the Securities, including accrued and unpaid
cash interest with respect to Securities, or other portions thereof,
not redeemed as provided herein."
6. Each Holder agrees not to take any position on any return or report for
any income tax purpose which is inconsistent with the application of any
payments made on the Notes provided in this Third Supplemental Indenture.
Exhibit A-2, Page 3
33
7. This Third Supplemental Indenture is an indenture to and in implementation
of the Indenture, and the Indenture and this Third Supplemental Indenture shall
henceforth be read together.
8. The Trustee accepts the trusts created by the Indenture, as supplemented
by this Third Supplemental Indenture, and agrees to perform the same upon the
terms and conditions in the Indenture, as supplemented by this Third
Supplemental Indenture.
9. The Indenture as amended and supplemented by this Third Supplemental
Indenture is in all respects confirmed and preserved.
10. This Third Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
11. The provisions of this Third Supplemental Indenture will take effect
immediately upon its execution and delivery by the Trustee.
12. This Third Supplemental Indenture shall be governed by the internal laws of
the State of New York.
13. If any provision of this Third Supplemental Indenture shall be declared by
a court of competent jurisdiction to be unenforceable, invalid or void, the same
shall not impair any of the other provisions of this Third Supplemental
Indenture, nor shall any party have liability to the other parties as a result
of such unenforceable, invalid or void provision.
(Signatures appear on the following page)
Exhibit A-2, Page 4
34
IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed as of the day and year first above
written.
WAXMAN INDUSTRIES, INC.
By:
-----------------------------------
Name:
Title:
Attest:
-----------------------
Name:
Title:
THE HUNTINGTON NATIONAL BANK,
as Trustee
By:
-----------------------------------
Name:
Title:
Exhibit A-2, Page 5
