Waxman Industries, Inc.

 
24460 Aurora Road

Bedford Heights, Ohio 44146

---------------

NOTICE OF

SPECIAL MEETING OF STOCKHOLDERS

To Be Held February 26, 2018

NOTICE IS GIVEN that a Special Meeting (the “Meeting”) of the Stockholders (the
“Stockholders”) of Waxman Industries, Inc. (the “Company,” “we,” or “us”), will be held at
10:00 a.m. on February 26, 2018 at 24460 Aurora Road, Bedford Heights, Ohio 44146, for the
following purposes:

1. to consider and vote on a proposal to adopt an Agreement and Plan of Merger,

dated January 16, 2018, among Waxman Holdings, Inc., a Delaware corporation
(“Parent”), Waxman Merger Sub, Inc., a Delaware corporation and wholly owned
subsidiary of Parent (“Merger Sub”), and the Company (the “merger agreement”);

2. to approve the adjournment of the special meeting if there are insufficient votes at
the time of the special meeting to obtain the Company shareholder approval (as
defined below); and

3. to act upon such other business as may properly come before the Meeting or any
postponement.

The holders of record of our common stock, par value $0.01 per share (the “common
shares”), and our Class B shares, par value $0.01 per share (the “Class B shares” and together
with the common shares, the “company shares”), at the close of business on January 11, 2018,
are entitled to notice of and to vote at the special meeting and at any adjournment thereof. All
shareholders of record are invited to attend the special meeting in person.

Your vote is important, regardless of the number of company shares you own. The
merger cannot be completed unless holders of our issued and outstanding common shares and
Class B shares, voting together as a single class, representing at least a majority of the
outstanding voting power of the Company, vote in favor of the adoption of the merger agreement
(which we refer to as the “Company shareholder approval”). Pursuant to our certificate of
incorporation, the common shares are entitled to one vote per share and the Class B shares are
entitled to ten votes per share. If you fail to vote on the merger agreement, the effect will be the
same as a vote against the adoption of the merger agreement.

The proposal to adjourn the special meeting if there are insufficient votes at the time of
the special meeting to obtain the Company shareholder approval requires the affirmative vote of

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holders of a majority of the votes cast at the special meeting. The common shares are entitled to
one vote per share, and the Class B shares are entitled to ten votes per share on this proposal.

If you fail to attend the special meeting or submit a proxy, the effect will be that your
shares will not be counted for purposes of determining whether a quorum is present at the special
meeting and will have the same effect as a vote against the adoption of the merger agreement.
However, assuming a quorum is present, failure to vote or submit a proxy will not affect the vote
regarding the adjournment of the special meeting if there are insufficient votes at the time of the
special meeting to obtain the Company shareholder approval.

You may revoke your proxy at any time before the vote at the special meeting by
following the procedures outlined in the enclosed information statement. If you are a shareholder
of record, you may attend the special meeting and vote in person or you may vote by proxy.

Dated: January 22, 2018 By Order of the Board of Directors,

   

 
Mark Wester, Chief Financial Officer

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 TABLE OF CONTENTS

SUMMARY TERM SHEET .......................................................................................................... 1 

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE

MERGER ........................................................................................................................................ 9 

SPECIAL FACTORS ................................................................................................................... 13 

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING

INFORMATION........................................................................................................................... 30 

THE PARTIES TO THE MERGER ............................................................................................. 31 

THE SPECIAL MEETING........................................................................................................... 31 

THE MERGER AGREEMENT ................................................................................................... 34 

AGREEMENTS INVOLVING COMPANY SHARES ............................................................... 49 

PROVISIONS FOR UNAFFILIATED SHAREHOLDERS ........................................................ 50 

IMPORTANT INFORMATION REGARDING WAXMAN INDUSTRIES ............................. 50 

IMPORTANT INFORMATION REGARDING ROLLOVER SHAREHOLDERS ................... 56 

APPRAISAL RIGHTS ................................................................................................................. 58 

TRADING OF COMMON STOCK ............................................................................................. 63 

OTHER MATTERS...................................................................................................................... 63 

HOUSEHOLDING ....................................................................................................................... 63 

WHERE YOU CAN FIND MORE INFORMATION ................................................................. 64 

Annex A Merger Agreement

Annex B Fairness Opinion

Annex C DGCL 262

Annex F Financial Statements

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 Waxman Industries, Inc.
24460 Aurora Road
Bedford Heights, Ohio 44146

---------------

INFORMATION STATEMENT FOR

SPECIAL MEETING OF STOCKHOLDERS

To Be Held February 26, 2018

This information statement contains information related to a special meeting of

shareholders (the “special meeting”) of Waxman Industries, Inc. (“Waxman Industries,” the
“Company,” “we,” “us” or “our”), which will be held at 24460 Aurora Road, Bedford Heights,
Ohio 44146, on February 26, 2018, at 10:00 a.m., Cleveland, Ohio time, and any adjournments
or postponements thereof. We are furnishing this information statement to shareholders of the
Company at the request of the Company’s board of directors (which we refer to as the “board of
directors” or the “board”) for use at the special meeting. This information statement is dated
January 22, 2018 and is first being mailed to shareholders on or about January 22, 2018.

SUMMARY TERM SHEET

This Summary Term Sheet discusses certain material information contained in this
information statement, including with respect to the merger agreement, as defined below, the
merger and the other agreements entered into in connection with the merger. We encourage you
to read carefully this entire information statement, including its annexes and the documents
referred to or incorporated by reference in this information statement, as this Summary Term
Sheet may not contain all of the information that may be important to you. Each item in this
Summary Term Sheet includes page references directing you to a more complete description of
that item in this information statement.

If the merger is completed, the Company will become a privately held company, wholly
owned by Waxman Holdings, Inc. All of the common stock and Class B common stock of
Waxman Holdings, Inc. will be owned by Melvin Waxman, Co-Chairman of the Board, Armond
Waxman, Co-Chairman of the Board, Laurence Waxman, President and Chief Executive Officer,
Judy Robins, a Director, Todd Waxman, a Director, Mitch Waxman, Sharon Waxman, Gregg
Waxman, Shari Waxman, Karen Polonsky, and Howard Amster.

The Parties to the Merger Agreement

Waxman Industries

Waxman Industries is a Delaware corporation. Founded in 1962, Waxman Industries is a

supplier of specialty plumbing, floor and surface protection, leak detection and mitigation and
other hardware products to the repair and remodeling market in the United States. We distribute
our products to a wide variety of large national and regional retailers, independent retail
customers, wholesalers and to the e-Commerce market. See “Important Information Regarding
Waxman Industries—Company Background” beginning on page 50.

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 Waxman Holdings, Inc.

Waxman Holdings, Inc. (“Parent”) is a Delaware corporation. Parent is currently owned

by Melvin Waxman, President of the Company. Parent has not engaged in any business other
than in connection with the merger and other related transactions. See “The Parties to the
Merger—Waxman Holdings, Inc.” beginning on page 31.

Waxman Merger Sub, Inc.

Waxman Merger Sub, Inc. (“Merger Sub”) is a Delaware corporation. Merger Sub is a
wholly owned subsidiary of Parent and was formed solely for the purpose of engaging in the
merger and other related transactions. Merger Sub has not engaged in any business other than in
connection with the merger and other related transactions. See “The Parties to the Merger—
Waxman Merger Sub, Inc.” beginning on page 31.

The Merger Proposal

You are being asked to consider and vote upon a proposal to adopt an Agreement and
Plan of Merger, dated January 16, 2018, among Parent, Merger Sub and the Company (the
“merger agreement”). For more information about the background of and reasons for the merger
agreement amendment, see “Special Factors—Background of the Merger” beginning on page 13
and “Reasons for the Merger; Recommendation of the Board of Directors; Fairness of the
Merger” beginning on page 13.

The merger agreement provides that at the closing of the merger, Merger Sub will be
merged with and into the Company (which we refer to as the “merger”), and each outstanding
common share, par value $0.01 per share (the “common shares”), and each outstanding Class B
common share, par value $0.01 per share (the “Class B shares” and together with the common
shares, the “company shares”), other than shares owned by the Company, Parent (which, at the
effective time of the merger will include common shares and Class B common shares currently
held by the Rollover Shareholders (as defined below)) and Merger Sub and holders of company
shares who have properly demanded dissenters’ rights (which shares we refer to as “dissenting
shares”), will be converted into the right to receive $1.87 in cash, without interest and less any
applicable withholding taxes.

If the merger is consummated, the Company will become a privately held company,
wholly owned by Parent. All of the common stock and Class B common stock of Parent, which,
immediately prior to the closing of the merger, will be owned by Melvin Waxman, Co-Chairman
of the Board, Armond Waxman, co-Chairman of the Board , Laurence Waxman, President and
Chief Executive Officer, Judy Robins, a Director, Todd Waxman, a Director, Mitch Waxman,
Sharon Waxman, Gregg Waxman, Shari Waxman, Karen Polonsky, and Howard Amster
(collectively, the “Rollover Shareholders”), who have collectively committed to roll over all of
the common shares (except for 100,000 common shares owned by Melvin Waxman) and Class B
common shares of the Company held by them immediately prior to the closing of the merger
(which we refer to as the “rolled shares”) in exchange for all of the equity interests in Parent. For
more information, see “Special Factors—Financing—Rollover Financing” beginning on page
25.

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The Special Meeting (Page 31)

The special meeting will be held at Waxman Industries Headquarters, which is located at
24460 Aurora Road, Bedford Heights, Ohio 44146, on February 26, 2018, at 10:00 a.m.,
Cleveland, Ohio time.

Record Date and Quorum (Page 31)

The holders of record of the company shares as of the close of business on January 11,
2018 (the record date for determination of shareholders entitled to notice of and to vote at the
special meeting) are entitled to receive notice of and to vote at the special meeting.

The presence at the special meeting, in person or by proxy, of the holders of company
shares entitled to exercise at least a majority of the outstanding voting power of the Company on
the record date will constitute a quorum, permitting the Company to conduct its business at the
special meeting.

Required Shareholder Votes for the Merger (Page 32)

The merger cannot be completed unless holders of our issued and outstanding common
shares and Class B shares, voting together as a single class, representing at least a majority of the
outstanding voting power of the Company, vote in favor of the adoption of the merger agreement
(which we refer to as the “Company shareholder approval”). Pursuant to our certificate of
incorporation, the common shares are entitled to one vote per share and the Class B shares are
entitled to ten votes per share.

A failure to vote company shares or an abstention from voting will have the same effect
as a vote against the merger for purposes of each required shareholder vote.

The Rollover Shareholders have voting power with respect to, in the aggregate, 715,743
common shares and 204,993 Class B shares, representing in the aggregate 86.1% of our
outstanding voting power as of the record date. As of the record date, there were 1,110,531
common shares outstanding and 210,266 Class B shares outstanding.

The Rollover Shareholders have agreed, subject to certain conditions, to vote all company
shares that they beneficially own in favor of adopting the merger agreement, pursuant to a voting
agreement entered into with the Company on January 16, 2018 (the “voting agreement”). See
“Agreements Involving Company Shares—Voting Agreement” beginning on page 49.

Except in their capacities as members of the board of directors, no executive officer or

director of the Company has made any recommendation either in support of or in opposition to
the merger or the merger agreement.

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Conditions to the Merger (Page 44)

The obligations of the Company, Parent and Merger Sub to effect the merger are subject
to the fulfillment or waiver, at or before the effective time, of the following conditions:

 that the Company shareholder approval has been obtained; and

 that no restraining order, preliminary or permanent injunction or other order issued by

any court of competent jurisdiction or other legal restraint or prohibition preventing, or
making illegal, the consummation of the merger and other transactions contemplated by
the merger agreement be in effect.

The obligation of the Company to effect the merger is subject to the fulfillment or waiver,
at or before the effective time, of the following conditions:

 that the representations and warranties of Parent and Merger Sub set forth in the merger
agreement are true and correct at and as of the date of the original merger agreement
and at and as of the closing date of the merger as though made at and as of the closing
date of the merger, except where the failure of such representations and warranties to be
true and correct (in each case without giving effect to any materiality or material
adverse effect qualifier) does not have, and would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect (as defined below) with
respect to Parent and except that representations and warranties that are made as of a
specified date or period need be true and correct only as of that specified date or period;

 that each of Parent and Merger Sub has in all material respects performed all obligations
and complied with all covenants required by the merger agreement to be performed or
complied with by it at or prior to the effective time; and

 that Parent has delivered to the Company a certificate, dated the effective time and
signed by its chief executive officer or another senior executive officer, certifying that
the conditions set forth in the two items described above have been satisfied.

The obligation of Parent and Merger Sub to effect the merger is subject to the fulfillment
or waiver, at or before the effective time, of the following conditions:

 that the representations and warranties of the Company set forth in the merger
agreement are true and correct at and as of the date of the original merger agreement
and at and as of the closing date of the merger as though made at and as of the closing
date of the merger, except where the failure of such representations and warranties to be
true and correct (in each case without giving effect to any materiality or material
adverse effect qualifier) does not have, and would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect with respect to the Company
and except that representations and warranties that are made as of a specified date or
period need be true and correct only as of that specified date or period; and except that
(i) the representations and warranties of the Company pertaining to corporate
organization, existence and good standing (with respect to the Company only), finders

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 and brokers and state takeover statutes and rights agreements must be true and correct in
all material respects, (ii) the representations and warranties pertaining to the Company’s
capitalization must be true and correct in all respects, except for such inaccuracies as are
de minimis in nature and amount relative to each such representation and warranty
taken as a whole and (iii) the representations and warranties of the Company pertaining
to corporate authority, the absence of a material adverse effect on the Company since
June 30, 2017, the opinion of the financial advisor to the board of directors and the
required vote of Company shareholders under Delaware law must be true and correct in
all respects;

 that the Company has in all material respects performed all obligations and complied
with all covenants required by the merger agreement to be performed or complied with
by it at or prior to the effective time;

 that the Company has delivered to Parent a certificate, dated the effective time and
signed by a senior executive officer of the Company, certifying that the conditions set
forth in the two items described immediately above have been satisfied;

 Parent and Merger Sub shall have received the consent of Huntington National Bank to
the transactions contemplated by the merger agreement; and

 that since the date of the original merger agreement, there has not been any material
adverse effect on the Company, subject to certain exceptions.

When the Merger Becomes Effective (Page 35)

We anticipate completing the merger on February 28, 2018, subject to adoption of the
merger agreement by the Company’s shareholders as specified herein and the satisfaction of the
other closing conditions.

Reasons for the Merger; Recommendation of the Board of Directors; Fairness of the
Merger (Page 13)

The board of directors recommends unanimously that the shareholders of the Company
vote “FOR” the proposal to adopt the merger agreement. For a description of the reasons
considered by the board for its recommendation, see “Special Factors—Reasons for the Merger;
Recommendation of the Board of Directors; Fairness of the Merger” beginning on page 13.

The purpose of the merger for the Company is to enable its shareholders to realize the
value of their investment in the Company through their receipt of the $1.87 per share merger
consideration (the “per share merger consideration”) in cash.

Opinion of Candlewood Partners (Page 18 and Annex B)

The board of directors retained Candlewood Partners (“Candlewood”) to act as its

financial advisor in connection with the merger and to evaluate the fairness, from a financial
point of view, of the merger consideration to be received in the merger by holders of the
common shares and Class B shares.

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 On January 16, 2018, at a meeting of the board of directors held to evaluate the merger,
Candlewood delivered to the board of directors an oral opinion, confirmed by delivery of a
written opinion dated January 16, 2018 to the board of directors, to the effect that, as of such date
and based on and subject to various assumptions and limitations described in its opinion, the
$1.87 per share merger consideration to be received by holders of common shares and Class B
shares was fair, from a financial point of view, to such holders.

The full text of Candlewood’s written opinion, dated January 16, 2018, to the board of
directors, which describes, among other things, the assumptions made, procedures followed,
factors considered and limitations on the review undertaken, is attached as Annex B to this
information statement. Candlewood provided its opinion for the information and assistance of
the board of directors in connection with their consideration of the merger. The Candlewood
opinion is not a recommendation as to how any holder of common shares or Class B shares
should vote with respect to the merger or any other matter.

Certain Effects of the Merger (Page 22)

If the conditions to the closing of the merger are either satisfied or waived, Merger Sub
will be merged with and into the Company, the separate corporate existence of Merger Sub will
cease and the Company will continue its corporate existence under Delaware law as the
surviving corporation in the merger, with all of its rights, privileges, immunities, powers and
franchises continuing unaffected by the merger. Upon completion of the merger, company
shares, other than shares owned by the Company, Parent (including the rolled shares), Merger
Sub or holders of dissenting shares, will be converted into the right to receive $1.87 per share,
without interest and less any applicable withholding taxes. Following the completion of the
merger, shareholders (other than the Rollover Shareholders through their interest in Parent) will
cease to have any ownership interest in the Company.

Interests of the Company’s Directors and Executive Officers in the Merger (Page 25)

In considering the recommendations of the board of directors with respect to the merger
agreement, you should be aware that, aside from their interests as shareholders of the Company,
the Company’s directors and executive officers have interests in the merger that are different
from, or in addition to, those of other shareholders of the Company generally. In particular, the
Rollover Shareholder directors will, together with the other Rollover Shareholders and related
persons, control the Company following the merger. In addition, Paul Cascio, as the managing
partner of 3S Advisors, LLC, will receive certain compensation in the event that the merger is
completed. Interests of executive officers and directors other than the Rollover Shareholders that
may be different from or in addition to the interests of the Company’s shareholders include:

 Certain executive officers will continue to receive benefits under employment plans or
employment agreements following the merger.

 The Company’s executive officers as of the effective time of the merger will become
the initial executive officers of the surviving corporation.

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  The Company’s directors and executive officers are entitled to continued
indemnification and insurance coverage under the merger agreement, and the
Company’s directors and certain executive officers are entitled to continued
indemnification and insurance coverage under indemnification agreements.

These interests are discussed in more detail in the section entitled “Special Factors—
Interests of the Company’s Directors and Executive Officers in the Merger” beginning on page
25. The board of directors were aware of the different or additional interests described herein and
considered those interests along with other matters in recommending and/or approving, as
applicable, the merger agreement and the transactions contemplated thereby, including the
merger.

Voting Agreement (Page 49)

In connection with the merger, the Rollover Shareholders and the Company entered into
the voting agreement through which each Rollover Shareholder has agreed to vote (or cause to
be voted) all company shares over which they have voting power (representing 86.1% of the
Company’s total outstanding voting power as of the record date) in favor of the adoption of the
merger agreement and, upon the request of the board of directors (acting through a majority of
all directors), any adjournment, postponement or recess of the special meeting and has waived
any rights of appraisal or rights of dissent from the merger that are available under applicable
law, unless the board of directors has changed its recommendation or failed to make a
recommendation with respect to the merger agreement. See “Agreements Involving Company
Shares—Voting Agreement” beginning on page 49.

Material U.S. Federal Income Tax Consequences of the Merger (Page 26)

If you are a U.S. holder, the receipt of cash in exchange for common shares pursuant to
the merger will generally be a taxable transaction for U.S. federal income tax purposes. You
should consult your own tax advisors regarding the particular tax consequences to you of the
exchange of common shares for cash pursuant to the merger in light of your particular
circumstances (including the application and effect of any state, local or foreign income and
other tax laws).

Anticipated Accounting Treatment of the Merger (Page 29)

The merger will be accounted for in accordance with U.S. generally accepted accounting
principles. The merger does not constitute a change of control under U.S. generally accepted
accounting principles and therefore historical book values will be used to account for the
transaction.

Termination (Page 46)

The Company (authorized by the board of directors) and Parent may terminate the merger
agreement by mutual written consent at any time before the completion of the merger, whether
prior to or after receipt of the Company shareholder approval. In addition, either the Company or
Parent may terminate the merger agreement if:

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  the merger has not been completed by 11:59 p.m. on March 31, 2018 (the “end date”),
provided that this termination right is not available to a party whose failure to perform
any of its obligations under the merger agreement has been the primary cause of the
failure of the merger to be consummated by the end date;

 any final nonappealable injunction, order, decision, opinion, decree, ruling or other
action of a governmental entity permanently restrains, enjoins or prohibits the merger,
provided that the party seeking to terminate the merger agreement pursuant to this
provision shall have used its reasonable best efforts to remove such injunction, other
legal restraint or order; or

 if the special meeting of the Company shareholders (including any adjournment or

postponement of such special meeting) has concluded, and the Company shareholder
approval has not been obtained.

The Company may terminate the merger agreement:

 if there is a breach of any of the covenants on the part of Parent or if any of the
representations or warranties of Parent fail to be true, such that the conditions to each
party’s obligation to effect the merger or the conditions to the obligation of the
Company to effect the merger would be incapable of fulfillment and the breach or
failure is incapable of being cured, or is not cured, by the earlier of the end date and
thirty days following written notice to Parent of the breach or failure, so long as the
Company is not then in material breach of any of its representations, warranties,
covenants or agreements contained in the merger agreement; or

 prior to the approval of the merger agreement by our shareholders, in order to

concurrently enter into a definitive agreement with respect to a superior proposal.

Parent may terminate the merger agreement:

 if there is a breach of any of the covenants on the part of the Company or if any of the
representations or warranties of the Company fail to be true, such that the conditions to
each party’s obligation to complete the merger or the conditions to the obligation of
Parent and Merger Sub to complete the merger would be incapable of fulfillment and
the breach or failure is incapable of being cured, or is not cured, by the earlier of the end
date and thirty days following written notice to the Company of the breach or failure, so
long as Parent is not then in material breach of any of its representations, warranties,
covenants or agreements contained in the merger agreement; or

 if prior to the approval of the merger agreement by our shareholders, the board of
directors withdraws or modifies its recommendation of the merger agreement or fails to
recommend the merger agreement.

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Expense Reimbursement Provisions (Page 47)

The Company will pay to Parent an amount equal to the sum of Parent’s and Merger
Sub’s expenses up to $500,000 if:

 the Company, prior to obtaining the Company shareholder approval, terminates the
merger agreement to enter into a definitive agreement providing for a superior proposal;
or

 Parent terminates the merger agreement because of a recommendation change or failure

to make a recommendation by the Company’s board of directors; or

 Parent, prior to obtaining the Company shareholder approval, terminates the merger
agreement because the Company fails to take necessary steps to obtain approval for the
merger and such breach is not cured within five business days following written notice
by Parent to the Company; or

 either the Company or Parent terminates the merger agreement because the merger
agreement is not approved by the Company’s shareholders at the special meeting; or

 after an alternative proposal to acquire all or a portion of the Company has been
disclosed publicly or has been made directly to the Company’s shareholders or any
person has publicly announced an intention (whether or not conditional) to make a bona
fide alternative proposal, the merger agreement is terminated by the Company or Parent
because the merger has not been completed by the end date or by Parent pursuant to a
breach by the Company of its covenants or representations and warranties, and the
Company enters into a definitive agreement with respect to, or consummates, a
transaction contemplated by any alternative proposal to acquire at least 50% of the
Company’s common shares and Class B shares or assets within 12 months of the date
the merger agreement is terminated.

In the event the Rollover Shareholders’ actual expenses exceed the $500,000 maximum expense
reimbursement amount provided for in the merger agreement, the Rollover Shareholders may
submit such additional expenses to the Company and the board of directors, in its sole discretion,
may decide whether to direct the Company to reimburse any additional expenses.

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers address briefly some questions you may have
regarding the special meeting, the merger agreement and the merger. These questions and
answers may not address all questions that may be important to you as a shareholder of the
Company. Please refer to the more detailed information contained elsewhere in this information
statement, the annexes to this information statement and the documents referred to or
incorporated by reference in this information statement.

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Q: What is the proposed transaction?

A: The proposed transaction is the merger of Merger Sub with and into the Company
pursuant to the merger agreement. If the merger is consummated, the Company will
become a privately-held company, wholly owned by Parent. The Rollover Shareholders
will own all of the common stock and Class B common stock of Parent.

Q: What will I receive in the merger?

A: If the merger is completed and you do not properly exercise dissenters’ rights, you will
be entitled to receive $1.87 in cash, without interest and less any applicable withholding
taxes, for each common share that you own. You will not be entitled to receive shares in
the surviving corporation.

Q: When and where is the special meeting?

A: The special meeting will take place on February 26, 2018, starting at 10:00 a.m.,
Cleveland, Ohio, time, at 24460 Aurora Road, Bedford Heights, Ohio 44146.

Q: What matters will be voted on at the special meeting?

A: You will be asked to vote on the following proposals:

 to adopt the merger agreement;

 to approve the adjournment of the special meeting if there are insufficient votes
at the time of the special meeting to obtain the Company shareholder approval;
and

 to act upon other business that may properly come before the special meeting or
any adjournment or postponement thereof.

Q: Are you soliciting proxies?

A: No, we are not soliciting proxies but you may attend the special meeting and vote in
person or by proxy.

Q: What vote of our shareholders is required to approve the merger agreement?

A: The merger cannot be completed unless holders of our issued and outstanding common
shares and Class B shares, voting together as a single class, representing at least a
majority of the outstanding voting power of the Company, vote in favor of the adoption
of the merger agreement. Pursuant to our certificate of incorporation, the common shares
are entitled to one vote per share and the Class B shares are entitled to ten votes per
share.

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 The Rollover Shareholders have voting power with respect to, in the aggregate, 715,743
common shares and 204,993 Class B shares, representing in the aggregate 86.1% of our
outstanding voting power as of the record date. As of the record date, there were
1,110,531 common shares issued and outstanding and 210,266 Class B shares issued and
outstanding.

The Rollover Shareholders have agreed, subject to certain conditions, to vote all
company shares that they beneficially own in favor of adopting the merger agreement,
pursuant to the voting agreement. See “Agreements Involving Company Shares—Voting
Agreement” on page 49.

Each of the directors and executive officers of the Company has informed the Company
that as of the date of this information statement, he or she intends to vote in favor of the
adoption of the merger agreement.

Q: What vote of our shareholders is required to approve other matters to be presented

at the special meeting?

A: The proposal regarding adjournment, if necessary.

Q: How does the board of directors recommend that I vote?

A: The board of directors recommends unanimously that our shareholders vote:

 “FOR” the adoption of the merger agreement;

 “FOR” the proposal regarding adjournment if there are insufficient votes at the
time of the special meeting to obtain the Company shareholder approval.

You should read “Special Factors—Reasons for the Merger; Recommendation of the
Board of Directors; Fairness of the Merger” beginning on page 13 for a discussion of the
factors that the board of directors considered in deciding to recommend and/or approve,
as applicable, the merger agreement. See also “Special Factors—Interests of the
Company’s Directors and Executive Officers in the Merger” beginning on page 25.

Q: What effects will the merger have on Waxman Industries?

A: As a result of the merger, the Company will be wholly owned by Parent. Upon the
consummation of the merger, the common shares will no longer be listed or traded on
any stock exchange or quotation system, including the pink sheets.

Q: What will happen if the merger is not consummated?

A: If the merger is not consummated for any reason, the Company’s shareholders will not
receive any payment for their shares in connection with the merger. Under specified
circumstances, the Company may be required to pay Parent and Merger Sub certain
expenses, up to a maximum of $500,000 if the merger is not consummated. In the event
the Rollover Shareholders’ actual expenses exceed the $500,000 maximum expense

11
 reimbursement amount provided in the merger agreement, the Rollover Shareholders
may submit such additional expenses to the Company and the board of directors, in its
sole discretion, may decide whether to direct the Company to reimburse any additional
expenses. See “The Merger Agreement—Termination” beginning on page 46
and “Agreements Involving Company Shares—Voting Agreement” beginning on page 49.

Q: What do I need to do now?

A: We urge you to read this information statement carefully, including its annexes and the
documents referred to as incorporated by reference in this information statement.

Q: Should I send in my stock certificates or other evidence of ownership now?

A: No. After the merger is completed, you will be sent a letter of transmittal with detailed
written instructions for exchanging your common shares for the per share merger
consideration. If your common shares or Class B shares are held in “street name” by your
broker, bank or other nominee, you may receive instructions from your broker, bank or
other nominee as to what action, if any, you need to take to effect the surrender of your
“street name” shares in exchange for the per share merger consideration. Do not send in
your certificates now.

Q: Who will count the votes?

A: A representative from Benesch, Friedlander, Coplan & Aronoff, LLP will count the votes
and act as an inspector of election.

Q: Who can help answer my other questions?

A: If you have more questions about the merger, or require assistance in submitting your
proxy or voting your shares or need additional copies of the information statement,
please contact Mark Wester, Chief Financial Officer of the Company.

Waxman Industries, Inc.

Attn: Mark Wester
24460 Aurora Road
Bedford Heights, Ohio 44146
Toll Free: 1-800-531-3342 ext. 3552

If your broker, bank or other nominee holds your shares, you can also call your broker,
bank or other nominee for additional information.

12
 SPECIAL FACTORS

Background of the Merger

Waxman Industries, Inc. is a thinly traded public company. In June 2004, the Company
completed a Reverse and Forward Stock Split transaction and reduced its number of shareholders
of record to fewer than 300. At that time, Company's common stock traded on the Over-The-
Counter Bulletin Board. After the Company’s completion of the Reverse / Forward Stock Split,
the Company was deregistered from the United States Securities and Exchange Commission
(“SEC”) under the Securities and Exchange Act of 1934 and delisted from the OTCBB and ceased
filing reports with the SEC. Thereafter, the Company’s Common Stock began trading on the Pink
Sheets.

The board of directors and management of the Company believed that it would ultimately
be in the best interest of the Company to be a private company and at various times since the 2004
transaction described above, there were occasional discussions on this matter. In 2014 the board of
directors empowered a management team to further explore a possible transaction. From April
2014 through the end of the calendar year, there were various meetings and materials developed
discussing a potential going private transaction, which management and the board of directors
viewed as the most efficient method of achieving this goal, and the potential financing to complete
a transaction. While there was an interest in 2014 to complete a transaction, the timing of various
strategic business initiatives and the ability of Company to complete this transaction, including the
support of the Company’s lender made it unrealistic to initiate a transaction at that time.

In May and June 2016, the board of directors and management began to evaluate a going
private transaction again and shortly thereafter, began to meet with financial firms that could
provide a valuation analysis and, if needed, a fairness opinion. Throughout the fall of 2016,
Candlewood Partners was selected by the board of directors after consultation with the Company’s
law firm to provide a valuation. In early 2017, the initial draft of a valuation report was prepared.
In 2017, the Company’s management team and members of the Board had various meetings and
discussions of a going private transaction. Due to the Company’s financial results, financing of the
transaction became an obstacle to completing a going private transaction.

In December 2017, the valuation analysis performed by Candlewood was updated and
members of the management team had discussions with the Company’s lender. In late December,
tentative approval was given by the lender for a going private transaction, with formal approval
being given on January 12, 2018. The board of directors held a meeting on January 16, 2018 to
discuss the merits of the merger, the merger agreement, and the transactions contemplated thereby,
as well as to receive and consider the opinion of Candlewood Partners.

Reasons for the Merger; Recommendation of the Board of Directors; Fairness of the
Merger

Overview

The board of directors, acting with the advice and assistance of its legal and financial
advisors, evaluated and negotiated the merger, including the terms and conditions of the merger

13
agreement, and determined that the merger is fair to and in the best interests of the Company and
its shareholders (other than the Rollover Shareholders, Parent and Merger Sub), including the
unaffiliated shareholders.

A special committee of the board of directors held several meetings to discuss the
Rollover Shareholders’ proposed acquisition of all of the outstanding common shares and Class
B common shares not currently owned by them (the “Rollover Shareholders’ proposal”), as it
was revised from time to time. On more many occasions the special committee of the board of
directors discussed the price that was proposed and other substantive issues raised by the
Rollover Shareholders’ proposal. The board of directors found that the special circumstances of
the Company gave rise to unusual considerations and significant complexity that made it
particularly challenging to analyze the Rollover Shareholders’ proposal. These factors included:

 That the Company’s dual class voting structure gives the Rollover Shareholders
effective control over the election of directors of the Company and that there is
substantial overlap between the board of directors and the Rollover Shareholders;

 That the Rollover Shareholders have effective control of the Company, and that
other shareholders acquired their equity interests with knowledge of that control (or
ready access to that knowledge), which supported the Rollover Shareholders’
position that other shareholders should not anticipate a “control premium” in a sale
of the Company; and

 That the Company’s dual class voting structure gives the Rollover Shareholders an
effective veto over any alternative sale transaction.

After taking into account the foregoing, as well as the factors described below, the board
of directors determined unanimously to recommend the merger to the shareholders.

The board of directors determined to recommend the $1.87 per share merger price. Its
recommendation is primarily premised on two beliefs. The first is that the $1.87 price represents
a premium to the likely unaffected trading price of common shares on the over the counter
market in the event a merger is not consummated. Second, it was the board of director’s view
that the $1.87 per share consideration was advisable based on its assessment of all the
information available to it regarding the Company’s business, financial results, prospects,
management, risks and opportunities.

Reasons for the Merger—Additional Considerations

In the course of reaching its determination and recommendation, the members of the
board of directors considered the following factors and potential benefits of the merger, each of
which the board of directors believed supported its decision:

 management’s and their own views and opinions on the current industry
environment of the specialty plumbing, floor and surface protection, leak detection
and mitigation and other hardware products;

14
 their understanding of the business, operations, financial condition, earnings,
strategy and prospects of the Company (including the risks involved in achieving
those prospects), as well as the Company’s historical and projected financial
performance;

 the current and historical market prices of the common shares and that the $1.87 per
share merger consideration in cash, without interest, to be received by Company
shareholders for each common share represented a 10.0% premium over the
unaffected closing price of common shares as of January 12, 2018, the last trading
day prior to the board of directors meeting to approve the merger;

 the opinion of Candlewood, dated January 16, 2018, that as of that date and based
on, and subject to, various assumptions and limitations described in its opinion, the
$1.87 per share merger consideration to be received by holders of common shares
prior to the board of directors meeting to approve the merger was fair, from a
financial point of view, to such holders;

 the various analyses undertaken by Candlewood, including a comparable company

and a liquidation value analysis, each of which is described below under “Special
Factors—Opinion of Candlewood Partners” beginning on page 18;

 the board of director’s belief that the $1.87 per share merger consideration
represented the highest per share consideration that they could obtain from the
Rollover Shareholders;

 the board of director’s belief that the all-cash merger consideration will allow the
Company’s shareholders (other than the Rollover Shareholders) to realize in the
near term a fair value, in cash, for their shares, while avoiding medium- and long-
term business risk and the risk associated with realizing current expectations for the
Company’s future financial performance, while also providing shareholders
certainty of value for their shares;

 the board of director’s belief that it was unlikely that any alternative sales
transaction could be consummated at this time, or in the immediate future, in light
of (i) the position of the Rollover Shareholders that they have no intention to sell all
or any significant portion of their shares in the Company and (ii) certain provisions
of Delaware law and the Company’s charter documents that, together or separately,
make it unlikely that a third party could acquire control of the Company without the
support of the Rollover Shareholders;

 all of the terms and conditions of the merger agreement, including, among other
things, the representations, warranties, covenants and agreements of the parties, the
conditions to closing of the merger, the form and structure of the merger
consideration and the termination rights, and that the merger agreement;

 the board of director’s belief, after extensive deliberations, that the merger was
likely to be more favorable to shareholders unaffiliated with the Rollover

15
 Shareholders than the value likely to be realized from other alternatives available to
the Company; and

 the general illiquidity of the Company shares held by shareholders other than the
Rollover Shareholders and, due to the low trading volume, the difficulty such
shareholders have when seeking to monetize their shares.

The board of directors also considered a variety of risks and potentially negative factors
concerning the merger and the merger agreement, including the following:

 that there is no reverse termination fee payable by Parent to the Company if Parent
or Merger Sub is unable to consummate the merger,

 that the Company’s shareholders, with the exception of the Rollover Shareholders,
will have no ongoing equity participation in the Company following the merger and
that those shareholders will cease to participate in the Company’s future earnings or
growth, if any, and will not benefit from increases, if any, in the value of the
common shares;

 that because of (i) the Rollover Shareholders’ ownership of a significant percentage

of the voting power of the common shares and their firm, expressed unwillingness
to consider alternative sale transactions and (ii) certain provisions of Delaware law
and the Company’s charter documents that, together or separately, make it unlikely
that a third party could acquire control of the Company, there was no reason to
contact, and in light thereof, no attempt was made to contact, third parties that might
otherwise consider an acquisition of the Company; the board of directors recognized
that, absent the refusal of the Rollover Shareholders to entertain an alternative
transaction, it was possible that a sale process open to all possible bidders might
result in a higher sale price than the cash consideration payable in the merger;

 the possibility that, at some future time, the Rollover Shareholders could sell some
or all of the surviving corporation or its businesses or assets to one or more
purchasers at a valuation higher than that available in the merger, and that the
current shareholders of the Company (other than the Rollover Shareholders) would
not be able to participate in such a sale;

 the risk of incurring substantial expenses related to the merger, including any
litigation that may arise in the future;

 the significant costs involved in connection with negotiating the merger agreement
and completing the merger, the substantial management time and effort required to
effectuate the merger and the related disruption to the Company’s day-to-day
operations during the pendency of the merger;

 that the Company may be required to bear certain costs and expenses involved in
connection with negotiating the merger agreement and attempting to close the

16
 merger if the merger is not consummated;

 the terms of the merger agreement that place restrictions on the conduct of the
Company’s business prior to completion of the merger, which may delay or prevent
the Company from undertaking business opportunities that may arise pending
completion of the merger, and the resultant risk if the merger is not consummated;

 that the receipt of cash in exchange for common shares pursuant to the merger will
be a taxable transaction for U.S. federal income tax purposes for many Company
shareholders;

 that the Company’s officers and directors may have interests in the merger that are
different from, or in addition to, the interests of the Company’s shareholders,
including the interests of the Company’s directors and officers in being entitled to
continued indemnification and insurance coverage from the surviving corporation
under the merger agreement; and

 that Parent and Merger Sub are newly formed corporations with essentially no
assets.

The above discussion of the information and factors considered by the board of directors
is not intended to be exhaustive, but indicates the material matters considered. In reaching its
determination and recommendation, the board of directors did not quantify, rank or assign any
relative or specific weight to any of the foregoing factors, and individual members of the board
of directors may have considered various factors differently. The board of directors did not
undertake to make any specific determination as to whether any specific factor, or any particular
aspect of any factor, supported or did not support its ultimate recommendation. Moreover, in
considering the information and factors described above, individual members of the board of
directors may have given differing weights to differing factors. The board of directors based its
unanimous recommendation on the totality of the information presented.

Recommendation of the Board of Directors

The board of directors consists of seven directors. On January 16, 2018, based on the
factors described above, the board on behalf of the Company unanimously by all directors
participating:

 determined that the merger agreement and the merger are advisable and are fair to,
and in the best interests of, the Company and its shareholders (other than the
Rollover Shareholders, Parent and Merger Sub), including the unaffiliated
shareholders;

 approved the merger agreement and the merger; and

 resolved to recommend that the Company’s shareholders vote “FOR” the proposal
to adopt the merger agreement and approve the merger.

17
 In reaching these determinations, the board of directors (with the Rollover Shareholder
directors abstaining) considered a number of factors, including the following material factors:

 the analysis (as to both substantive and procedural aspects of the transaction)
summarized above that the merger is fair to and in the best interests of the Company
and its shareholders (other than the Rollover Shareholders, Parent and Merger Sub),
including the unaffiliated shareholders; and

 the financial analyses of Candlewood, financial advisor to the board of directors,

and the opinion of Candlewood, dated January 16, 2018, to the board of directors
that as of that date and based on, and subject to, various assumptions and limitations
described in its opinion, the $1.87 per share merger consideration to be received by
holders of common shares was fair, from a financial point of view, to those holders,
as described under “Special Factors—Opinion of Candlewood Partners” beginning
on page 18.

The board of directors recommends unanimously that you vote “FOR” the adoption of the
merger agreement.

Opinion of Candlewood Partners

The board of directors has retained Candlewood to act as its financial advisor in
connection with the merger. On January 16, 2018, at a meeting of the board of directors held to
evaluate the merger, Candlewood delivered to the board of directors an oral opinion, confirmed
by delivery of a written opinion dated January 16, 2018 to the board of directors, to the effect
that, as of such date and based on and subject to various assumptions and limitations described in
its opinion, the $1.87 per share merger consideration to be received by holders of the company
shares was fair, from a financial point of view, to such holders.

The full text of Candlewood’s written opinion, dated January 16, 2018, to the board of
directors, which describes, among other things, the assumptions made, procedures followed,
factors considered and limitations on the review undertaken, is attached as Annex B to this
information statement and is incorporated by reference herein in its entirety. The following
summary of Candlewood’s opinion is qualified in its entirety by reference to the full text of the
opinion. Candlewood delivered its opinion to the board of directors for the benefit and use of the
board of directors (in its capacity as such). Candlewood’s opinion did not address any aspect of
the merger except as expressly identified in its opinion and no opinion or view was expressed as
to the relative merits of the merger in comparison to other strategies or transactions that might be
available to the Company or in which the Company might engage or as to the underlying
business decision of the Company to proceed with or effect the merger. Candlewood also
expressed no opinion or recommendation as to how any shareholder should vote or act in
connection with the merger or any related matter.

In arriving at its opinion, Candlewood, among other things:

 reviewed certain information about the Company and its industry that was publicly
available;

18
  reviewed information furnished to Candlewood by the Company’s management,
including certain internal financial analyses, budgets, reports and other information;

 held discussions with various members of senior management of the Company and the
Board of Directors concerning historical and current operations, financial conditions
and prospects, including recent financial performance;

 reviewed the recent activity involving the Company’s privately-held shares;

 reviewed the valuation of the Company implied by the terms of the merger;

 reviewed the valuations of publicly traded companies that Candlewood deemed

comparable in certain respects to the Company, which included a review of the general
economic conditions of the industry;

 prepared a liquidation analysis based on an analysis of the Company’s assets and

liabilities in a liquidation scenario; and

 prepared a discounted cash flow analysis of certain businesses of the Company on a

stand-alone basis.

In arriving at its opinion, Candlewood has assumed and relied upon, but has not assumed
any responsibility to independently investigate or verify, the accuracy, completeness and fair
presentation of all financial and other information that was provided to Candlewood by the
Company or that was publicly available to Candlewood (including, without limitation, the
information described above), or that was otherwise reviewed by Candlewood (including the
Company’s calculation of outstanding company shares). Candlewood’s opinion is expressly
conditioned upon such information (whether written or oral) being complete, accurate and fair in
all respects material to its analysis. Candlewood has further relied upon the assurance of
management of the Company that they are unaware of any facts that would make the information
provided to it incomplete or misleading in any respect. Candlewood’s analyses were based,
among other things, on the financial projections of the Company furnished by senior
management of the Company, which are inherently subject to uncertainty. Candlewood
expressed no opinion as to the financial projections provided by management or the assumptions
on which they are based. In addition, in rendering its opinion, Candlewood assumed that the
financial projections provided by management were reasonably prepared by management and
reflected management’s best currently available estimates and good faith judgment of the future
competitive, operating and regulatory environment and related financial performance of the
Company, and that such financial projections and the assumptions derived therefrom provide a
reasonable basis for its opinion.

In its analysis and in connection with the preparation of its opinion, Candlewood made
numerous assumptions with respect to industry performance, general business, market and
economic conditions and other matters, many of which are beyond the control of any party
involved in the merger. Candlewood’s opinion is necessarily based on business, economic,
market and other conditions as they exist and can be evaluated by Candlewood at the date of its
opinion. Candlewood’s opinion is conditioned upon the terms of the merger being consistent in

19
all material respects with those in the draft of the merger agreement reviewed.

Candlewood’s opinion does not address the underlying business decision of the Company
to engage in the merger, or the relative merits of the merger as compared to any strategic
alternatives that may be available to the Company. Candlewood’s opinion addresses only the
fairness from a financial point of view, as of the date hereof, of the merger as to the common
stockholders of the Company. Candlewood did not express any view on, and its opinion does not
address, any other term or aspect of the merger, including, without limitation, the fairness of the
merger to, or any consideration received in connection therewith by, the holders of any other
class of securities, creditors, or other constituencies of the Company; nor as to the fairness of the
amount or nature of any compensation to be paid or payable to any of the officers, directors or
employees of the Company, or class of such persons in connection otherwise. Candlewood is not
expressing any opinion as to the prices at which the common stock of the Company will trade at
any time. Candlewood’s opinion is necessarily based on economic, monetary, market and other
conditions as in effect on, and the information made available to it as of, the date of its opinion
and it assumes no responsibility for updating, revising or reaffirming its opinion based on
circumstances, developments or events occurring after the date of its opinion. Candlewood’s
advisory services and its opinion were provided for the information and assistance of the board
of directors in connection with its consideration of the merger and its opinion does not constitute
a recommendation as to how any holder of company shares should vote with respect to such
merger or any other matter.

The following summarizes the significant financial analyses performed by Candlewood and
reviewed with the board of directors on January 16, 2018 in connection with the delivery of
Candlewood’s opinion.

Selected Publicly Traded Company Analysis

Candlewood reviewed and compared selected financial information of the Company with
similar information using publicly available information of the following publicly traded
companies that share similar business characteristics to the Company or its operating segments,
and that Candlewood deemed relevant, including the following companies that Candlewood
deemed to have comparable risk and return profiles to the Company:

Canwel Building Material

Capstone Companies

Flurida Group

Candlewood calculated and compared the enterprise value (which represents equity value
plus book values of total debt, including preferred stock and minority interest less cash) of the
selected companies based on closing share prices on November 29, 2017, as a multiple
of: earnings before interest, taxes, depreciation and amortization, excluding non-recurring items
(“EBITDA”), as calculated from publicly reported data, in each case for each of the selected
companies for each of the latest twelve months (“LTM”), from the latest month of information
available to Candlewood as of November 29, 2017.

20
 Based on its professional judgment and after taking into consideration, among other things,
the observed data for the selected companies as of November 29, 2017, Candlewood developed a
mean EBITDA multiple of 6.5x, which Candlewood, based on the size of the greater size and
profitability of the selected companies, discounted by 25% to arrive at a comparable EBITDA
multiple of 4.9x. The EBITDA multiple of 4.9x implies an enterprise value of the Company of
$7,016,000 based on the Company’s LTM financial statements as of September 30, 2017.

No company used in this analysis is identical to the Company. Accordingly, an evaluation

of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex
considerations and judgments concerning differences in financial and operating characteristics
and other factors that could affect the public trading or other values of the companies to which
the Company was compared.
Liquidation Analysis
Candlewood performed a liquidation analysis of the Company by calculating the liquidation
value of the Company’s assets. Based on its professional judgement, Candlewood developed
expected recovery values of the Company’s assets in a liquidation scenario, including: 85% of
account receivable, 51% of net cash due to a significant portion of cash being held overseas, 75%
of Key Man life insurance, 70% of inventory and 30% of net fixed assets. Candlewood also
assumed that 100% of payables and liabilities would be paid in a liquidation and the Company
would incur $1,000,000 in costs. Based on this data and the Company’s balance sheet as of
September 30, 2017, Candlewood calculated that $1,770,000 in cash would be available to the
equity holders in a liquidation scenario.
Discounted Cash Flow Analysis
Candlewood performed a discounted cash flow analysis of the Company by calculating the
estimated present value of the standalone unlevered, after-tax free cash flows that the Company
was forecasted to generate during the period beginning on September 30, 2018 through the full
fiscal year ending June 30, 2022 based on the financial forecasts prepared by management of the
Company. Candlewood believed it appropriate to utilize a terminal value of 7.9x for the
Company, applied to the estimated unlevered, after-tax free cash flows of the Company for the
fiscal year ending June 30, 2022. The cash flows and terminal values were then discounted to
present value as of September 30, 2017, using a discount rate of 13.7%, which discount rate was
selected based on Candlewood’s professional judgment and after taking into consideration,
among other things, an estimate of the Company’s weighted average cost of capital. Based on
this data, Candlewood calculated an enterprise value of $5,503,000.
Final Analysis
Candlewood used its professional judgement to assign weighted values to each of the
analyses it performed. Accordingly, Candlewood weighted the Comparable Publicly Traded
Company Analysis at 45.0%, the Discounted Cash Flow Analysis at 5.0% and the Liquidation
Analysis at 50.0% to calculate a total equity value of $2,465,000.

21
 General

Candlewood is an investment banking firm that, as part of its investment banking activities,
is regularly engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, investments for passive and control purposes, distressed sales,
liquidations, corporate and other purposes. The board of directors selected Candlewood because
of its familiarity with the Company and its qualifications, reputation and experience in the
valuation of businesses and securities in connection with mergers and acquisitions generally, as
well as substantial experience in transactions comparable to the merger.

As compensation for its services in connection with the merger, total aggregate
compensation of approximately $125,000 shall be payable to Candlewood, of which $100,000
was paid to Candlewood upon delivery of its opinion and the remainder of which was paid when
Candlewood was originally engaged. In addition, the Company has agreed to reimburse
Candlewood for its expenses incurred in connection with the merger and to indemnify
Candlewood for certain liabilities that may arise out of its engagement by Candlewood and the
rendering of Candlewood’s opinion.

Certain Effects of the Merger

If the Company shareholder approval is obtained and the other conditions to the closing
of the merger are either satisfied or waived, Merger Sub will be merged with and into the
Company with the Company being the surviving corporation. If the merger is completed, all of
the Company’s equity interests will be owned by Parent. Except for the Rollover Shareholders
and any other person who may have a beneficial ownership interest in the Company as of the
closing of the merger, through their interest in Parent, none of Company’s current shareholders
will have any ownership interest in, or be a shareholder of, the Company after the completion of
the merger. As a result, Company’s current shareholders (other than the Rollover Shareholders
and any other person who may have an ownership interest in Parent) will no longer benefit from
any increase in our value, nor will they bear the risk of any decrease in Company’s value.
Following the merger, Parent will benefit from any increase in the Company’s value and also
will bear the risk of any decrease in our value.

Upon the consummation of the merger:

 each issued and outstanding common share and Class B share held by shareholders
(other than the Rollover Shareholders and holders of dissenting shares) immediately
prior to the effective time of the merger will be converted automatically into and
will represent the right to receive the $1.87 per share merger consideration in cash,
without interest, and each such share will otherwise cease to be outstanding and will
otherwise automatically be cancelled and cease to exist;
 each issued and outstanding common share (other than 100,000 shares held by
Melvin Waxman) and Class B share that is held by the Rollover Shareholders (all of
which shares will, immediately prior to the effective time of the merger, be held by
Parent pursuant to the contribution agreement, as defined below and described in the
“Agreements Involving Company Shares—Contribution Agreement” section

22
 beginning on page 50) immediately prior to the effective time of the merger, will
cease to be outstanding and will automatically be cancelled and will cease to exist.

Following the merger, all of the equity interests in the surviving corporation will
ultimately be owned by Parent. If the merger is completed, the Rollover Shareholders will be the
sole beneficiaries of Company’s future earnings and growth, if any, and will be entitled to vote
on corporate matters affecting the Company following the merger. Similarly, the Rollover
Shareholders will also bear the risks of ongoing operations, including the risks of any decrease in
Company’s value after the merger and the operational and other risks related to the incurrence by
the surviving corporation of additional debt as described below under “Special Factors—
Financing” beginning on page 24.

If the merger is completed, the Company’s shareholders, other than the Rollover
Shareholders and any other person who may have a beneficial ownership interest in Parent, will
have no interest in the Company’s net book value or net earnings.

As a result of and upon consummation of the merger, the Company will be 100% owned
by Parent. Following the merger, the Rollover Shareholders will own 100% of the common
equity and voting equity of Parent.

The primary benefit of the merger to the unaffiliated shareholders of the Company will be
the right of those shareholders to receive a cash payment of $748,114, without interest, for each
company share held by those shareholders as described above.

The primary detriments of the merger to the unaffiliated shareholders of the Company
will include the lack of interest of such shareholders in our potential future earnings, growth or
value. Additionally, the receipt of cash in exchange for common shares pursuant to the merger
will generally be a taxable sale transaction for U.S. federal income tax purposes to many of our
shareholders who surrender their company shares in the merger.

In connection with the merger, the Rollover Shareholders and their permitted assignees or
designees will receive benefits and be subject to obligations that are different from, or in addition
to, the benefits received by our shareholders generally. The primary benefits of the merger to the
Rollover Shareholders, based on their indirect ownership of all of the common equity interests in
Parent, will include their interest in our potential future earnings and growth which, if they
successfully execute their business strategies, could be substantial. Additional anticipated
benefits to the Rollover Shareholders include receiving tax-free treatment with respect to the
contribution of common shares in the transaction pursuant to the contribution agreement
discussed under “Agreements Involving Company Shares—Contribution Agreement” beginning
on page 50.

The primary detriments of the merger to the Rollover Shareholders include that all of the
risk of any possible decrease in the Company’s earnings, growth or value, and all of the risks
related to the Company’s additional indebtedness, following the merger will be borne by Parent.
Additionally, the investment by the Rollover Shareholders and the other investors in Parent and
the Company will not be liquid, with no public trading market for such securities, and the equity
securities of Parent and the Company will be subject to contractual restrictions on transfer.

23
 In connection with the merger, certain members of the Company’s management will
receive benefits and be subject to obligations that are different from, or in addition to, the
benefits and obligations of the Company’s shareholders generally, as described in more detail
under “Special Factors—Interests of the Company’s Directors and Executive Officers in the
Merger” beginning on page 25. Those incremental benefits are expected to include, among
others, certain executive officers continuing as executive officers of the surviving corporation.

At the effective time of the merger, the certificate of incorporation and bylaws of the
Company will be amended and restated to be in the form of (except with respect to the name of
the Company) the certificate of incorporation and bylaws of Merger Sub and, as so amended,
will be the certificate of incorporation and bylaws of the Company following the merger until
thereafter amended in accordance with their respective terms and Delaware law.

Parent anticipates that the Company’s executive officers as of the effective time of the
merger will continue as the officers of the Company following the merger.

Financing of the Merger

The Company and Parent estimate that the total amount of funds (including rollover
equity) required to complete the merger and related transactions and pay related fees and
expenses will be approximately $2,894,890 (of which $1,721,776 reflects the value of the
rollover equity). Parent expects this amount to be provided through a combination of the
proceeds of:

 the rollover of the common shares and Class B shares held by the Rollover
Shareholders (other than 100,000 common shares held by Melvin Waxman)
immediately prior to the merger (representing approximately 820,736 company
shares, the equivalent of an investment of approximately $1,534,776 based upon the
$1.87 per share merger consideration), which is described in the “Special Factors—
Financing—Rollover Financing” section beginning on page 25;

 financing from the Company’s current credit facility with Huntington National
Bank;

 cash of the Parent that was contributed by Melvin Waxman and equal to $187,000,
or the proceeds due for the 100,000 common shares that he is not rolling over;

together with cash of the Company at the closing of the merger.

Rollover Financing

On January 16, 2018, the Rollover Shareholders entered into the contribution agreement
with Parent (the “contribution agreement”), pursuant to which the Rollover Shareholders
collectively committed to contribute, immediately prior to the consummation of the merger, an
aggregate amount of 820,736 common shares and Class B shares to Parent (the equivalent of a
$1,534,776 based upon the $1.87 per share merger consideration) in exchange for certain equity
securities of Parent.

24
 The obligations of the Rollover Shareholders and Parent pursuant to the contribution
agreement are conditioned upon the satisfaction or waiver of the conditions to the obligations of
Parent, Merger Sub and the Company under the merger agreement described in the “Merger
Agreement—Conditions to the Merger” section beginning on page 44. If the transactions
provided for in the contribution agreement are consummated but the merger agreement is
terminated in accordance with its terms as described in the “Merger Agreement—Termination”
section beginning on page 46, then the transactions provided for in the contribution agreement
will be void and deemed not to have occurred.

The Company is an express third-party beneficiary of the contribution agreement solely

with respect to a right to seek specific performance of the contribution agreement by Parent if
(i) the conditions to Parent’s and Merger Sub’s obligations under the merger agreement have
been satisfied, (ii) Parent and Merger Sub fail to complete the closing of the merger in
accordance with the merger agreement and (iii) the Company has irrevocably confirmed that if
specific performance is granted then the Company will take the actions required of it by the
merger agreement to cause the closing of the merger to occur.

Interests of the Company’s Directors and Executive Officers in the Merger

In considering the recommendation of the board of directors that you vote to adopt the
merger agreement, you should be aware that aside from their interests as shareholders of the
Company, the Company’s directors and executive officers have interests in the merger that are
different from, or in addition to, those of other shareholders of the Company generally. The
members of the board of directors were aware of and considered these interests, among other
matters, in evaluating and negotiating the merger agreement and the merger, and when making
its recommendation to the shareholders of the Company that the merger agreement be adopted.
See “Special Factors—Background of the Merger” beginning on page 13, and “Special
Factors—Reasons for the Merger; Recommendation of the Board of Directors; Fairness of the
Merger” beginning on page 13.

The Company’s shareholders should take these interests into account in deciding whether
to vote “FOR” the adoption of the merger agreement. These interests are described in more
detail below, and certain of them are quantified in the narrative below.

Rollover Shareholders

As of the closing of the merger, the Company will be owned by Parent. The Rollover
Shareholders will own all of the common stock and Class B common stock of Parent. For a
description of the treatment of the company shares held by the Rollover Shareholder directors in
the merger, a discussion of their continuing interest in the Company, see “Special Factors—
Certain Effects of the Merger” beginning on page 22.

25
 Paul Cascio and 3S Advisors, LLC

The Company has retained 3S Advisors, LLC, a company owned by Paul Cascio, to
provide consulting services in connection with the merger. In the event that the merger closes,
3S Advisors will receive a fee of $100,000 and have the option to purchase 15,000 common
shares of Parent.

Benefits to Executive Officers Pursuant to Employment Plans and Agreements

Certain of the Company’s named executive officers may be entitled to additional benefits
under individual employment agreements as a result of the merger.

Continuing Employment

The Company’s executive officers as of the effective time of the merger will become the
initial officers of the surviving corporation until their successors are duly elected or appointed
and qualified.

Indemnification/Insurance

The Company’s bylaws provides for indemnification of directors and executive officers
against certain liabilities that may arise by reason of their status or service as directors or
officers. In addition, pursuant to the merger agreement, the Company’s directors and executive
officers will be entitled to certain ongoing indemnification from Parent and the surviving
corporation. The indemnification and insurance provisions in the merger agreement are further
described in the section entitled “The Merger Agreement—Other Covenants and Agreements—
Indemnification; Directors’ and Officers’ Insurance” on page 43.

Material U.S. Federal Income Tax Consequences of the Merger

The following is a general discussion of the material U.S. federal income tax
consequences of the merger to U.S. holders (as defined below) of common shares and Class B
shares whose shares are exchanged for cash pursuant to the merger. This discussion does not
address U.S. federal income tax consequences with respect to non-U.S. holders. This discussion
is based on the provisions of the Internal Revenue Code of 1986, as amended (the “Code”),
applicable U.S. Treasury regulations, judicial opinions, and administrative rulings and published
positions of the Internal Revenue Service, each as in effect as of the date hereof. These
authorities are subject to change, possibly on a retroactive basis, and any such change could
affect the accuracy of the statements and conclusions set forth in this discussion. This discussion
does not address any tax considerations under state, local or foreign laws or U.S. federal laws
other than those pertaining to the U.S. federal income tax. This discussion is not binding on the
Internal Revenue Service or the courts and therefore could be subject to challenge, which could
be sustained. We do not intend to seek any ruling from the Internal Revenue Service with respect
to the merger.

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of
common shares that is:

26
  a citizen or individual resident of the United States;

 a corporation or other entity taxable as a corporation for U.S. federal income tax
purposes, created or organized in or under the laws of the United States, any state
thereof, or the District of Columbia;

 a trust if (1) a court within the United States is able to exercise primary supervision
over the trust’s administration and one or more U.S. persons are authorized to
control all substantial decisions of the trust, or (2) the trust has a valid election in
effect under applicable U.S. Treasury Regulations to be treated as a U.S. person; or

 an estate, the income of which is subject to U.S. federal income tax regardless of its
source.

This discussion applies only to U.S. holders of common shares and Class B shares who
hold such shares as a capital asset within the meaning of Section 1221 of the Code (generally,
property held for investment). Further, this discussion does not purport to consider all aspects of
U.S. federal income taxation that may be relevant to a U.S. holder in light of its particular
circumstances, or that may apply to a U.S. holder that is subject to special treatment under the
U.S. federal income tax laws, including, for example, insurance companies, dealers or brokers in
securities or foreign currencies, traders in securities who elect the mark-to-market method of
accounting, U.S. holders subject to the alternative minimum tax, persons that have a functional
currency other than the U.S. dollar, tax-exempt organizations, banks and certain other financial
institutions, mutual funds, certain expatriates, partnerships or other pass-through entities or
investors in partnerships or such other entities, U.S. holders who hold common shares and Class
B shares as part of a hedge, straddle, constructive sale or conversion transaction, U.S. holders
who will hold, directly or indirectly, an equity interest in the surviving corporation, and U.S.
holders who acquired their common shares through the exercise of employee stock options or
other compensation arrangements.

If a partnership (including for this purpose any entity or arrangement treated as a

partnership for U.S. federal income tax purposes) holds common shares or Class B Shares, the
tax treatment of a partner in that partnership will generally depend on the status of the partners
and the activities of the partnership. If you are a partner of a partnership holding common shares,
you should consult your tax advisor.

Holders of common shares or Class B shares are urged to consult their own tax
advisors to determine the particular tax consequences to them of the merger, including the
applicability and effect of the alternative minimum tax and any state, local, foreign or other
tax laws.

The receipt of cash by U.S. holders in exchange for common shares or Class B shares
pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. In
general, a U.S. holder who receives cash in exchange for common shares or Class B shares
pursuant to the merger will recognize gain or loss in an amount equal to the difference, if any,
between (1) the amount of cash received and (2) the U.S. holder’s adjusted tax basis in those
shares.

27
 If a U.S. holder’s holding period in the common shares or Class B shares surrendered in
the merger is greater than one year as of the effective date of the merger, the gain or loss will be
long-term capital gain or loss. Long-term capital gains of certain non-corporate holders,
including individuals, are generally subject to U.S. federal income tax at preferential rates. The
deductibility of a capital loss recognized on the exchange is subject to limitations. If a U.S.
holder acquired different blocks of common shares at different times and different prices, that
holder must determine its adjusted tax basis and holding period separately with respect to each
block of common shares.

Medicare Tax on Unearned Income

For taxable years beginning after December 31, 2012, certain taxable U.S. holders who
are individuals, trusts, or estates with adjusted gross income in excess of certain thresholds are
subject to a 3.8% tax on all or a portion of “net investment income,” which includes gains
recognized upon a disposition of stock. U.S. holders who are individuals, estates or trusts are
urged to consult their tax advisors regarding the applicability of the Medicare tax to any gain
recognized pursuant to the merger.

Information Reporting and Backup Withholding

Payments made to U.S. holders in exchange for common shares or Class B shares
pursuant to the merger may be subject, under certain circumstances, to information reporting and
backup withholding. To avoid backup withholding, a U.S. holder that does not otherwise
establish an exemption should complete and return Internal Revenue Service Form W-9,
certifying the holder is a U.S. person, the taxpayer identification number provided is correct and
the holder is not subject to backup withholding.

Backup withholding is not an additional tax. Any amounts withheld under the backup
withholding rules may be refunded or credited against a U.S. holder’s U.S. federal income tax
liability, if any, if that holder furnishes the required information to the Internal Revenue Service
in a timely manner.

Fees and Expenses

Except as described under “The Merger Agreement—Fees and Expenses—Expense

Reimbursement Provisions,” if the merger is not completed, all fees and expenses incurred in
connection with the merger will be paid by the party incurring those fees and expenses. If the
merger is completed, all costs and expenses incurred by Parent or Merger Sub in connection with
the transaction will be paid by the surviving corporation. Total fees and expenses incurred or to
be incurred by the Company in connection with the merger are estimated at this time to be as
follows:

28
 Amount to be
Paid

Financial advisory fees and expenses $225,000

Legal, accounting and other professional fees $160,000

Proxy solicitation, printing and mailing costs $20,000

Paying agent fees and expenses $20,000

Total $425,000

Anticipated Accounting Treatment of the Merger

The merger will be accounted for in accordance with U.S. generally accepted accounting
principles. The merger does not constitute a change of control under U.S. generally accepted
accounting principles and therefore historical book values will be used to account for the
transaction.

29
 CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
INFORMATION

This information statement, and the documents incorporated by reference in this

information statement, include “forward-looking statements” that reflect our current views as to
future events and financial performance with respect to our operations, the expected completion
and timing of the merger and other information relating to the merger. These statements can be
identified by the fact that they do not relate strictly to historical or current facts. There are
forward-looking statements throughout this information statement, including under the headings,
among others, “Summary Term Sheet,” “Questions and Answers About the Special Meeting and
the Merger,” “The Special Meeting,” “Special Factors,” and “Important Information Regarding
Waxman Industries,” and in statements containing the words “aim,” “anticipate,” “are
confident,” “estimate,” “expect,” “will be,” “will continue,” “will likely result,” “project,”
“intend,” “plan,” “believe” and other words and terms of similar meaning in conjunction with a
discussion of future operating or financial performance or other future events. You should be
aware that forward-looking statements involve known and unknown risks and uncertainties.
Although we believe that the expectations reflected in these forward-looking statements are
reasonable, we cannot assure you that the actual results or developments we anticipate will be
realized, or even if realized, that they will have the expected effects on the business or operations
of the Company. These forward-looking statements speak only as of the date on which the
statements were made and we undertake no obligation to update or revise any forward-looking
statements made in this information statement or elsewhere as a result of new information, future
events or otherwise, except as required by law. In addition to other factors and matters referred to
or incorporated by reference in this document, we believe the following factors could cause
actual results to differ materially from those discussed in the forward-looking statements:

 the occurrence of any event, change or other circumstance that could give rise to the
termination of the merger agreement;

 the outcome of any legal proceedings that have been or may be instituted against the
Company or others relating to the merger agreement;

 the inability to complete the merger because of the failure to obtain shareholder
approval, failure by Parent and Merger Sub to receive the proceeds of the financing
as contemplated by the financing commitments or the failure to satisfy other
conditions to consummation of the merger;

 the failure of the merger to close for any other reason;

 the risk that the pendency of the merger disrupts current plans and operations and
potential difficulties in employee retention as a result of the pendency of the merger;

 the effect of the announcement of the merger on our business relationships,

operating results and business generally; and

 the amount of the costs, fees, expenses and charges related to the merger.

30
Many of the factors that will determine our future results are beyond our ability to control or
predict. In light of the significant uncertainties inherent in the forward-looking statements
contained herein, readers should not place undue reliance on forward-looking statements, which
reflect management’s views only as of the date hereof. We cannot guarantee any future results,
levels of activity, performance or achievements.

THE PARTIES TO THE MERGER

Waxman Industries

For information about the Company, see “Important Information Regarding Waxman
Industries—Company Background” beginning on page 50 and “Where You Can Find Additional
Information” beginning on page 64.

Waxman Holdings, Inc.

Parent is a Delaware corporation. Parent is currently owned by Melvin Waxman. Parent

has not engaged in any business other than in connection with the merger and related
transactions. For more information, see “Important Information Regarding the Rollover
Shareholders, Parent, Merger Sub” beginning on page 56.

Waxman Merger Sub, Inc.

Merger Sub is a Delaware corporation. Merger Sub is a wholly owned subsidiary of

Parent and was formed solely for the purpose of engaging in the merger and other related
transactions. Merger Sub has not engaged in any business other than in connection with the
merger and other related transactions. For more information, see “Important Information
Regarding the Rollover Shareholders, Parent, Merger Sub” beginning on page 56.

THE SPECIAL MEETING

Date, Time and Place

This information statement is being furnished to our shareholders at the request of the
board of directors for their use at the special meeting to be held on February 26, 2018, starting at
10:00 a.m., Cleveland, Ohio time, at 24460 Aurora Road, Bedford Heights, Ohio 44146, or at
any adjournment or postponement thereof.

The purpose of the special meeting is for our shareholders to consider and vote upon the
adoption of the merger agreement. Company shareholder approval must be obtained for the
merger to occur. A copy of the merger agreement is attached to this information statement as
Annex A. This information statement is first being mailed to our shareholders on or about
January 22, 2018.

Record Date and Quorum

The holders of record of common shares and Class B shares as of the close of business on
January 11, 2018, the record date for the determination of shareholders entitled to notice of and

31
to vote at the special meeting, are entitled to receive notice of and to vote at the special meeting.
On the record date, 1,110,531 common shares and 210,266 Class B shares were issued and
outstanding.

The presence at the special meeting, in person or by proxy, of the holders of common
shares entitled to exercise at least a majority of the outstanding voting power of the Company on
the record date will constitute a quorum, permitting the Company to conduct its business at the
special meeting. Proxies received but marked as abstentions will be included in the calculation of
the number of shares considered to be present at the special meeting. Broker non-votes, as
described below under “The Special Meeting—Required Vote—Broker Non-Votes,” will not be
considered to be present for purposes of determining whether a quorum exists.

Required Vote

The merger cannot be completed unless holders of our issued and outstanding common
shares and Class B shares, voting together as a single class, representing at least a majority of the
outstanding voting power of the Company, vote in favor of the adoption of the merger
agreement. Pursuant to our certificate of incorporation, the common shares are entitled to one
vote per share and the Class B shares are entitled to ten votes per share. A failure to vote your
Company shares on the merger or an abstention from voting on the merger will have the same
effect as a vote against the merger.

The proposal to adjourn the special meeting if there are insufficient votes at the time of
the special meeting to obtain the Company shareholder approval requires the affirmative vote of
the majority of the votes cast at the special meeting. The common shares are entitled to one vote
per share, and the Class B shares are entitled to ten votes per share on each of these proposals.
Abstentions will not count as votes cast, and therefore will have no effect on the outcome of
either of these proposals.

The Rollover Shareholders have voting power with respect to, in the aggregate, 715,743
common shares and 204,993 Class B shares, representing in the aggregate 86.1% of our
outstanding voting power as of the record date.

Except in their capacities as members of the board of directors, as applicable, no

executive officer or director of the Company has made any recommendation either in support of
or in opposition to the merger or the merger agreement. The board of directors voted to approve
and recommend the merger agreement and the merger.

Each of the directors and executive officers of the Company has informed the Company
that, as of date of this information statement, he or she intends to vote in favor of the adoption of
the merger agreement.

Broker Non-Votes

Banks, brokers and other nominees who hold common shares in “street name” for their
customers do not have discretionary authority to vote those shares with respect to the adoption of
the merger agreement or the proposal to adjourn the special meeting if there are insufficient
votes at the time of the special meeting to obtain the Company shareholder approval.

32
Accordingly, if banks, brokers or other nominees do not receive specific voting instructions from
the beneficial owners of those shares, they are not permitted to vote those shares with respect to
any of the proposals to be presented at the special meeting (this is known as a “broker non-
vote”). As a result, if you hold your common shares in “street name” and you do not provide
voting instructions, your common shares will not be counted for purposes of determining
whether a quorum is present at the special meeting and will have the same effect as a vote
“AGAINST” the approval of the merger agreement. Assuming a quorum is present, however,
“broker non-votes” will have no effect on the adjournment proposal.

Abstentions

Abstentions will be included in the calculation of the number of common shares and
Class B shares represented at the special meeting for purposes of determining whether a quorum
is present. Abstaining from voting will have the same effect as a vote “AGAINST” the proposal
to adopt the merger agreement. Abstentions will not count as votes cast, and therefore will have
no effect on the outcome of the proposal to adjourn the special meeting if there are insufficient
votes at the time of the special meeting to obtain the Company shareholder approval or obtain the
shareholder approval.

Voting; Proxies; Revocation

Attendance

All holders of common shares and Class B shares as of the close of business on
January 11, 2018, the record date for voting at the special meeting, including shareholders of
record and beneficial owners of common shares registered in the “street name” of a bank, broker
or other nominee, are invited to attend the special meeting and/or submit a proxy. If you are a
shareholder of record, please be prepared to provide proper identification, such as a driver’s
license. If you hold your shares in “street name,” you will need to provide proof of ownership,
such as a recent account statement or letter from your bank, broker or other nominee, along with
proper identification.

Voting in Person

Shareholders of record will be able to vote in person at the special meeting. If you are not
a shareholder of record, but instead hold your shares in “street name” through a bank, broker or
other nominee, you must provide a proxy executed in your favor from your bank, broker or other
nominee in order to be able to vote in person at the special meeting. However, you may provide
voting instructions as described below.

Adjournments and Postponements

The special meeting may be adjourned or postponed if there are insufficient votes at the
time of the special meeting to obtain the Company shareholder approval, although this is not
currently expected. If there is present, in person or by proxy, sufficient favorable voting power to
secure the vote of the shareholders of the Company necessary to adopt the merger agreement, the
Company does not anticipate that it will adjourn or postpone the special meeting.

33
 THE MERGER AGREEMENT

The following is a summary of the material provisions of the merger agreement. A Copy
of the merger agreement is attached to this information statement as Annex A, and is
incorporated by reference into this information statement. The provisions of the merger
agreement are extensive and not easily summarized. We encourage you to read carefully the
merger agreement in its entirety, as the rights and obligations of the parties to the merger
agreement are governed by the express terms of the merger agreement and not by this summary
or any other information contained in this information statement. In addition, you should read
“Agreements Involving Company Shares” beginning on page 49, which summarizes the voting
agreement and contribution agreement, as certain provisions of these agreements relate to certain
provisions of the merger agreement.

Explanatory Note Regarding the Merger Agreement

The following summary of the merger agreement, and the copies of the merger agreement
attached as Annex A, to this information statement, are intended to provide information
regarding the terms of the merger agreement. The merger agreement contains representations
and warranties by the Company, Parent and Merger Sub, which were made for purposes of that
agreement and as of specified dates. The representations, warranties and covenants in the
merger agreement are subject to limitations agreed upon by the contracting parties, including
being qualified by confidential disclosures made for the purposes of allocating contractual risk
between the parties to the merger agreement instead of establishing these matters as facts, and
may be subject to standards of materiality applicable to the contracting parties that differ from
those applicable to investors. In addition, information concerning the subject matter of the
representations, warranties and covenants may change after the date of the merger agreement.
The representations and warranties in the merger agreement and the description of them in this
information statement should not be read alone but instead should be read in conjunction with
the other information contained in this information statement.

The description of the merger agreement below does not purport to describe all of the
terms of that agreement, and is qualified in its entirety by reference to the full text of the original
merger agreement a copy of which is attached as Annex A, and is incorporated in this
information statement by reference.

Additional information about the Company may be found elsewhere in this information
statement.

Structure of the Merger

At the effective time of the merger, Merger Sub will merge with and into the Company
and the separate corporate existence of Merger Sub will cease. The Company will be the
surviving corporation in the merger and will continue to be an Delaware corporation after the
merger. At the closing of the merger, the certificate of incorporation and bylaws of the Company,
as amended and restated pursuant to the merger agreement, will be the certificate of
incorporation and bylaws of the surviving corporation.

34
 The directors of the Company immediately prior to the effective time of the merger will
be the initial directors of the surviving corporation and will serve until their resignations become
effective as contemplated by the merger agreement (which is expected to occur on the effective
date of the merger) or until their earlier death, resignation or removal in accordance with the
certificate of incorporation and the bylaws of the surviving corporation. The officers of the
Company immediately prior to the effective time will be the initial officers of the surviving
corporation and will serve until their successors are duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the certificate of incorporation
and the bylaws of the surviving corporation.

When the Merger Becomes Effective

The closing of the merger will take place on the third business day after the satisfaction
or waiver of the conditions to closing provided for in the merger agreement (other than any
condition that by its nature cannot be satisfied until the closing of the merger, but subject to
satisfaction of any such condition), or at such other place, date and time as the Company and
Parent may agree in writing. The merger will become effective at the time (which we refer to as
the “effective time”) when the parties file a certificate of merger with the Secretary of State of
the State of Delaware, to be executed, acknowledged and filed in accordance with the relevant
provisions of Delaware law, or at such later date or time as may be agreed by Parent and the
Company in writing and specified in the certificate of merger in accordance with Delaware law.

Effect of the Merger on the Common Shares and Class B Shares of the Company and
Merger Sub

At the effective time, each outstanding common share and Class B share of the Company
(other than any cancelled shares (as described below), any dissenting shares and any rolled
shares) will be converted automatically into and will represent the right to receive $1.87 in cash,
without interest. At the effective time, all common shares and Class B shares of the Company
will be cancelled automatically and will cease to exist.

Each common share and Class B share of the Company that is held by the Company or
Merger Sub immediately prior to the effective time (which we refer to as a “cancelled share”)
will be cancelled automatically and will cease to exist, and no consideration will be delivered in
exchange for such cancellation.

Each common share and Class B share of the Company that is issued and outstanding
immediately prior to the effective time that is held by any shareholder who delivers to the
Company, in accordance with Delaware law, a written demand for payment of the fair cash value
for that dissenting share will not be converted into the right to receive the per share merger
consideration, unless and until the shareholder loses its rights as a dissenting shareholder.

At the effective time, each issued and outstanding common share (other than 100,000
common shares held by Melvin Waxman) and Class B share of the Company that is owned by
Parent or any Rollover Shareholder (all of which will, immediately prior to the effective time, be
held by Parent pursuant to the contribution agreement) immediately prior to the effective time,

35
will cease to be outstanding and will be cancelled automatically and will cease to exist, and no
consideration will be delivered in exchange for that cancellation.

At the effective time, each share of common stock and each share of Class B common
stock of Merger Sub issued and outstanding immediately prior to the effective time will be
converted into 100 shares common stock and 100 shares of Class B common stock, respectively
of the surviving corporation.

Payment for the Common Shares in the Merger

At the effective time, Parent will deposit, or will cause to be deposited, with a U.S. bank
or trust company appointed by Parent (with the Company’s prior approval) as the paying agent,
in trust for the benefit of holders of the common shares and Class B shares (other than any
cancelled shares, dissenting shares and rolled shares), cash in U.S. dollars in immediately
available funds sufficient to pay the $1.87 per share merger consideration.

As soon as reasonably practicable and not later than the third business day following the
effective time, the paying agent will mail to each holder of record of common shares whose
common shares and Class B shares were converted into the right to receive the per share merger
consideration a letter of transmittal and instructions for use in effecting the surrender of
certificates (or affidavits of loss in lieu of certificates) that formerly represented common shares
or non-certificated shares represented by book-entry in exchange for the per share merger
consideration.

Representations and Warranties

The merger agreement contains representations and warranties of the Company as to,
among other things:

 corporate organization, existence and good standing, including with respect to the
Company’s subsidiaries;

 the capitalization of the Company, including in particular the number of common

shares and Class B shares outstanding;

 ownership of the Company’s subsidiaries;

 corporate power and authority to enter into the merger agreement and to
consummate the transactions contemplated by it (other than Parent’s and Merger
Sub’s financing transactions);

 the absence of certain defaults under certain contracts, including arising out of the
execution and delivery of, and the consummation of the transactions contemplated
by, the merger agreement;

 required regulatory filings and authorizations, consents or approvals of

government entities and consents or approvals required of other third parties;

36
 the accuracy of the Company’s and its subsidiaries’ financial statements;

 the absence of certain undisclosed liabilities of the Company and its subsidiaries;

 compliance with laws and possession of the necessary permits and authorizations
by the Company and its subsidiaries;

 environmental matters and compliance with environmental laws by the Company

and its subsidiaries;

 the Company’s employee benefit plans;

 the absence of certain events or changes since June 30, 2017 and the absence of
any material adverse effect with respect to the Company since June 30, 2017;

 the absence of certain investigations, proceedings, actions, suits, inquiries, orders

judgments or decrees with respect to the Company and its subsidiaries;

 matters relating to information to be included in the information statement;

 material contracts of the Company and its subsidiaries;

 the payment of taxes, the filing of tax returns and other tax matters related to the
Company and its subsidiaries;

 labor matters relating to the Company and its subsidiaries;

 title to all owned real property and title to all of the personal property owned by
the Company or its subsidiaries, leasehold interests under enforceable leases in all
of the properties leased by the Company or its subsidiaries and other matters
pertaining to real and personal property;

 intellectual property owned, licensed or used by the Company or its subsidiaries;

 insurance policies covering the Company and its subsidiaries;

 the receipt by the board of directors of an opinion of the financial advisor to the
board of directors;

 the shareholder vote required under Delaware law to adopt the merger agreement;

 the absence of any fees or commission owed to investment bankers, finders or

brokers in connection with the merger, other than the fee to be paid to
Candlewood;

 the absence of any Company rights agreements; and

 the Company’s use of all necessary action to ensure that anti-takeover provisions

37
 of applicable law will not apply to the merger.

The merger agreement also contains representations and warranties of Parent and Merger
Sub as to, among other things:

 corporate (or limited liability company) organization and good standing, including
with respect to Parent;

 power and authority to enter into the merger agreement and, including with
respect to Parent, to consummate the transactions contemplated by it;

 the absence of certain defaults under certain contracts, including arising out of the
execution and delivery of, and the consummation of the transactions contemplated
by, the merger agreement;

 required regulatory filings and authorizations, consents or approvals of

government entities and consents or approvals required of other third parties;

 matters relating to information to be included in the information statement;

 the valid and binding nature of the contribution agreement and the voting
agreement;

 the absence of any fees or commission owed to investment bankers, finders or

brokers in connection with the merger, other than 3S Advisors and Candlewood
Partners;

 the fees and expenses incurred by the Rollover Shareholders or Parent incurred
prior to signing the merger agreement and expected to be incurred prior to the
closing of the merger;

 the solvency of Parent and the surviving corporation as of the effective time and
immediately after consummation of the merger;

 the absence of arrangements between Parent, Merger Sub or any of their

respective affiliates and any member of the Company’s management or directors
related to the Company or any of its subsidiaries or the merger;

 the absence of arrangements though which any shareholder of the Company

would be entitled to receive consideration of a different amount or nature than the
$1.87 per share of merger consideration;

 the absence of arrangements through which any Company shareholder agrees to

vote to adopt the merger agreement or the merger or to vote against any superior
proposal (other than as provided in the voting agreement);

 the absence of certain investigations, proceedings, actions, suits, inquiries, orders

38
 judgments or decrees with respect to Parent or Merger Sub;

 the ownership and operation of Parent and Merger Sub; and

 the acknowledgement of uncertainties inherent in Company estimates, projections,

forecasts and other forward-looking information regarding the Company and its
business and operations and agreement that neither Parent nor Merger Sub will
have any claim against the Company, any of its subsidiaries or any other person
with respect to those matters.

Many of the representations and warranties in the merger agreement are qualified by
knowledge or materiality qualifications or a “material adverse effect” clause.

For purposes of the merger agreement, a “material adverse effect,” with respect to the
Company and its subsidiaries means any fact, circumstance, event, change, effect or occurrence
(whether or not constituting any breach of a representation, warranty, covenant or agreement set
forth in the merger agreement) that (i) has had or would reasonably be expected to have a
material adverse effect on the assets, properties, liabilities, business, results of operation or
financial condition of the Company and its subsidiaries, taken as a whole but will not include
facts, circumstances, events, changes, effects or occurrences to the extent, or to the extent
attributable to: (A) generally affecting the industry in the geographies in which the Company
operates, (B) generally affecting the economy, credit or financial markets in the geographies in
which the Company operates, (C) changes after the date of the merger agreement in law or in
generally accepted accounting principles or in accounting standards, or any regulatory and
political conditions or developments, (D) the announcement of the merger agreement or the
consummation of the merger (other than for purposes of any representation or warranty
contained in Sections 3.3(b)-(c)) of the merger agreement, (E) acts of war or military action,
sabotage or terrorism, or any escalation or worsening of any such acts of war or military action,
sabotage or terrorism, (F) earthquakes, hurricanes, tornados or other natural disasters, except, in
the case of each of clauses (A), (B), (C), (E) and (F), to the extent any fact, circumstance, event,
change, effect or occurrence disproportionately impacts the assets, properties, business, results of
operation or financial condition of the Company and its subsidiaries, taken as a whole, relative to
other participants in the industries in which the Company and its subsidiaries operate, (G) any
action taken by the Company or its subsidiaries (1) that is expressly required by the merger
agreement (other than with respect to the Company’s obligations to comply with Section 5.1(a)
or Section 5.5) of the merger agreement, (2) taken with Parent’s written consent, or (3) resulting
from any action taken at the written request of Parent, (H) resulting from any change in the
market price or trading volume of securities of the Company in and of itself; provided that a fact,
circumstance, event, change, effect or occurrence causing or contributing to the change in market
price or volume will not be disregarded from the determination of a Company material adverse
effect, or (I) the fact of any failure to meet revenue or earnings projections, forecasts, estimates
or guidance for any period, whether relating to financial performance or business metrics,
including revenues, net incomes, cash flows or cash positions, provided that a fact, circumstance,
event, change, effect or occurrence causing or contributing to such failure shall not be
disregarded from the determination of a Company Material Adverse Effect; or (ii) that would
reasonably be expected to prevent or materially delay or impair the ability of the Company to
perform its obligations under the merger agreement or to consummate the merger.

39
 For the purpose of the merger agreement, a “material adverse effect,” with respect to
Parent or Merger Sub, means circumstances that would, individually or in the aggregate, prevent
or materially delay or materially impair the ability of Parent or Merger Sub to consummate the
merger and the other transactions contemplated thereby.

Conduct of Business Pending the Merger

The merger agreement provides that, subject to certain exceptions or Parent’s consent,
during the period from the signing of the original merger agreement to the effective time, the
Company must, and will cause each of its subsidiaries to, conduct its business in all material
respects in the ordinary course consistent with past practice, use commercially reasonable efforts
to maintain its business organization and advantageous business relationships and to retain the
services of its key officers and key employees, and take no action that would materially and
adversely affect or delay the ability of any of the parties to the merger agreement to obtain any
necessary governmental approvals or otherwise materially delay or prohibit the merger and
transactions related to the merger. In addition, subject to certain exceptions or Parent’s written
consent, the Company must not and shall cause each of its subsidiaries not to:

 adjust, split, combine or reclassify any capital stock or otherwise amend the terms
of its capital stock;

 make, declare or pay any dividend or other distribution on, or directly or indirectly
redeem, purchase or otherwise acquire or encumber, any of its capital stock or any
securities or obligations convertible into or exchangeable for any shares of its
capital stock;

 grant any rights to acquire any shares of its capital stock;

 purchase, sell, transfer, mortgage, encumber or otherwise dispose of any

properties or assets having a value in excess of $100,000 in the aggregate (other
than to a wholly owned Company subsidiary), other than pursuant to existing
contracts or in the ordinary course of business consistent with past practice;

 incur, assume, guarantee, prepay or become obligated with respect to any

indebtedness for borrowed money (other than as is already in existence at the
signing of the original merger agreement, is in the ordinary course of business
consistent with past practice and would not reasonably be expected to delay,
adversely affect or impede Parent’s ability to obtain the financing);

 make any investment in excess of $100,000 in the aggregate, other than in

accordance with certain exceptions;

 make any acquisitions, whether by purchase of stock or securities or contributions

to capital in excess of $100,000 in the aggregate, other than pursuant to existing
contracts;

 except to the extent required by law or any Company benefit plan in effect as of

40
 the date of the merger agreement: increase in any manner the compensation or
benefits of any employees, officers, directors, consultants or independent
contractors of the Company or any of its subsidiaries, except for increases in base
salary in the ordinary course of business consistent with past practice; pay any
severance or retirement benefits to any employees, directors, consultants or
independent contractors of the Company or any of its subsidiaries, except with
respect to officers, directors and consultants in the ordinary course of business
consistent with past practice; accelerate the vesting of, or the lapsing of forfeiture
restrictions or conditions with respect to, any equity or equity-based
awards; establish or cause the funding of any “rabbi trust” or similar arrangement;
establish, adopt, amend or terminate any arrangement that would be a benefit plan
of the Company if in effect on the date of the original merger agreement; or enter
into, amend, alter, adopt, implement or otherwise make any commitment to do any
of the foregoing;

 amend or waive any provision of its certificate of incorporation or regulations;

 take any action that is intended or would reasonably be expected to result in any
of the conditions described in “The Merger Agreement—Conditions to the
Merger” beginning on page 44 not to be satisfied;

 adopt a plan of complete or partial liquidation, dissolution, merger, consolidation,

restructuring, recapitalization or other reorganization of the Company or any of its
subsidiaries;

 implement or adopt any material change in its tax or financial accounting

principles, practices or methods, other than as may be required by GAAP or
applicable law; make, change or revoke any material tax election; change any
method of reporting for tax purposes; settle or compromise any material tax claim,
audit or dispute in excess of $100,000; or make or surrender any claim for a
material refund of taxes in excess of $100,000;

 other than in the ordinary course of business consistent with past practice, enter
into any new, or materially amend or otherwise materially alter any current,
agreement or obligation with any affiliate of the Company; or

 agree or commit to do any of the foregoing.

41
Other Covenants and Agreements

Access and Information

During normal business hours throughout the period prior to the effective time and
subject to the requirements of applicable law and the confidentiality agreement between the
Company and certain of the Rollover Shareholders, the Company must provide Parent and its
respective representatives, reasonable access to the Company’s offices, properties, books and
records and such other information as Parent reasonably requests.

Shareholder Approval

The Company will take all action necessary in accordance with Delaware law and its
certificate of incorporation and bylaws to duly call, give notice of, convene and hold a meeting
of its shareholders as promptly as practicable following the mailing of this information statement
for the purpose of obtaining the Company shareholder approval and use reasonable best efforts to
solicit from its shareholders proxies in favor of the adoption of the merger agreement.

Reasonable Best Efforts

Subject to the terms and conditions of the merger agreement, each of the parties to the
merger agreement will use its reasonable best efforts (subject to, and in accordance with,
applicable law) to do or cause to be done promptly all things reasonably necessary, proper or
advisable to consummate the merger and the other transactions contemplated by the merger
agreement, including:

 obtaining all necessary actions or nonactions, waivers, consents and approvals

from applicable governmental entities, making all necessary registrations and
filings and taking all necessary steps to obtain an approval or waiver from, or to
avoid an action or proceeding by, any governmental entity;

 obtaining all necessary consents, approvals or waivers from third parties;

 defending any lawsuits or other legal proceedings, whether judicial or

administrative, challenging the merger agreement or the consummation of the
transactions contemplated by the merger agreement; and

 executing and delivering any additional instruments reasonably necessary to

consummate the transactions contemplated by the merger agreement.

In addition to the foregoing, subject to the terms and conditions in the merger agreement,
the Company and Parent will:

 cooperate with each other in determining whether any other filings are required to
be made with, or consents, permits, authorizations, waivers or approvals are
required to be obtained from, any third parties or governmental entities in
connection with the execution and delivery of the merger agreement and the

42
 consummation of the transactions contemplated by the merger agreement and
timely make all such filings or seek all such consents, permits, authorizations or
approvals;

 subject to applicable law, keep each other apprised of the status of matters relating
to the completion of the transactions contemplated by the merger agreement,
including promptly furnishing the other with true and complete copies of notices
or other material communications sent or received by the Company or Parent or
their subsidiaries to or from any third party or governmental entity with respect to
those transactions, and permit the other to review in advance any proposed
material communication by that party to any supervisory or governmental entity;
and

 give the other reasonable notice of, and, to the extent permitted by such
governmental entity, allow the other to attend and participate at any meeting with
any governmental entity in respect of any filings, investigation or other inquiry or
proceeding relating to the merger.

Each of the Company and Parent will permit counsel for the other party reasonable
opportunity to review in advance, and consider in good faith the views of the other party in
connection with, any proposed written communication to any governmental entity.

Indemnification; Directors’ and Officers’ Insurance

From and after the effective time until the sixth anniversary of the effective time, Parent
and the surviving corporation will indemnify and hold harmless any individual who is a current
or former director or officer of the Company or any of its subsidiaries and each such person who
serves or served at the request of the Company as a director, officer, member, trustee or fiduciary
of another corporation, partnership, joint venture, trust, pension or other employee benefit plan
or enterprise, together with such person’s heirs, executors or administrators (each of whom we
refer to as an “indemnified party”) with respect to all losses in connection with any claim, suit,
action, proceeding or investigation, whenever asserted, based on or arising out of, in whole or in
part, (i) the fact that the indemnified party was a director or officer of the Company or any of its
subsidiaries or (ii) acts or omissions by the indemnified party in his or her capacity as a director,
officer, employee or agent of the Company or one of its subsidiaries or taken at the request of the
Company or one of its subsidiaries, in each case to the fullest extent permitted under Delaware
law, to the extent that the indemnified party may be indemnified pursuant to the organizational
documents of the Company or its subsidiaries or any written agreement in existence as of the
date of the merger agreement.

Parent guarantees, and the surviving corporation will assume, all obligations of the
Company and any of its subsidiaries in respect of rights of exculpation, indemnification and
advancement of expenses for acts or omissions occurring at or prior to the effective time,
whether asserted or claimed prior to, at or after the effective time, existing in favor of any
indemnified party as provided in the organizational documents of the Company or its
subsidiaries or in certain written agreements. From and after the effective time until the sixth
anniversary of the effective time, Parent will cause, unless otherwise required by law, the

43
organizational documents of the surviving corporation to contain provisions no less favorable to
the indemnified parties with respect to limitation of liabilities of directors and officers and
indemnification than are set forth as of the date of the merger agreement in the organizational
documents of the Company or available under Delaware law, which provisions will not be
amended, repealed or otherwise modified in a manner that would adversely affect the rights of
the indemnified parties. In addition, from and after the effective time until the sixth anniversary
of the effective time, Parent will, and will cause the surviving corporation to, advance any
expenses of any indemnified party to the fullest extent permitted under applicable law, so long as
the individual to whom expenses are advanced provides an undertaking to repay those advances
if that individual is not entitled to indemnification under the merger agreement.

Huntington Consent

Parent and Merger Sub will use their respective reasonable best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or
advisable to obtain Huntington National Bank’s consent to the transactions contemplated by the
merger agreement.

Shareholder Litigation

The Company will give Parent the opportunity to participate in the defense or settlement of any
shareholder litigation against the Company or its directors relating to the merger or any other
transactions contemplated by the merger agreement, whether commenced prior to or after the
execution and delivery of the merger agreement, and the Company will not settle any such litigation
without Parent’s prior written consent.

Conditions to the Merger

The obligations of the Company, Parent and Merger Sub to effect the merger are subject to
the fulfillment or waiver, at or before the effective time, of the following conditions:

 that the Company shareholder approval has been obtained;

 that no restraining order, preliminary or permanent injunction or other order

issued by any court of competent jurisdiction or other legal restraint or prohibition
preventing, or making illegal, the consummation of the merger and other
transactions contemplated by the merger agreement, other than the financing, be
in effect; and

The obligation of the Company to effect the merger is subject to the fulfillment or waiver,
at or before the effective time, of the following conditions:

 that the representations and warranties of Parent and Merger Sub set forth in the
merger agreement are true and correct at and as of the date of the original merger
agreement and at and as of the closing date of the merger as though made at and
as of the closing date of the merger, except where the failure of such
representations and warranties to be true and correct (in each case without giving

44
 effect to any materiality or material adverse effect qualifier) does not have, and
would not reasonably be expected to have, individually or in the aggregate, a
material adverse effect with respect to Parent and except that representations and
warranties that are made as of a specified date or period need be true and correct
only as of that specified date or period;

 that each of Parent and Merger Sub has in all material respects performed all
obligations and complied with all covenants required by the merger agreement to
be performed or complied with by it at or prior to the effective time; and

 that Parent has delivered to the Company a certificate, dated the effective time and
signed by its chief executive officer or another senior executive officer, certifying
that the conditions set forth in the two items described above have been satisfied.

The obligation of Parent and Merger Sub to effect the merger is subject to the fulfillment
or waiver, at or before the effective time, of the following conditions:

 that the representations and warranties of the Company set forth in the merger
agreement are true and correct at and as of the date of the original merger agreement
and at and as of the closing date of the merger as though made at and as of the
closing date of the merger, except where the failure of such representations and
warranties to be true and correct (in each case without giving effect to any
materiality or material adverse effect qualifier) does not have, and would not
reasonably be expected to have, individually or in the aggregate, a material adverse
effect with respect to the Company and except that representations and warranties
that are made as of a specified date or period need be true and correct only as of that
specified date or period; and except that that (i) the representations and warranties
of the Company pertaining to corporate organization, existence and good standing
(with respect to the Company only), finders and brokers and state takeover statutes
and rights agreements must be true and correct in all material respects, (ii) the
representations and warranties pertaining to the Company’s capitalization must be
true and correct in all respects, except for such inaccuracies as are de minimis in
nature and amount relative to each such representation and warranty taken as a
whole and (iii) the representations and warranties of the Company pertaining to
corporate authority, the absence of a material adverse effect on the Company since
June 30, 2017, the opinion of the financial advisor to the board of directors and the
required vote of Company shareholders under Delaware law must be true and
correct in all respects;

 that the Company has in all material respects performed all obligations and
complied with all covenants required by the merger agreement to be performed or
complied with by it at or prior to the effective time;

 that the Company has delivered to Parent a certificate, dated the effective time and
signed by a senior executive officer of the Company (other than any affiliate of
Parent), certifying that the conditions set forth in the two items described

45
 immediately above have been satisfied;

 Parent and Merger Sub shall have received the consent of Huntington National Bank
to the transactions contemplated by the merger agreement;

 that since the date of the original merger agreement, there has not been any material
adverse effect on the Company, subject to certain exceptions.

Termination

The Company and Parent may terminate the merger agreement by mutual written
consent at any time before the completion of the merger, whether prior to or after receipt of the
Company shareholder approval. In addition, either the Company or Parent may terminate the
merger agreement if:

 the merger has not been completed by the end date, provided that this termination
right is not available to a party whose failure to perform any of its obligations
under the merger agreement has been the primary cause of the failure of the
merger to be consummated by the end date;

 any final nonappealable injunction, order, decision, opinion, decree, ruling or

other action of a governmental entity permanently restrains, enjoins or prohibits
the merger, provided that the party seeking to terminate the merger agreement
pursuant to this provision shall have used its reasonable best efforts to remove
such injunction, other legal restraint or order; or

 if the special meeting of the Company shareholders (including any adjournment or

postponement of such special meeting) has concluded, and the Company
shareholder approval has not been obtained.

The Company may terminate the merger agreement:

 if there is a breach of any of the covenants on the part of Parent or if any of the
representations or warranties of Parent fail to be true, such that the conditions to
each party’s obligation to effect the merger or the conditions to the obligation of
the Company to effect the merger would be incapable of fulfillment and the
breach or failure is incapable of being cured, or is not cured, by the earlier of the
end date and thirty days following written notice to Parent of the breach or failure,
so long as the Company is not then in material breach of any of its representations,
warranties, covenants or agreements contained in the merger agreement; or

46
  prior to the approval of the merger agreement by the Company’s shareholders, in
order to concurrently enter into a definitive agreement with respect to a superior
proposal, but only if the Company has otherwise complied in all material respects
with its obligations under the merger agreement.

Parent may terminate the merger agreement:

 if there is a breach of any of the covenants on the part of the Company or if any of
the representations or warranties of the Company fail to be true, such that the
conditions to each party’s obligation to complete the merger or the conditions to the
obligation of Parent and Merger Sub to complete the merger would be incapable of
fulfillment and the breach or failure is incapable of being cured, or is not cured, by
the earlier of the end date and thirty days following written notice to the Company
of the breach or failure, so long as Parent is not then in material breach of any of its
representations, warranties, covenants or agreements contained in the merger
agreement; or

 if prior to the approval of the merger agreement by our shareholders, the board of
directors withdraws or modifies its recommendation of the merger agreement or
fails to recommend the merger agreement.

Fees and Expenses

Except as otherwise provided in the merger agreement, as described in this “The Merger
Agreement—Fees and Expenses” section, whether or not the merger is consummated, all costs
and expenses incurred in connection with the merger will be paid by the party incurring or
required to incur them, but if the merger is consummated, all costs and expenses incurred by
Parent or Merger Sub in connection with the merger, the merger agreement and the transactions
contemplated by the merger agreement will be paid by the surviving corporation.

Expense Reimbursement Provisions

The Company will pay to Parent an amount equal to the sum of Parent’s and Merger Sub’s
expenses up to $500,000 if:

 the Company, prior to obtaining the Company shareholder approval, terminates

the merger agreement to enter into a definitive agreement providing for a superior
proposal;

 Parent terminates the merger agreement because of a recommendation change or

failure to make a recommendation by the board of directors;

 Parent, prior to obtaining the Company shareholder approval, terminates the

merger agreement because the Company fails to take necessary steps to obtain
approval for the merger and that breach is not cured within five business days
following written notice by Parent to the Company;

47
  either the Company or Parent terminates the merger agreement because the
merger agreement is not approved by the Company’s shareholders at the special
meeting; or

 after an alternative proposal to acquire all or a portion of the Company has been
disclosed publicly or has been made directly to the Company’s shareholders or
any person has publicly announced an intention (whether or not conditional) to
make a bona fide alternative proposal, the merger agreement is terminated by the
Company or Parent because the merger has not been completed by the end date or
by Parent pursuant to a breach by the Company of its covenants or representations
and warranties, and the Company enters into a definitive agreement with respect
to, or consummates, a transaction contemplated by any alternative proposal to
acquire at least 50% of the Company’s common shares and Class B shares or
assets within 12 months of the date the merger agreement is terminated.

The merger agreement amendment provides that in the event the Rollover Shareholders’
actual expenses exceed the $500,000 maximum expense reimbursement amount provided for in
the merger agreement, the Rollover Shareholders may submit such additional expenses to the
Company and the Company’s board of directors, in its sole discretion, may decide whether to
direct the Company to reimburse any additional expenses.

Amendments and Waivers

Except as described in the next paragraph, at any time prior to the effective time, any
provision of the merger agreement may be amended or waived if, and only if, the amendment or
waiver is in writing and signed, in the case of an amendment, by the Company, Parent and
Merger Sub, or in the case of a waiver, by the party against whom the waiver is to be effective,
but after receipt of the Company shareholder approval, if any amendment or waiver, by
applicable law, requires further approval of the shareholders of the Company, the effectiveness
of that amendment or waiver will be subject to the approval of the shareholders of the Company.

However, no amendment, waiver or other modification may be made to certain sections

of the merger agreement that would be adverse to Parent and Merger Sub’s financing sources
without the consent of the Parent and Merger Sub’s financing sources (which consent may not be
unreasonably withheld, delayed or conditioned).

Equitable Remedies and Specific Performance

The parties will be entitled to an injunction or injunctions to prevent breaches of the

merger agreement or to enforce specifically the performance of its terms without proof of
damages or otherwise, in addition to any other remedies to which they are entitled at law or in
equity. Except as otherwise provided in the merger agreement, all remedies, at law or otherwise,
will be cumulative and not alternative or exclusive of other remedies.

Each party waives any defenses in any action for specific performance. However, the
Company’s right to seek specific performance of Parent’s obligation to cause the transactions

48
contemplated by the contribution agreement to be effected and to consummate the merger is
subject to the requirements that:

 all of the conditions to Parent’s and Merger Sub’s obligations to effect the merger,
as described in “The Merger Agreement—Conditions to the Merger” above have
been satisfied;

 the conditions to the funding of the financing have been satisfied (other than any
conditions related to Parent or its obligations under the financing);

 Parent and Merger Sub have failed to complete the closing of the merger in
accordance with the terms of the merger agreement; and

 the Company has irrevocably confirmed that if specific performance is granted

and the financing is funded, then it will take the actions required of it by the
merger agreement to cause the closing of the merger to occur.

Governing Law

The merger agreement is governed by and construed in accordance with the laws of the
State of Delaware without reference to that state’s principles of conflict of laws.

AGREEMENTS INVOLVING COMPANY SHARES

Voting Agreement

In connection with the merger agreement, the Rollover Shareholders and the Company
entered into the voting agreement. Subject to certain terms and conditions in the voting
agreement, the Rollover Shareholders agreed to vote the common shares and Class B shares over
which they have voting power (representing 86.1% of the Company’s total outstanding voting
power as of the record date) in favor of the adoption of the merger agreement and, upon the
request of the board of directors (acting through a majority of all directors other than the
Rollover Shareholder directors), any adjournment, postponement or recess of the special meeting
and have waived any rights of appraisal or rights of dissent from the merger that are available
under applicable law. The obligation to vote those common shares and Class B shares will
terminate upon the occurrence of certain events, including a change of recommendation or
failure to make a recommendation regarding the merger by the board and the termination of the
merger agreement.

Contribution Agreement

On January 16, 2018, the Rollover Shareholders entered into the contribution agreement
with Parent, pursuant to which the Rollover Shareholders collectively committed to contribute,
immediately prior to the consummation of the merger, an aggregate amount of 820,736 shares of
Common shares and Class B shares to Parent (the equivalent of a $1,534,776 investment based
on the $1.87 per share merger consideration) in exchange for certain equity securities of Parent.

49
 The contribution agreement is further described in the section “Special Factors—
Financing—Rollover Financing” beginning on page 25.

PROVISIONS FOR UNAFFILIATED SHAREHOLDERS

No provision has been made (i) to grant the Company’s public shareholders access to the
corporate files of the Company, any other party to the merger or any of their respective affiliates,
or (ii) to obtain counsel or appraisal services at the expense of the Company, or any other such
party or affiliate.

IMPORTANT INFORMATION REGARDING WAXMAN INDUSTRIES

Company Background

The Company believes it is one of the leading suppliers of specialty plumbing, floor and
surface protection, other hardware products to the repair and remodeling market and leak
detection and water mitigation products to distributors, retailers and the consumer. Through its
U.S. wholly owned subsidiaries, the Company distributes products to a wide variety of large
national and regional retailers, independent retail customers, wholesalers and to the e-Commerce
market, primarily in the United States. Through its operations based in Asia, the Company also
distributes plumbing and hardware products to manufacturers, original equipment manufacturers
(“O.E.M.”) customers, wholesalers, retailers and other industrial customers in the U.S. and
worldwide. The Company's consolidated net sales were $86.8 million and $94.1 million in fiscal
2017 and 2016, respectively.

The Company’s U.S. based operations consist of Waxman Consumer Products Group Inc.
(“Consumer Products”) and TWI Industrial, Inc. (“TWI Industrial”). The Company’s operations
in Asia, which are held through Waxman Industrial Group, Inc. (“Industrial Group”), include
TWI International Taiwan Inc., (“TWI”) and CWI International China, Ltd. (“CWI”).

Consumer Products, the Company’s largest operation, is a supplier of specialty plumbing,

floor and surface protection, leak detection and water mitigation and other hardware products to
a wide variety of large retailers. Approximately 64% of Consumer Products’ purchases are from
TWI and CWI. TWI Industrial is a sales, marketing and management operation that sells
products for TWI and CWI in North America, and manages sales representatives for CWI and
TWI throughout Europe and Asia (collectively “Industrial Sales”).

LeakSMART, Inc. (“leakSMART”) is a newly formed subsidiary, organized to develop

and distribute the leak detection and water mitigation products beginning July 1, 2017.
LeakSMART has begun to develop an industrial channel to distribute its products. LeakSMART
will also distribute products to the end user through the e-Commerce channel and eventually may
serve the retail market currently served by Consumer Products. Consumer Products will charge
leakSMART for the warehousing, logistics, technical and administrative services they provide.

CWI, located in Mainland China, manufactures, sources, assembles and packages

plumbing and other products for sale to Waxman's U.S. based operations and other worldwide
customers. TWI, located in Taiwan, sources, consolidates and provides shipping services. With
the support of TWI Industrial, CWI and TWI sell products worldwide to industrial, O.E.M. and

50
wholesale distributors. In certain circumstances, CWI also sells container load direct ship
programs to certain retail customers, with the assistance and coordination of Consumer Products.

The Company’s non-intercompany sales are classified into three primary segments; (i)
retail sales, which are made to the Company’s base of retail store customers, (ii) industrial sales,
which are made to industrial supply distributors, O.E.M.’s and other wholesale trade businesses,
and (iii) a small but growing e-Commerce sales segment.

During the past five years, neither the Company nor any of the Company directors or
executive officers listed below has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors). In addition, during the past five years, neither the Company
nor any of the Company directors or executive officers listed below has been a party to any
judicial or administrative proceeding (except for matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining the person from future
violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of
any violation of federal or state securities laws. Each of the individuals listed below is a citizen
of the United States and can be reached care of Waxman Industries, 24460 Aurora Road,
Bedford Heights, Ohio 44146.

Directors and Executive Officers

The board of directors presently consists of seven members. The persons listed below are
the directors and executive officers of Waxman Industries as of the date of this information
statement.

Age
Name Current Position and Office
Melvin Waxman 83
Co-Chairman of the Board
Armond Waxman 79
Co-Chairman of the Board
Laurence S. Waxman 60
Director, President and Chief Executive Officer
Judy Robins 69
Director
Mark Reichenbaum 67
Director
Todd Waxman 52
Director
Paul Cascio 55
Director
Mr. Melvin Waxman became the Co-Chairman of the Company in June 2004 and served as the
Co-Chief Executive Officer from June 2004 through June 2013. Prior thereto, he was the Chief
Executive Officer of the Company, a director of the Company since 1962 and Chairman of the
Board of the Company since August 1976.

Mr. Armond Waxman became the Co-Chairman of the Company in June 2004 and served as the
Co-Chief Executive Officer from June 2004 through June 2013. Prior thereto, he was the

51
President and Treasurer of the Company since August 1976. Mr. Waxman has been a director of
the Company since 1962.

Mr. Laurence Waxman became the Chief Executive Officer of the Company effective July 1,
2013, and has served as President since June 2004. Prior thereto he was President and Chief
Operating Officer of the Company since June 2004, the Executive Vice President of the
Company since August 2002 and had been Senior Vice President of the Company since
November 1993. He is also President of Waxman Consumer Products, a wholly-owned
subsidiary of the Company, 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.

Mrs. Robins has been a director of the Company since 1980. Mrs. Robins owns and operates an
interior design business. Mrs. Robins is the sister of Messrs. Melvin and Armond Waxman. In
January 2008, Mrs. Robins joined the Company’s Audit Committee

Mr. Todd Waxman is the President of North Park Management Group LLC, a real estate
development and management company. Mr. Todd Waxman is the son of Mr. Armond Waxman
and became a director of the Company in May 2003.

Mr. Reichenbaum is the President of Reichenbaum Capital Corporation, an investment firm, and
Co-Founder and Managing Partner of RW Real Estate Group, a private real estate investment
and management company. Until October 1997, Mr. Reichenbaum was the President of Medo
Industries, Inc., a large manufacturer and distributor of automotive air fresheners worldwide,
which was sold to Quaker State Corporation in 1996. Mr. Reichenbaum has been a director of
the Company since 2001 and is a member of the Company’s Audit Committee.

Mr. Paul Cascio is the founder and a managing member of 3S Advisors, LLC. 3S Advisors
provides objective advice to entrepreneurs and business owners to help build shareholder value
through a focus on strategy, scalability and sustainability of the business model. Prior to
founding 3S Advisors, Mr. Cascio was a Senior General Partner at Brantley Partners, a private
equity organization founded in 1987 with approximately $400 million of committed capital
under management, and a lead investor in over 40 privately-held companies throughout the
United States. Mr. Cascio served in various capacities with the Brantley portfolio companies
from 1996 to 2009. Before joining Brantley in May 1996, Mr. Cascio was a Managing Director
and head of the General Industrial Manufacturing and Service Group in the Corporate Finance
Department at Dean Witter Reynolds Inc. In his capacity as an investment banker, Mr. Cascio
completed public debt and equity, private debt and equity, mergers and acquisitions and fairness
opinion assignments for a variety of industrial, consumer product and health care related
companies. Mr. Cascio joined the Board of Directors in March 2016.

52
Historical Selected Financial Information

Set forth below is certain historical selected financial information relating to the
Company. The historical selected financial data as of and for the fiscal years ended June 30,
2017, 2016 and 2015 have been derived from the Company’s historical audited consolidated
financial statements. This information is only a summary and should be read in conjunction with
our Consolidated Financial Statements for the quarters ended September 30, 2017 and September
30, 2016 and the fiscal years ended June 30, 2017 and June 30, 2016, which are attached as
Annex F-1 and Annex F-2, respectively, and are incorporated by reference into this information
statement. More comprehensive financial information is included in those reports and the
following summary is qualified in its entirety by reference to such reports and all of the financial
information and notes contained therein. For additional information, see “Where You Can Find
Additional Information” beginning on page 64 and Annex F-1 and Annex F-2. Historical results
are not necessarily indicative of results to be expected in any future period.

2017 2016 2015

Net Sales 100.0% 100.0% 100.0%
Cost of Sales 62.8% 62.0% 64.2%
Gross Profit 37.2% 38.0% 35.8%
Selling, General and Administrative Expenses 37.0% 34.4% 32.7%
Operating Income 0.2% 3.6% 3.1%

Other Income 0.2% 0.2% 0.1%

Interest Expense, net 0.4% 0.4% 0.4%
Net Income Before Taxes 0.0% 3.4% 2.8%
Provision for Income Taxes 0.9% 1.2% 0.9%
Net (Loss) Income ‐0.9% 2.2% 1.9%

Ratio of Earnings to Fixed Charges

The following table presents our ratio of earnings to fixed charges for the fiscal periods
indicated.

FY 2017 FY 2016 FY 2015

EBITDA $1,508 $4,672 $4,158

Capital Expenditures 1,000 1,141 1,151
Earnings 508 3,531 3,007

Fixed Charges 1,239 1,081 1,101

Ratio of Earnings to Fixed Charge 0.41 3.27 2.73

53
Book Value Per Share

Our net book value per share as of June 30, 2017 was approximately $14.99 (calculated
based on 1,320,797 company shares outstanding).

Market Price of the Company’s Common Shares

The common shares are traded over the counter under the symbol “WXMN.” The
following table sets forth the high and low sales prices per share of common shares for the fiscal
years ended June 30, 2017, June 30, 2016 and June 30, 2015.

2015 2016 2017

High Low High Low High Low

First Quarter $3.49 $2.75 $3.25 $2.50 $3.10 $2.75

Second Quarter $2.86 $2.25 5.00 1.00 2.75 2.05

Third Quarter $2.86 $2.30 3.00 2.50 2.40 1.60

Fourth Quarter $3.00 $2.50 3.00 2.60 3.00 1.60

Dividends

The Company has not declared a dividend since 1994. Restrictions contained in the
Company's debt instruments currently prohibit the declaration and payment of cash dividends.

Security Ownership of Management and Certain Beneficial Owners

Security Ownership of Management

The following table sets forth, as of December 31, 2017, the number of shares of
Common Stock and Class B Common Stock beneficially owned by each director, director
nominee and executive officer named in “Summary Compensation Table,” by the directors,
nominees and executive officers of the Company as a group and by each holder of at least five
percent of Common Stock and Class B 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,
Armond, Laurence and Todd Waxman is that of the executive office of the Company.

At the close of business on December 31, 2017, our directors, the named executive
officers and the directors and executive officers as a group beneficially owned and had sole
voting and dispositive power (except as otherwise indicated) of our common shares as set forth
in the following table:

54
 Number of Shares Beneficially Owned Percent of Ownership Percentage of
Common Class B Common Class B Aggregate
Officers and Directors Shares Shares Total Shares Shares Voting

Melvin Waxman 100,000 2,500 102,500 9.0% 1.2% 31.6%

Armond Waxman 173,079 77,029 250,108 15.6% 36.6% 29.4%
Laurence Waxman 293,048 106,720 399,768 26.4% 50.8% 14.6%
Judy Robins 7,975 7,525 15,500 0.7% 3.6% 2.6%
Todd Waxman 6,591 2,160 8,751 0.6% 1.0% 0.9%
Directors and Officers as a Group 580,693 195,934 776,627 52.3% 93.2% 79.1%

Other 5% Holders
Howard Amster 106,000 106,000 9.5% 0.0% 3.3%
TOTAL 686,693 195,934 882,627 61.8% 93.2% 82.3%

Security Ownership of Rollover Shareholders

Class B
Common Common
Rollover Shareholder Shares Shares
Melvin Waxman 100,000 2,500
Armond Waxman 173,079 77,029
Laurence Waxman 293,002 104,220
Mitch Waxman 6,226 4,126
Sharon Waxman 6,788 3,113
Todd Waxman 6,591 2,160
Gregg Waxman 4,041 2,160
Shari Waxman 4,041 2,160
Judy Robins 7,975 7,525
Karen Polonsky 8,000 --
Howard Amster 106,000 --

Transactions in Company Shares

Transactions During the Past 60 Days

Other than the merger agreement and agreements entered into in connection therewith,
including the voting agreement and the contribution agreement discussed in “Agreements
Involving Common Shares,” beginning on page 49, the Company, Parent, Merger Sub and the
Rollover Shareholders, and their respective affiliates, have not conducted any transactions with
respect to company shares during the past 60 days.

55
 IMPORTANT INFORMATION REGARDING ROLLOVER SHAREHOLDERS

Set forth below are the names, the current principal occupations or employment,
telephone number and the name, principal business, and address of any corporation or other
organization in which such occupation or employment is conducted and the five-year
employment history of each of the Rollover Shareholders, Parent, and Merger Sub. During the
past five years, none of the persons or entities described have been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) party to any judicial or
administrative proceeding (except for matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining the person from future
violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of
any violation of federal or state securities laws. Each person identified is a United States citizen.

Melvin Waxman is the sole director and executive officer of Parent and Merger Sub.

Name Business Address & Employment History

Telephone

Melvin Waxman c/o Melvin Waxman Mr. Melvin Waxman became the Co-Chairman of the Company
Waxman Industries in June 2004 and served as the Co-Chief Executive Officer from
24460 Aurora Road June 2004 through June 2013. Prior thereto, he was the Chief
Bedford Heights, Executive Officer of the Company, a director of the Company
Ohio 44146 since 1962 and Chairman of the Board of the Company since
(800) 531-3342 August 1976.
Armond Waxman c/o Armond Waxman Mr. Armond Waxman became the Co-Chairman of the
Waxman Industries Company in June 2004 and served as the Co-Chief Executive
24460 Aurora Road Officer from June 2004 through June 2013. Prior thereto, he was
Bedford Heights, the President and Treasurer of the Company since August 1976.
Ohio 44146 Mr. Waxman has been a director of the Company since 1962.
(800) 531-3342

Laurence S. Waxman c/o Laurence Mr. Laurence Waxman became the Chief Executive Officer of
Waxman the Company effective July 1, 2013, and has served as President
Waxman Industries since June 2004. Prior thereto he was President and Chief
24460 Aurora Road Operating Officer of the Company since June 2004, the
Bedford Heights, Executive Vice President of the Company since August 2002
Ohio 44146 and had been Senior Vice President of the Company since
(800) 531-3342 November 1993. He is also President of Waxman Consumer
Products, a wholly-owned subsidiary of the Company, 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.

Judy Robins c/o Judy Robins Mrs. Robins has been a director of the Company since 1980.
Waxman Industries Mrs. Robins owns and operates an interior design business. Mrs.
24460 Aurora Road Robins is the sister of Messrs. Melvin and Armond Waxman. In
Bedford Heights, January 2008, Mrs. Robins joined the Company’s Audit
Ohio 44146 Committee.
(800) 531-3342

Mitch Waxman c/o Mitch Waxman Mr. Mitchell Waxman is an independent film and television
Waxman Industries writer, producer, director based in Los Angeles. He is the son
24460 Aurora Road of Mr. Melvin Waxman. Mr. Waxman got his start in

56
 Bedford Heights, independent film in New York with Killer Films and in Los
Ohio 44146 Angeles working for Academy Award winning writer-
(800) 531-3342 director Curtis Hanson. He is currently in post-production on
two feature films. Mr. Waxman has extensive experience
doing business in China. Prior to working in film, he ran
WAMI Sales, Inc., a wholly-owned subsidiary of the
Company, sourcing and importing plumbing products from
China.
Todd Waxman c/o Todd Waxman Mr. Todd Waxman is the President of North Park Management
Waxman Industries Group LLC, a real estate development and management
24460 Aurora Road company. Mr. Todd Waxman is the son of Mr. Armond
Bedford Heights, Waxman and became a director of the Company in May 2003.
Ohio 44146
(800) 531-3342

Sharon Waxman c/o Sharon Waxman Ms. Sharon Waxman is the founder and CEO and Editor in
Waxman Industries Chief of The Wrap News, Inc., the leading multiplatform
24460 Aurora Road news and information network covering the entertainment
Bedford Heights, and media industries for the business of entertainment. Ms.
Ohio 44146 Waxman is the daughter of Melvin Waxman. She has over 20
(800) 531-3342 years of experience as a journalist, including a correspondent
for The New York Times and The Washington Post. She is
also the author of two books.
Gregg Waxman c/o Gregg Waxman Mr. Gregg Waxman has been in the purchasing department
Waxman Industries for the Company since 1988. Mr. Gregg Waxman is the son
24460 Aurora Road of Armond Waxman.
Bedford Heights,
Ohio 44146
(800) 531-3342

Shari Waxman c/o Shari Waxman Dr. Shari Goldstein is a post-doctoral clinical psychologist.
Waxman Industries She has worked at Williamsburg Therapy Group, Silver Hill
24460 Aurora Road Hospital and Bellevue Hospital. Dr. Shari Goldstein is the
Bedford Heights, daughter of Armond Waxman.
Ohio 44146
(800) 531-3342

Karen Polonsky c/o Karen Polonsky Karen Polonsky is presently pursuing higher education in
Waxman Industries language as she hopes to continue her work with the
24460 Aurora Road International community, using her love of the Spanish
Bedford Heights, language and love of humanity. Karen Polonsky had been
Ohio 44146 working at the nonprofit Esperanza as a family engagement
(800) 531-3342 specialist for the past 18 months and was previously the
director of CLL Creative Learning Institute of Dance where
she taught dance and fitness and choreographed for her
students and community performance for 15 years. She is
the daughter of Melvin Waxman.
Howard Amster Mr. Howard M. Amster is an owner and operator of multiple
real estate investments. Since March 1998, Mr. Amster has
served as President of Pleasant Lake Apts. Corp., the
corporate general partner of Pleasant Lake Apts. Limited
Partnership. He is also a Principal and Director at Ramat
Securities, a securities brokerage firm that has an ownership
interest in the Company. Mr. Amster also serves as a Board
of Director at Horizon Group Properties Inc. and was on the

57
 board of directors of several companies. Mr. Amster is not
related to any members of the Waxman family.

APPRAISAL RIGHTS

If the merger is completed, the Company’s stockholders will be entitled to appraisal

rights under Section 262 of the DGCL, provided that they comply with the conditions set forth in
that statute. Note all references in this section to common stock include both our common shares
and Class B shares.

Pursuant to Section 262 of the DGCL, if you do not wish to accept the merger
consideration provided for in the merger agreement, you have the right to seek appraisal of your
shares of our common stock and to receive payment in cash for the fair value of your shares of
our common stock, exclusive of any element of value arising from the accomplishment or
expectation of the merger, as determined by the Delaware Court of Chancery, together with
interest, if any, to be paid upon the amount determined to be fair value. The “fair value” of your
shares of our common stock as determined by the Delaware Court of Chancery may be less than,
equal to or more than the $1.87 per share that you are otherwise entitled to receive under the
terms of the merger agreement. These rights are known as appraisal rights. The Company’s
stockholders who do not vote in favor of the proposal to adopt the merger agreement and who
properly demand appraisal for their shares in compliance with the provisions of Section 262 of
the DGCL will be entitled to appraisal rights. Strict compliance with the statutory procedures set
forth in Section 262 of the DGCL is required. Failure to follow precisely any of the statutory
requirements will result in the loss of your appraisal rights.

This section is intended only as a brief summary of certain provisions of the statutory
procedures that a stockholder must follow under the DGCL in order to seek and perfect appraisal
rights. This summary, however, is not a complete statement of all applicable requirements and
the law pertaining to appraisal rights under the DGCL, and is qualified in its entirety by
reference to Section 262 of the DGCL, the full text of which appears in Annex C to this
information statement. The following summary does not constitute any legal or other advice, nor
does it constitute a recommendation that stockholders exercise their appraisal rights under
Section 262 of the DGCL.

Pursuant to Section 262 of the DGCL, when a merger agreement will be submitted for
adoption at a meeting of stockholders, the Company must notify the stockholders who were
stockholders of record on the record date for notice of such meeting, not less than 20 days before
the meeting to vote on the merger, that appraisal rights will be available. A copy of Section 262
of the DGCL must be included with the notice.

This information statement constitutes the Company’s notice to our stockholders that
appraisal rights are available in connection with the merger and the full text of Section 262 of the
DGCL is attached to this information statement as Annex C, in compliance with the
requirements of Section 262 of the DGCL. If you wish to exercise your appraisal rights, you
should carefully review the text of Section 262 of the DGCL contained in Annex C. Failure to
comply timely and properly with the requirements of Section 262 of the DGCL will result in the
loss of your appraisal rights. Moreover, because of the complexity of the procedures for
58
exercising the right to seek appraisal of shares of our common stock, the Company believes that
a stockholder considering the exercise of such rights should seek the advice of legal counsel.

If you wish to demand appraisal of your shares of our common stock, you must satisfy
each of the following conditions: You must deliver to the Company a written demand for
appraisal of your shares of our common stock before the vote is taken to approve the proposal to
adopt the merger agreement; the written demand must reasonably inform us of the identity of the
holder of record of shares of our common stock who intends to demand appraisal of his, her or
its shares of our common stock; and you must not vote or submit a proxy in favor of the proposal
to adopt the merger agreement.

If you fail to comply with either of these conditions and the merger is completed, you
will be entitled to receive payment for your shares of our common stock as provided in the
merger agreement, but you will not have appraisal rights with respect to your shares of our
common stock. A holder of shares of our common stock wishing to exercise appraisal rights
must hold of record the shares of our common stock on the date the written demand for appraisal
is made and must continue to hold the shares of our common stock of record through the
effective time of the merger. A proxy that is submitted and does not contain voting instructions
will, unless revoked, be voted “FOR” the proposal to adopt the merger agreement, and it will
result in the loss of the stockholder’s right of appraisal and will nullify any previously delivered
written demand for appraisal. Therefore, a stockholder who submits a proxy and who wishes to
exercise appraisal rights must either submit a proxy containing instructions to vote “AGAINST”
the proposal to adopt the merger agreement or “ABSTAIN” from voting on the proposal to adopt
the merger agreement. Voting against or failing to vote for the proposal to adopt the merger
agreement by itself does not constitute a demand for appraisal within the meaning of Section 262
of the DGCL. The written demand for appraisal must be in addition to and separate from any
proxy or vote on the proposal to adopt the merger agreement.

All demands for appraisal should be addressed to the Secretary at 24460 Aurora Road,
Bedford Heights, Ohio 44146 and must be delivered to the Company before the vote is taken to
approve the proposal to adopt the merger agreement at the special meeting, and must be executed
by, or on behalf of, the record holder of the shares of our common stock. The demand will be
sufficient if it reasonably informs the Company of the identity of the stockholder and the
intention of the stockholder to demand appraisal of the “fair value” of his, her or its shares of our
common stock. A stockholder’s failure to deliver to the Company the written demand for
appraisal prior to the taking of the vote on the proposal to adopt the merger agreement at the
special meeting of stockholders will result in the loss of appraisal rights.

Only a holder of record of shares of our common stock is entitled to demand an appraisal
of the shares registered in that holder’s name. Accordingly, to be effective, a demand for
appraisal by a holder of our common stock must be made by, or on behalf of, the record
stockholder. The demand should set forth, fully and correctly, the record stockholder’s name as it
appears on the stockholder’s stock certificate(s) or in the transfer agent’s records, and in the case
of uncertificated shares, should specify the stockholder’s mailing address and the number of
shares registered in the stockholder’s name. The demand must state that the person intends
thereby to demand appraisal of the stockholder’s shares in connection with the merger. The
demand cannot be made by the beneficial owner if he or she does not also hold the shares of our

59
common stock of record. The beneficial holder must, in such cases, have the registered owner,
such as a bank, brokerage firm or other nominee, submit the required demand in respect of those
shares of our common stock. If you hold your shares of our common stock through a bank,
brokerage firm or other nominee and you wish to exercise your appraisal rights, you should
consult with your bank, brokerage firm or the other nominee to determine the appropriate
procedures for the making of a demand for appraisal by the nominee and obtaining notice of the
effective date of the merger.

If shares of our common stock are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, execution of a demand for appraisal must be made in that
capacity. If the shares of our common stock are owned of record by more than one person, as in a
joint tenancy or tenancy in common, the demand must be executed by or for all joint owners. An
authorized agent, including an authorized agent for two or more joint owners, may execute the
demand for appraisal for a stockholder of record; however, the agent must identify the record
owner or owners and expressly disclose the fact that, in executing the demand, he or she is acting
as agent for the record owner or owners. A record owner, such as a bank, brokerage firm or other
nominee, who holds shares of our common stock as a nominee for others, may exercise his or her
right of appraisal with respect to shares of our common stock held for one or more beneficial
owners, while not exercising this right for other beneficial owners. In that case, the written
demand should state the number of shares of our common stock as to which appraisal is sought.
Where no number of shares of our common stock is expressly mentioned, the demand will be
presumed to cover all shares of our common stock held in the name of the record owner. If a
stockholder holds shares of our common stock through a broker who in turn holds the shares
through a central securities depository nominee such as Cede & Co., a demand for appraisal of
such shares must be made by or on behalf of the depository nominee and must identify the
depository nominee as record owner.

Within 10 days after the effective time of the merger, the surviving corporation in the
merger must give notice of the date that the merger became effective to each of the Company’s
record stockholders who has complied with Section 262 of the DGCL and who did not vote in
favor of the proposal to adopt the merger agreement. At any time within 60 days after the
effective time of the merger, any stockholder who has not commenced an appraisal proceeding
or joined a proceeding as a named party may withdraw the stockholder’s demand and accept the
merger consideration specified by the merger agreement for that holder’s shares of our common
stock by delivering to the surviving corporation a written withdrawal of the demand for
appraisal. However, any such attempt to withdraw the demand made more than 60 days after the
effective time of the merger will require written approval of the surviving corporation. No
appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder
without the approval of the Delaware Court of Chancery, with such approval conditioned upon
such terms as the Delaware Court of Chancery deems just. If the surviving corporation does not
approve a request to withdraw a demand for appraisal when that approval is required, or, except
with respect to any stockholder who withdraws such stockholder’s right to appraisal in
accordance with the proviso in the immediately preceding sentence, if the Delaware Court of
Chancery does not approve the dismissal of an appraisal proceeding, the stockholder will be
entitled to receive only the appraised value of his, her or its shares of our common stock
determined in any such appraisal proceeding, which value may be less than, equal to or more
than the merger consideration offered pursuant to the merger agreement.

60
 Within 120 days after the effective time of the merger, but not thereafter, either the
surviving corporation or any stockholder who has complied with the requirements of Section 262
of the DGCL and is entitled to appraisal rights under Section 262 of the DGCL may commence
an appraisal proceeding by filing a petition in the Delaware Court of Chancery demanding a
determination of the fair value of the shares of our common stock held by all such stockholders.
Upon the filing of the petition by a stockholder, service of a copy of such petition shall be made
upon the surviving corporation. The surviving corporation has no obligation to file such a
petition, has no present intention to file a petition and holders should not assume that the
surviving corporation will file a petition. Accordingly, it is the obligation of the holders of our
common stock to initiate all necessary petitions to perfect their appraisal rights in respect of
shares of our common stock within the time prescribed in Section 262 of the DGCL and the
failure of a stockholder to file such a petition within the period specified in Section 262 of the
DGCL could nullify the stockholder’s previous written demand for appraisal. In addition, within
120 days after the effective time of the merger, any stockholder who has properly complied with
the requirements of Section 262 of the DGCL and who did not vote in favor of the proposal to
adopt the merger agreement will be entitled to receive from the surviving corporation, upon
written request, a statement setting forth the aggregate number of shares of our common stock
not voted in favor of the proposal to adopt the merger agreement and with respect to which
demands for appraisal have been received and the aggregate number of holders of such shares.
The statement must be mailed within 10 days after such written request has been received by the
surviving corporation or within 10 days after the expiration of the period for delivery of demands
for appraisal, whichever is later. A person who is the beneficial owner of shares of our common
stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s
own name, file a petition for appraisal or request from the surviving corporation such statement.

If a petition for appraisal is duly filed by a stockholder and a copy of the petition is
delivered to the surviving corporation, then the surviving corporation will be obligated, within 20
days after receiving service of a copy of the petition, to file with the Delaware Register in
Chancery a duly verified list containing the names and addresses of all stockholders who have
demanded an appraisal of their shares of our common stock and with whom agreements as to the
value of their shares of our common stock have not been reached. After notice to stockholders
who have demanded appraisal from the Register in Chancery, if such notice is ordered by the
Delaware Court of Chancery, the Delaware Court of Chancery will conduct a hearing upon the
petition and determine those stockholders who have complied with Section 262 of the DGCL and
who have become entitled to the appraisal rights provided by Section 262 of the DGCL. The
Delaware Court of Chancery may require stockholders who have demanded payment for their
shares of our common stock to submit their stock certificates to the Register in Chancery for
notation of the pendency of the appraisal proceedings; if any stockholder fails to comply with
that direction, the Delaware Court of Chancery may dismiss the proceedings as to that
stockholder.

After determination of the stockholders entitled to appraisal of their shares of our

common stock, the Delaware Court of Chancery will appraise the shares of our common stock,
determining their fair value as of the effective time of the merger after taking into account all
relevant factors exclusive of any element of value arising from the accomplishment or
expectation of the merger, together with interest, if any, to be paid upon the amount determined
to be the fair value. When the fair value has been determined, the Delaware Court of Chancery

61
will direct the payment of such value upon surrender by those stockholders of the certificates
representing their shares of our common stock. Unless the Delaware Court of Chancery in its
discretion determines otherwise for good cause shown, interest from the effective date of the
merger through the date of payment of the judgment shall be compounded quarterly and shall
accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established
from time to time during the period between the effective time of the merger and the date of
payment of the judgment. At any time before the entry of judgment in the proceedings, the
surviving corporation may pay to each shareholder entitled to appraisal an amount in cash, in
which case interest shall accrue thereafter only upon the sum of (1) the difference, if any,
between the amount paid and the fair value of the shares as determined by the Delaware Court of
Chancery, and (2) interest theretofore accrued, unless paid at that time.

You should be aware that an investment banking opinion as to the fairness from a
financial point of view of the consideration to be received in a sale transaction, such as the
merger, is not an opinion as to fair value under Section 262 of the DGCL. Although we believe
that the merger consideration is fair, no representation is made as to the outcome of the appraisal
of fair value as determined by the Delaware Court of Chancery and stockholders should
recognize that such an appraisal could result in a determination of a value that may be less than,
equal to or more than the merger consideration. Moreover, we do not anticipate offering more
than the merger consideration to any stockholder exercising appraisal rights and reserve the right
to assert, in any appraisal proceeding, that, for purposes of Section 262 of the DGCL, the “fair
value” of a share of our common stock is less than the merger consideration. In determining “fair
value”, the Delaware Court of Chancery is required to take into account all relevant factors.
In Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that could be
considered in determining fair value in an appraisal proceeding, stating that “proof of value by
any techniques or methods which are generally considered acceptable in the financial community
and otherwise admissible in court” should be considered and that “[f]air price obviously requires
consideration of all relevant factors involving the value of a company”. The Delaware Supreme
Court has stated that in making this determination of fair value, the court must consider market
value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts
which could be ascertained as of the date of the merger which throw any light on future
prospects of the merged corporation. Section 262 of the DGCL provides that fair value is to be
“exclusive of any element of value arising from the accomplishment or expectation of the
merger”. In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such
exclusion is a “narrow exclusion [that] does not encompass known elements of value”, but which
rather applies only to the speculative elements of value arising from such accomplishment or
expectation. In Weinberger, the Delaware Supreme Court also stated that “elements of future
value, including the nature of the enterprise, which are known or susceptible of proof as of the
date of the merger and not the product of speculation, may be considered”.

Costs of the appraisal proceeding (which do not include attorneys’ fees or the fees and
expenses of experts) may be determined by the Delaware Court of Chancery and imposed upon
the surviving corporation and the stockholders participating in the appraisal proceeding by the
Delaware Court of Chancery, as it deems equitable in the circumstances. Upon the application of
a stockholder, the Delaware Court of Chancery may order all or a portion of the expenses
incurred by any stockholder in connection with the appraisal proceeding, including, without
limitation, reasonable attorneys’ fees and the fees and expenses of experts used in the appraisal

62
proceeding, to be charged pro rata against the value of all shares of our common stock entitled to
appraisal. Any stockholder who demanded appraisal rights will not, after the effective time of the
merger, be entitled to vote shares of our common stock subject to that demand for any purpose or
to receive payments of dividends or any other distribution with respect to those shares of our
common stock, other than with respect to payment as of a record date prior to the effective time
of the merger. If no petition for appraisal is filed within 120 days after the effective time of the
merger, or if the stockholder otherwise fails to perfect, successfully withdraws or loses such
holder’s right to appraisal, then the right of that stockholder to appraisal will cease and that
stockholder will be deemed to have been converted at the effective time of the merger into the
right to receive the $1.87 cash payment (without interest) for his, her or its shares of our common
stock pursuant to the merger agreement. Inasmuch as the Company has no obligation to file such
a petition, and the Company has no present intention to do so, any holder of shares of our
common stock who desires such a petition to be filed is advised to file it on a timely basis. A
stockholder will fail to perfect or effectively lose the right to appraisal if no petition for appraisal
is filed within 120 days after the effective date of the merger. In addition, as indicated above, a
stockholder may withdraw his, her or its demand for appraisal in accordance with Section 262 of
the DGCL and accept the merger consideration offered pursuant to the merger agreement.

Failure to comply strictly with all of the procedures set forth in Section 262 of the
DGCL will result in the loss of a stockholder’s statutory appraisal rights.

In view of the complexity of Section 262 of the DGCL, the Company’s stockholders
who may wish to pursue appraisal rights should consult their legal and financial advisors.

TRADING OF COMMON STOCK

If the merger is completed, our common stock will no longer trade on the over the
counter market.
OTHER MATTERS

As of the date of this information statement, the Board knows of no matters that will be
presented for consideration at the special meeting other than as described in this information
statement. The persons named as proxies will vote the proxies, insofar as they are not otherwise
instructed, regarding such other matters and the transaction of such other business as may be
properly brought before the meeting, as seems to them to be in the best interest of our company
and our stockholders.
HOUSEHOLDING

We and some brokers household proxy materials, delivering a single information

statement to multiple stockholders sharing an address unless contrary instructions have been
received from the affected stockholders.

Once you have received notice from your broker or us that they or we will be
householding materials to your address, householding will continue until you are notified
otherwise or until you revoke your consent. You may request to receive at any time a separate
copy of our information statement, by sending a written request to Mark Wester, Chief Financial

63
Officer, Waxman Industries, Inc., 24460 Aurora Road, Bedford Heights, Ohio 44146, or call 1-
800-531-3342 ext. 3552.

If, at any time, (1) you no longer wish to participate in householding and would prefer to
receive a separate information statement in the future or (2) you and another stockholder sharing
the same address wish to participate in householding and prefer to receive a single copy of our
information statement, please notify your broker if your shares are held in a brokerage account or
us if you hold registered shares. You can notify us by sending a written request to Mark Wester,
Chief Financial Officer, Waxman Industries, Inc., 24460 Aurora Road, Bedford Heights, Ohio
44146, or call 1-800-531-3342 ext. 3552.

WHERE YOU CAN FIND MORE INFORMATION

Statements contained in this Information Statement, or in any document referenced in this

Information Statement regarding the contents of any contract or other document, are not
necessarily complete and each such statement is qualified in its entirety by reference to that
contract or other document.

Any person, including any beneficial owner, to whom this Information Statement is
delivered may request copies of Information Statements and any of the documents referenced in
this document or other information concerning us, without charge, by contacting the Company
by telephone at 1-800-531-3342 ext. 3552, or by mail at the Company: 24460 Aurora Road,
Bedford Heights, Ohio 44146. Such documents are available without charge.

64
 Annex A

AGREEMENT AND PLAN OF MERGER

Agreement and Plan of Merger, dated January 16, 2018 (this “Agreement”), among
Waxman Holdings, Inc., a Delaware corporation (“Parent”), Waxman Merger Sub, Inc., a
Delaware corporation and a wholly owned Subsidiary of Parent (“Merger Sub”), and Waxman
Industries, Inc., a Delaware corporation (the “Company” and, together with Parent and Merger
Sub, the “Parties”).

RECITALS

A. As of the date hereof, the New Waxman Shareholders Beneficially Own, in the
aggregate, 715,743 Common Shares and 204,993 Class B Common Shares;

B. Concurrently with the execution and delivery of this Agreement, the New
Waxman Shareholders are entering into an agreement with Parent, dated the date of this
Agreement (the “Contribution Agreement”), providing for (i) the contribution to the Parent
immediately prior to the Effective Time of all of the Common Shares and Class B Common
Shares Beneficially Owned by the New Waxman Shareholders (except for 100,000 common
shares beneficially owned by Melvin Waxman) (the “Rolled Shares”) in exchange for the
corresponding number of shares of Common Stock and/or shares of Class B Common Stock in
the Parent, on the terms and subject to the conditions provided in the Contribution Agreement;

C. Concurrently with the execution and delivery of this Agreement, the New
Waxman Shareholders are entering into a Voting agreement in favor of the Company (the
“Voting Agreement”) with respect to certain obligations of Parent and Merger Sub under this
Agreement on the terms and subject to the conditions provided in the Voting Agreement, and
pursuant to which the New Waxman Shareholders agree to vote their Company Shares in favor
of the adoption of this Agreement;

D. The Parties intend that Merger Sub be merged with and into the Company (the
“Merger”), with the Company surviving the Merger, on the terms and subject to the conditions
set forth in this Agreement;

E. The Board of Directors of the Company (the “Company Board”) has

unanimously: (i) determined that the Merger is in the best interests of the Company and its
shareholders (other than the New Waxman Shareholders, Parent and Merger Sub), and declared
advisable that the Company enter into this Agreement, based in part on the fairness opinion dated
as of January 16 issued by Candlewood Partners LLC, (ii) approved the execution, delivery and
performance of this Agreement and the Transactions, and (iii) resolved to recommend adoption
of this Agreement by the shareholders of the Company;

F. The Board of Directors of Parent and Merger Sub have each unanimously
approved this Agreement and declared it advisable that Parent and Merger Sub, respectively,
enter into this Agreement; and
 G. Parent, Merger Sub and the Company desire to make certain representations,
warranties and covenants in connection with the Merger and the Transactions and also to
prescribe certain conditions to the Merger as specified herein.

NOW, THEREFORE, the Parties agree as follows:

I. THE MERGER

1.1 The Merger. At the Effective Time (as hereinafter defined), on the terms and
subject to the conditions set forth in this Agreement and in accordance with the Delaware
General Corporation Law (“DGCL”), Merger Sub will merge with and into the Company,
whereupon the separate corporate existence of Merger Sub will cease, and the Company will
continue as the surviving corporation in the Merger (the “Surviving Corporation”) and a wholly
owned Subsidiary of Parent.

1.2 Closing. The closing of the Merger (the “Closing”) will take place at the offices
of Benesch, Friedlander, Coplan & Aronoff, 200 Public Square, Suite 2300, Cleveland, Ohio
44114 at 10:00 a.m. on the third Business Day after the satisfaction or waiver of all of the
conditions set forth in Article VI (other than any condition that by its nature cannot be satisfied
until the Closing, but subject to satisfaction of any such condition) (such date, the “Closing
Date”), or at such other place, date and time as the Company and Parent may agree in writing.

1.3 Effective Time. On the Closing Date, the Parties will cause a certificate of
merger (the “Certificate of Merger”) to be executed, acknowledged and filed with the Secretary
of State of the State of Delaware in accordance with the relevant provisions of the DGCL. The
Merger will become effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware, or at such later date or time as may be agreed by
Parent and the Company in writing and specified in the Certificate of Merger in accordance with
the DGCL (such time as the Merger becomes effective, the “Effective Time”).

1.4 Effects of the Merger. The Merger will have the effects set forth in this
Agreement and in the applicable provisions of the DGCL. Without limiting the generality of the
foregoing, at the Effective Time, all the property, rights, privileges, immunities, powers,
franchises and authority of the Company and Merger Sub will vest in the Surviving Corporation
and all debts, liabilities and duties of the Company and Merger Sub will become the debts,
liabilities and duties of the Surviving Corporation.

1.5 Certificate of Incorporation and Bylaws of the Surviving Corporation. At the

Effective Time, the certificate of incorporation and bylaws of the Company, as in effect
immediately prior to the Effective Time, will be amended and restated as of the Effective Time
to be in the form of (except with respect to the name of the Company) the certificate of
incorporation and bylaws of Merger Sub, and as so amended will be the certificate of
incorporation and bylaws of the Surviving Corporation until thereafter amended as provided
therein or by applicable Law (and subject to Section 5.8 hereof).

1.6 Directors and Officers of the Surviving Corporation. The directors of the
Company immediately prior to the Effective Time will be the initial directors of the Surviving

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Corporation until such time as their resignations shall become effective as contemplated by
Section 5.10 or, in the case of any directors who do not submit resignations that are effective
immediately after the Effective Time, until their earlier death, resignation or removal, in
accordance with the certificate of incorporation and the bylaws of the Surviving Corporation.
The officers of the Company immediately prior to the Effective Time will be the initial officers
of the Surviving Corporation until their successors are duly elected or appointed and qualified or
until their earlier death, resignation or removal, in accordance with the certificate of
incorporation and the bylaws of the Surviving Corporation.

1.7 Subsequent Actions. If, at any time after the Effective Time, the Surviving
Corporation considers or is advised that any deeds, bills of sale, assignments, assurances or any
other actions or things are necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation, its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or Merger Sub vested in or to be vested in the
Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out
this Agreement, the officers and directors of the Surviving Corporation will execute and deliver,
in the name and on behalf of either the Company or Merger Sub, all such deeds, bills of sale,
assignments and assurances and take and do, in the name and on behalf of each of such
corporations or otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties
or assets in the Surviving Corporation or otherwise to carry out this Agreement.

II. CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES

2.1 Effect on Capital Stock. At the Effective Time, by virtue of the Merger and
without any action on the part of Parent, the Company, Merger Sub or the holders of any
securities of the Company or Merger Sub:

(a) Conversion of Company Shares. Subject to Sections 2.1(c), 2.1(e) and

2.1(f), each Company Share (other than any Cancelled Shares, any Dissenting Shares and
any Rolled Shares) will thereupon be converted automatically into and will thereafter
represent the right to receive $1.87 in cash, without interest for each Common Share and
$1.87 in cash, without interest for each Class B Common Share, (the “Merger
Consideration”). At the Effective Time, all Company Shares will be automatically
cancelled and will cease to exist, and subject to Section 2.1(f), the holders of certificates
which immediately prior to the Effective Time represented such Company Shares, and
holders of Book-Entry Shares, will cease to have any rights with respect to Company
Shares other than the right to receive the Merger Consideration.

(b) Rolled Shares. Each Rolled Share owned, directly or indirectly, by Parent
or the New Waxman Shareholders immediately prior to the Effective Time will, by virtue
of the Merger and without any action on the part of the holder thereof, be cancelled and
will cease to exist, and no consideration will be delivered in exchange for such
cancellation.

(c) Company and Merger Sub Owned Shares. Each Common Share and Class
B Common Share that is held by the Company or Merger Sub immediately prior to the
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Effective Time (the “Cancelled Shares”) will, by virtue of the Merger and without any
action on the part of the holder thereof, be cancelled and will cease to exist, and no
consideration will be delivered in exchange for such cancellation.

(d) Conversion of Merger Sub Common Shares. At the Effective Time, by

virtue of the Merger and without any action on the part of the holder thereof, (i) each
share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time will be converted into and become one hundred
validly issued, fully paid and nonassessable common shares, par value $0.01 per share of
the Surviving Corporation, and (ii) each share of Class B common stock, par value $0.01
per share, of Merger Sub issued and outstanding immediately prior to the Effective Time
will be converted into and become one hundred validly issued, fully paid and
nonassessable Class B common shares, par value $0.01 per share of the Surviving
Corporation and such shares will constitute the only outstanding capital shares of the
Surviving Corporation (the “Surviving Shares”). From and after the Effective Time, all
certificates representing the common shares of Merger Sub will be deemed for all
purposes to represent the number of common shares of the Surviving Corporation into
which they were converted in accordance with the immediately preceding sentence.

(e) Adjustments. If at any time during the period between the date of this
Agreement and the Effective Time, any change in the outstanding capital shares of the
Company, or securities convertible or exchangeable into or exercisable for capital shares
of the Company, shall occur as a result of any reclassification, recapitalization, stock split
(including a reverse stock split), subdivision or combination, exchange or readjustment of
shares, or any stock dividend or stock distribution with a record date during such period
(excluding, in each case, normal quarterly cash dividends), the Merger Consideration will
be equitably adjusted to reflect such change; provided, however, that nothing herein will
be construed to permit the Company to take any action with respect to its securities that is
prohibited or not expressly permitted by the terms of this Agreement.

(f) Dissenters’ Rights. Notwithstanding any provision of this Agreement to

the contrary and to the extent required by the DGCL, any Company Shares that are issued
and outstanding immediately prior to the Effective Time that are held by any shareholder
who was a record holder of Company Shares as to which such shareholder seeks relief as
of the date fixed for determination of shareholders entitled to notice of the Company
Meeting, and who delivers to the Company, in accordance with the DGCL (including
Section 262 of the DGCL), a written demand for payment of the fair cash value for such
Company Shares that have not been voted in favor of the proposal to adopt this
Agreement at the Company Meeting (the “Dissenting Shares”, and together with the
Cancelled Shares and the Rolled Shares, the “Excluded Shares”), will not be converted
into the right to receive the Merger Consideration, unless and until such holder of
Dissenting Shares fails to perfect or otherwise waives, withdraws or loses any such rights
as a dissenting shareholder under the DGCL. If a holder of Dissenting Shares fails to
perfect or otherwise waives, withdraws or loses any such rights as a dissenting
shareholder under the DGCL, then as of the Effective Time or the occurrence of such
event, whichever later occurs, such holder’s Company Shares will automatically be
converted into and represent only the right to receive the Merger Consideration, without
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interest, and will no longer be Excluded Shares. The Company will give Parent prompt
notice of, and copies of all correspondence from, each shareholder who asserts rights as a
dissenting shareholder following receipt of such shareholder’s written demand delivered
as provided in Section 262 of the DGCL. Prior to the Effective Time, the Company may
not, except with the prior written consent of Parent given or withheld in its sole
discretion, voluntarily make any payment or commit or agree to make any payment, or
settle or commit to offer to settle, any rights of a dissenting shareholder.

2.2 Exchange of Certificates.

(a) Paying Agent. Concurrently with the Effective Time, Parent will deposit,
or will cause to be deposited, with a U.S. bank or trust company appointed by Parent with
the Company’s prior approval (such approval not to be unreasonably withheld or
delayed) to act as a paying agent hereunder (the “Paying Agent”), in trust for the benefit
of holders of the Company Shares, cash in U.S. dollars in immediately available funds
sufficient to pay the aggregate Merger Consideration deliverable pursuant to this Article
II, payable upon due surrender of the certificates that immediately prior to the Effective
Time represented the Company Shares (“Certificates”) or non-certificated Company
Shares represented by book-entry (“Book-Entry Shares”) pursuant to the provisions of
this Article II (such cash being hereinafter referred to as the “Exchange Fund”). The
Paying Agent agreement pursuant to which Parent shall appoint the Paying Agent shall
be in form and substance reasonably acceptable to the Company.

(b) Payment Procedures.

(i) As soon as reasonably practicable after the Effective Time and in

any event not later than the third Business Day following the Effective Time, the
Paying Agent will mail to each holder of record of Company Shares whose
Company Shares were converted into the right to receive the Merger
Consideration pursuant to Section 2.1 (A) a letter of transmittal (which will
specify that delivery shall be effected, and risk of loss and title to Certificates
shall pass, only upon delivery of Certificates (or affidavits of loss in lieu of
Certificates as provided in Section 2.2(g)) or Book-Entry Shares to the Paying
Agent and shall be in such form and have such other provisions as Parent and the
Company shall reasonably determine) and (B) instructions for use in effecting the
surrender of Certificates (or affidavits of loss in lieu of Certificates as provided in
Section 2.2(g)) or Book-Entry Shares in exchange for the Merger Consideration.

(ii) Upon surrender of Certificates (or affidavits of loss in lieu of

Certificates as provided in Section 2.2(g)) or Book-Entry Shares to the Paying
Agent together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, and such other documents as
may customarily be required by the Paying Agent, the holder of such Certificates
or Book-Entry Shares will be entitled to receive in exchange therefor a payment
in an amount equal to the product of (x) the number of Company Shares formerly
represented by such holder’s properly surrendered Certificates (or affidavits of
loss in lieu of Certificates as provided in Section 2.2(g)) or Book-Entry Shares
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 multiplied by (y) the Merger Consideration. No interest will be paid or accrued
on any amount payable upon due surrender of Certificates or Book-Entry Shares.
In the event of a transfer of ownership of Company Shares that is not registered in
the transfer or stock records of the Company, the Merger Consideration to be paid
upon due surrender of the Certificate formerly representing such Company Shares
may be paid to such a transferee if such Certificate is presented to the Paying
Agent, accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable stock transfer or other Taxes have
been paid or are not applicable.

(iii) The Surviving Corporation, Parent and the Paying Agent will be
entitled to deduct and withhold from the consideration otherwise payable under
this Agreement to any holder of Company Shares such amounts as are required to
be withheld or deducted under the Internal Revenue Code of 1986, as amended
(the “Code”), or any provision of U.S. state or local or foreign Tax Law with
respect to the making of such payment. To the extent that amounts are so
withheld or deducted and paid over to the applicable Governmental Entity, such
withheld or deducted amounts will be treated for all purposes of this Agreement
as having been paid to the holder of the Company Shares in respect of which or
whom such deduction and withholding were made.

(c) Closing of Transfer Books. At the Effective Time, the stock transfer
books of the Company will be closed, and there will be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the Company Shares (other
than the Surviving Shares) that were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates (other than with respect to Surviving Shares) are
presented to the Surviving Corporation, Parent or the Paying Agent for transfer, they will
be cancelled and exchanged for payment in the proper amount pursuant to and subject to
the requirements of this Article II.

(d) Unclaimed Funds. Approximately four months after the Effective Time,
the Paying Agent may mail a follow-up letter to former holders of Company Shares who
have not surrendered their Certificates or Book-Entry Shares in accordance with this
Section 2.2. After the eight month anniversary of the Effective Time, the Paying Agent
may use the services of a stockholder locating service provider to facilitate the location
and contact of former holders of Company Shares who have not surrendered their
Certificates or Book-Entry Shares in accordance with this Section 2.2. Notwithstanding
the foregoing, the Paying Agent will report unclaimed property to each state in
compliance with state laws.

(e) No Liability. Notwithstanding anything herein to the contrary, none of the

Company, Parent, Merger Sub, the Surviving Corporation, the Paying Agent or any other
Person will be liable to any former holder of Company Shares for any amount properly
delivered to a public official pursuant to any applicable abandoned property, escheat or
similar Law.

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 (f) Investment of Exchange Fund. The Paying Agent will invest all cash
included in the Exchange Fund as directed by Parent; provided, however, that any
investment of such cash will be limited to direct short-term obligations of, or short-term
obligations fully guaranteed as to principal and interest by, the United States of America
in commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors Service,
Inc. or Standard & Poor’s Corporation, respectively, and, in any such case, no such
instrument will have a maturity exceeding three months, and that no such investment or
loss thereon will affect the amounts payable to holders of Certificates or Book-Entry
Shares pursuant to this Article II. Any interest and other income resulting from such
investments will be paid to the Surviving Corporation pursuant to Section 2.2(d). To the
extent that there are losses with respect to such investments, or the Exchange Fund
diminishes for other reasons below the level required to make prompt payments of the
Merger Consideration as contemplated hereby, Parent will promptly replace or restore the
portion of the Exchange Fund lost through investments or other events so as to ensure
that the Exchange Fund is, at all times, maintained at a level sufficient to make such
payments.

(g) Lost Certificates. In the case of any Certificate that has been lost, stolen
or destroyed, upon (i) the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed, (ii) if required by Parent or the Paying Agent,
the posting by such Person of an indemnity agreement or, at the election of Parent or the
Paying Agent, a bond in customary amount as indemnity against any claim that may be
made against it with respect to such Certificate and (iii) payment of a fee equal to 3.0% of
the value of the applicable Merger consideration plus an $80 processing fee, in each case,
as may reasonably be requested by Parent or the Paying Agent, the Paying Agent will pay
in exchange for such lost, stolen or destroyed Certificate the applicable Merger
Consideration with respect to the number of Company Shares formerly represented by
such lost, stolen or destroyed Certificate.

III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as disclosed in the disclosure schedule delivered by the Company to Parent (the
“Company Disclosure Schedule”) prior to the execution of this Agreement (with specific
reference to the representations and warranties in this Article III to which the information in such
schedule relates, provided that any disclosure set forth in any section of the Company Disclosure
Schedule will be deemed set forth for purposes of any other section to the extent that it is
reasonably apparent that such disclosure is relevant to such other section), the Company
represents and warrants to Parent and Merger Sub as follows:

3.1 Qualification, Organization, Subsidiaries, etc.

(a) The Company and each of its Subsidiaries is a corporation, limited

liability company or other legal entity duly organized, validly existing and in good
standing under the Laws of its respective jurisdiction of incorporation or organization.
Each of the Company and its Subsidiaries has the requisite corporate or similar power
and authority to own, lease and operate its properties and assets and to carry on its
business as presently conducted. Each of the Company and its Subsidiaries is duly
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qualified to do business or licensed to do business as a foreign corporation, limited
liability company or other legal entity and is in good standing (with respect to
jurisdictions that recognize the concept of good standing) in each jurisdiction where the
ownership, leasing or operation of its assets or properties or conduct of its business
requires such qualification, except where the failure to be so qualified or in good standing
has not had and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.

(b) The Company has delivered or made available to Parent a true and correct
copy of the certificate of incorporation, bylaws or similar organizational documents, each
as amended to date (collectively, the “Charter Documents”), of the Company and each
of its Subsidiaries.

3.2 Capital Stock.

(a) The authorized capital stock of the Company consists of 8,000,000

Common Shares and 1,500,000 Class B Common Shares. As of January 16, 2018,
(i) 1,110,531 Common Shares were issued and outstanding, (ii) 210,266 Class B
Common Shares were issued and outstanding, and (iii) no Common Shares or Class B
Common Shares are held in treasury. All outstanding Company Shares are duly
authorized, validly issued, fully paid and non-assessable and free of preemptive rights
and issued in compliance with all applicable securities Laws.

(b) Except as otherwise provided in Section 3.2(a), there are not issued,
reserved for issuance or outstanding (i) any shares of capital stock or other voting
securities of the Company, (ii) any securities convertible into or exchangeable or
exercisable for shares of capital stock or voting securities of the Company or any of its
Subsidiaries, or (iii) any warrants, calls, options or other rights to acquire from the
Company or any of its Subsidiaries any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock or voting securities of
the Company or any of its Subsidiaries. Except as otherwise provided in Section 3.2(a)
above, there are no outstanding obligations of the Company or any of its Subsidiaries to
(A) issue, deliver or sell, or cause to be issued, delivered or sold, any capital stock, voting
securities or securities convertible into or exchangeable or exercisable for capital stock or
voting securities of the Company or any of its Subsidiaries or (B) repurchase, redeem or
otherwise acquire any such securities.

(c) Neither the Company nor any of its Subsidiaries has outstanding bonds,
debentures, notes or other obligations, the holders of which have the right to vote (or
which are convertible into or exercisable for securities having the right to vote) with the
shareholders of the Company on any matter.

(d) There are no shareholder agreements, voting trusts or other agreements or

understandings to which the Company or any of its Subsidiaries is a party with respect to
the voting of the capital stock or other equity interest of the Company or any of its
Subsidiaries.

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 (e) Section 3.2(e) of the Company Disclosure Schedule sets forth a complete
and correct list of each Subsidiary of the Company. All equity interests (including
partnership interests and limited liability company interests) of the Company’s
Subsidiaries are beneficially owned, directly or indirectly, by the Company as described
in Section 3.2(e) of the Company Disclosure Schedule, and all such interests have been
duly and validly authorized and were validly issued, fully paid and non-assessable and
were not issued in violation of any preemptive or similar rights, purchase option, call or
right of first refusal or similar rights. All such equity interests are free and clear of any
Liens or any other limitations or restrictions on such equity interests (including any
limitation or restriction on the right to vote, pledge or sell or otherwise dispose of such
equity interests).

3.3 Corporate Authority Relative to This Agreement; Noncontravention.

(a) The Company has the requisite corporate power and authority to enter into
this Agreement and, subject to receipt of the Company Shareholder Approval, to
consummate the Transactions. The execution and delivery of this Agreement and the
consummation of the Transactions have been duly and validly authorized by the
Company Board and, except for the Company Shareholder Approval, no other corporate
proceedings on the part of the Company are necessary to authorize the consummation of
the Transactions. The Company Board has unanimously determined that this Agreement
is in the best interests of the Company and its shareholders (other than the New Waxman
Shareholders, Parent and Merger Sub) and declared it advisable to enter into this
Agreement, has approved this Agreement, and has resolved to recommend that the
Company’s shareholders adopt this Agreement (the “Recommendation”). This
Agreement has been duly and validly executed and delivered by the Company and,
assuming this Agreement constitutes the valid and binding agreement of Parent and
Merger Sub, constitutes the valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar Laws of general applicability
relating to or affecting creditors’ rights and to general equity principles (the “Bankruptcy
and Equity Exception”).

(b) Other than in connection with or in compliance with the DGCL or as may
otherwise be set forth in Section 3.3(b) of the Company Disclosure Schedule
(collectively, the “Company Approvals”), no authorization, consent or approval of, or
filing with, any United States or foreign governmental or regulatory agency, commission,
court, body, entity or authority (each, a “Governmental Entity”) is necessary for the
consummation by the Company of the Merger in accordance with applicable Law, other
than any authorizations, consents, approvals or filings that, if not obtained, made or
given, would not reasonably be expected to be material to the Company and its
Subsidiaries, taken as a whole, or prevent or materially impair or delay the consummation
of the Merger.

(c) The execution and delivery by the Company of this Agreement does not,
and the consummation of the Transactions and compliance with the provisions hereof by
the Company will not, (i) conflict with or result in any violation of any provision of the
A-9
 Charter Documents of (A) the Company or (B) any of its Subsidiaries or (ii) assuming
that the authorizations, consents and approvals referred to in Section 3.3(b) and the
Company Shareholder Approval are obtained and the filings referred to in Section 3.3(b)
are made, (x) result in any violation of, or default (with or without notice or lapse of time,
or both) under, require consent under, or give rise to a right of termination, cancellation
or acceleration of any obligation or to the loss of any benefit under, any loan, guarantee
of indebtedness or credit agreement, note, bond, mortgage, indenture, lease, agreement,
contract, instrument, permit, Company Permit, concession, franchise, right or license
binding upon the Company or any of its Subsidiaries, (y) result in the creation of any
liens, claims, mortgages, encumbrances, pledges, security interests, equities or charges of
any kind (each, a “Lien”), upon any of the properties or assets of the Company or any of
its Subsidiaries or (z) conflict with or violate any applicable Laws, other than, in the case
of clauses (i)(B) and (ii), any such violation, conflict, default, termination, cancellation,
acceleration, right, loss or Lien that has not had and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.

3.4 Reports and Financial Statements. Schedule 3.4 contains true, correct and
complete copies of the following financial statements (the “Financial Statements”): (A) the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of September 30,
2017 and the related unaudited consolidated statements of operations, stockholders’ equity and
cash flows for the three-month period then ended (the “Unaudited Financial Statements”); and
(B) the audited consolidated balance sheet of the Company and its Subsidiaries as of the years
ended June 30, 2017 and June 30, 2016 and the related consolidated statements of operations,
stockholders’ equity and cash flows, together with the notes and schedules thereto (the “Audited
Financial Statements”). The consolidated balance sheets included in the Financial Statements
fairly present, in all material respects, the financial position of the Company and its Subsidiaries
as of their respective dates, and the related consolidated statements of operations, stockholders’
equity and cash flows of the Company and its Subsidiaries included in the Financial Statements
fairly present, in all material respects, the results of their operations and cash flows for the
periods indicated, in each case, in accordance with generally accepted accounting principles in
the United States (“GAAP”) consistently applied in all material respects, with only such
deviations from such accounting principles or their consistent application as are referred to in the
notes to the Financial Statements or otherwise therein and subject, in the case of the Unaudited
Financial Statements, to normal and recurring year-end audit adjustments and the absence of
notes. The Financial Statements, including the footnotes thereto, have been prepared from the
books and records of the Company and its Subsidiaries.

3.5 No Undisclosed Liabilities. Except (i) as reflected or reserved against in the

Company’s Financial Statements (or the notes thereto), (ii) for the Merger and the other
transactions contemplated by this Agreement, (iii) for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since June 30, 2017, and (iv) for
liabilities or obligations which have been discharged or paid in full in the ordinary course of
business, neither the Company nor any Subsidiary of the Company has any liabilities that would
be required to be reflected or reserved against on the Company’s consolidated statement of
financial position (or described in the notes thereto) prepared in accordance with GAAP, that

A-10
have had or would reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.

3.6 Compliance with Law; Permits.

(a) The Company and its Subsidiaries are, and since June 30, 2015 have
been, in compliance with and are not in default under or in violation of any applicable
federal, state, local or foreign law, statute, ordinance, rule, regulation, judgment, order,
injunction, decree or agency requirement of or undertaking to or agreement with any
Governmental Entity (collectively, “Laws” and each, a “Law”), except where such non-
compliance, default or violation has not had and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.

(b) The Company and its Subsidiaries are in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity legally required for the
Company and its Subsidiaries to own, lease and operate their properties and assets or to
carry on their businesses as they are now being conducted (the “Company Permits”),
except where the failure to have any of the Company Permits has not had and would not
reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect. All Company Permits are in full force and effect, except where the
failure to be in full force and effect has not had and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. No
suspension or cancellation of any of the Company Permits is pending or, to the
Company’s Knowledge, threatened, except where such suspension or cancellation has not
had and would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. The Company and its Subsidiaries are not in
violation or breach of, or default under, any Company Permit, except where such
violation, breach or default has not had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.

3.7 Environmental Laws and Regulations. Except as has not had and would not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect, (i) the Company and each of its Subsidiaries have conducted their respective businesses
in compliance with all applicable Environmental Laws (as hereinafter defined), (ii) no
Hazardous Substance has been disposed of, released or transported in violation of any applicable
Environmental Law, or in a manner giving rise to any liability under Environmental Law
(including remedial obligations and corrective action requirements), by the Company or any of
its Subsidiaries or from any properties owned by the Company or any of its Subsidiaries as a
result of any activity of the Company or any of its Subsidiaries, and (iii) neither the Company, its
Subsidiaries nor any of their respective properties are, or, to the Company’s Knowledge,
threatened to become, subject to any liabilities relating to any suit, settlement, court order,
administrative order, regulatory requirement, judgment or written claim asserted or arising under
any applicable Environmental Law or any agreement relating to environmental liabilities.
Notwithstanding any other representation or warranty in this Article III, the representations and
warranties in this Section 3.7 constitute the sole representations and warranties relating to any
Environmental Law or Hazardous Substances.
A-11
3.8 Employee Benefit Plans.

(a) Except for such claims which have not had or would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect,
no action, dispute, suit, claim, arbitration or legal, administrative or other proceeding or
governmental action (other than claims for benefits in the ordinary course) is pending or,
to the Company’s Knowledge, threatened with respect to any Company Benefit Plan.

(b) Each Company Benefit Plan has been maintained and administered in
compliance with its terms and with applicable Law, including ERISA and the Code to the
extent applicable thereto, except for such non-compliance which has not had and would
not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect. Any Company Benefit Plan intended to be qualified under
Section 401(a) or 401(k) of the Code has received a favorable determination letter from
the IRS which has not been revoked and, to the Company’s Knowledge, no
circumstances exist which could adversely affect such qualification.

(c) Neither the Company nor any member of the Controlled Group has any
actual or potential liability with respect to a “defined benefit plan” as defined in
Section 3(35) of ERISA, a pension plan subject to the funding standards of Section 302
of ERISA or Section 412 of the Code, a “multiemployer plan” as defined in Section 3(37)
of ERISA or Section 414(f) of the Code or a “multiple employer plan” within the
meaning of Section 210(a) of ERISA or Section 413(c) of the Code.

(d) Except as set forth on Schedule 3.8, the execution and performance of this
Agreement will not (i) constitute an event under any Company Benefit Plan that will
result in any payment (whether of severance pay or otherwise) becoming due from the
Company to any current or former officer, employee, director or consultant (or
dependents of such Persons) or (ii) accelerate the time of payment or vesting, or
materially increase the amount of compensation due to any current or former officer,
employee, director or consultant (or dependents of such Persons) of the Company.

(e) No amount that could be received (whether in cash or property or the

vesting of property) as a result of the Transactions by any employee, officer or director of
the Company or any of its affiliates who is a “disqualified individual” (as such term is
defined in Treasury Regulation Section 1.280G-1) under any employment, severance or
termination agreement, other compensation arrangement or Company Benefit Plan
currently in effect would be characterized as an “excess parachute payment” (as such
term is defined in Section 280G(b)(1) of the Code).

(f) Each Company Benefit Plan that is a “nonqualified deferred compensation

plan” (as such term is defined in Section 409A(d)(1) of the Code) is in material
documentary compliance with and has been operated in material compliance with
Section 409A of the Code or, for the period prior to January 1, 2009, had been operated
in good faith compliance with Section 409A of the Code.

A-12
 3.9 Absence of Certain Changes or Events. Since June 30, 2017, except as otherwise
required or contemplated by this Agreement, the businesses of the Company and its Subsidiaries
have been conducted, in all material respects, in the ordinary course of business consistent with
past practice. Since June 30, 2017 through the date of this Agreement, there have not been any
facts, circumstances, events, changes, effects or occurrences that have had or would reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

3.10 Investigations; Litigation. There are no (i) investigations or proceedings pending

(or, to the Company’s Knowledge, threatened) by any Governmental Entity with respect to the
Company or any of its Subsidiaries or (ii) actions, suits, inquiries, investigations or proceedings
pending (or, to the Company’s Knowledge, threatened) against or affecting the Company or any
of its Subsidiaries, or any of their respective properties at law or in equity before, and there are
no orders, judgments or decrees of, any Governmental Entity against the Company or any of its
Subsidiaries, in each case of clause (i) or (ii), which have had or would reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.

3.11 Information Statement; Other Information. The Information Statement (as

hereinafter defined) will not at the time of the mailing of the Information Statement to the
shareholders of the Company, at the time of the Company Meeting, and at the time of any
amendments thereof or supplements thereto, will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were made, not
misleading; except that no representation is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by or on behalf of
Parent or Merger Sub (including with respect to any of the New Waxman Shareholders, other
than solely with respect to any such Person’s capacity as an officer or director of the Company).
The letter to shareholders, notice of meeting, information statement and forms of proxy to be
distributed to shareholders in connection with the Merger are collectively referred to herein as
the “Information Statement.”

3.12 Material Contracts.

(a) As of the date of this Agreement, except as set forth on Schedule 3.12 of
the Company Disclosure Schedule neither the Company nor any of its Subsidiaries is a
party to or is bound by any Contract (i) which is a “material contract” (as such term is
defined in Item 601(b)(10) of Regulation S-K), (ii) which contains covenants that
materially limit the ability of the Company, any of its Subsidiaries or any of its current or
future Affiliates to compete in any business or with any Person or in any geographic area
or distribution or sales channel, or to sell, supply or distribute any service or product,
(iii) for or relating to indebtedness for borrowed money or obligations reflected as
indebtedness on the Company’s Financial Statements, in each case for or relating to an
obligation to any Person other than the Company or any of its Subsidiaries, exceeding
$100,000 at any one time outstanding, or under which the Company or any of its
Subsidiaries has made advances or loans to any other Person (other than the Company or
any of its Subsidiaries) other than advances made to employees with respect to business
expenses in the ordinary course of business, or which grants any Liens (other than
Permitted Liens) on any property or asset of the Company or any of its Subsidiaries and
A-13
 other than trade payables, advances to customers under customer contracts and other
accrued liabilities made or incurred in the ordinary course of business or (iv) concerning
the use or licensing of any Company Intellectual Property and is material to the conduct
of the business of the Company and its Subsidiaries taken as a whole (each, a “Company
Material Contract”).

(b) (i) Each Company Material Contract is valid and binding on the Company
and/or its Subsidiaries, as applicable, and in full force and effect (subject to the
Bankruptcy and Equity Exception) relative to the Company or its applicable Subsidiary
and, to the Company’s Knowledge, is in full force and effect (subject to the Bankruptcy
and Equity Exception) relative to the other party thereto, except where the failure to be
valid, binding and in full force and effect has not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect,
(ii) the Company and each of its Subsidiaries has in all material respects performed all
obligations required to be performed by it to date under each Company Material Contract,
and (iii) neither the Company nor any of its Subsidiaries has received notice of or, to the
Company’s Knowledge, is aware of any event or condition which constitutes, or, after
notice or lapse of time or both, will constitute, a default on the part of the Company or
any of its Subsidiaries under any such Company Material Contract, except where such
default has not had and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.

3.13 Tax Matters. Except as has not had and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, (i) the Company and
each of its Subsidiaries have prepared and timely filed (taking into account any extension of time
within which to file) all Tax Returns required to be filed by any of them and all such Tax Returns
are complete and accurate, (ii) the Company and each of its Subsidiaries have timely paid all
Taxes that are required to be paid by any of them, except with respect to matters contested in
good faith and for which adequate reserves have been established on the Financial Statements of
the Company and its Subsidiaries in accordance with GAAP, (iii) as of the date hereof, there are
not pending or, to the Company’s Knowledge, threatened, any audits, examinations,
investigations or other proceedings in respect of Taxes of the Company or any of its Subsidiaries,
(iv) there are no Liens for Taxes on any of the assets of the Company or any of its Subsidiaries
other than Permitted Liens, and (v) the Company has not been a “controlled corporation” or a
“distributing corporation” in any distribution occurring during the two-year period ending on the
date hereof that was purported or intended to be governed by Section 355 of the Code (or any
similar provision of state, local or foreign Law).

3.14 Labor Matters. Neither the Company nor any of its Subsidiaries is party to, bound
by, or in the process of negotiating a collective bargaining agreement, work rules or practices or
similar labor-related agreement with any labor union, labor organization or works council.
Except for such matters which have not had or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, (i) as of the date hereof,
there are no pending strikes or lockouts with respect to any employees of the Company or any of
its Subsidiaries (“Employees”), (ii) to the Knowledge of the Company, as of the date hereof,
there is no union organizing effort pending or threatened against the Company or any of its
Subsidiaries, (iii) there is no unfair labor practice, labor dispute or labor arbitration proceeding
A-14
pending or, to the Company’s Knowledge, threatened against the Company or any of its
Subsidiaries, (iv) as of the date hereof, there is no slowdown, or work stoppage pending or, to the
Company’s Knowledge, threatened with respect to Employees, and (v) the Company and its
Subsidiaries are in compliance with all applicable Laws respecting employment and employment
practices, terms and conditions of employment and wages and hours and unfair labor practices.
Except for such matters which have not had or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, neither the Company nor
any of its Subsidiaries has any liabilities under the Worker Adjustment and Retraining Act of
1998. Except for such matters which have not had and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, each individual who
renders or has rendered services to the Company or any of its Subsidiaries and who is not or has
not been classified by the Company or any of its Subsidiaries as an employee and paid on one of
their respective payrolls has, to the Company’s Knowledge, at all times been properly
characterized as to his or her relationship to the Company or any of its Subsidiaries to the extent
that any erroneous classification would not reasonably be anticipated to result in the failure to
satisfy any qualification requirement with respect to any Company Benefit Plan, a violation of
ERISA, the imposition of penalties or excise taxes with respect to any Company Benefit Plan, or
result in any other liability to the Company or any of its Subsidiaries.

3.15 Real and Personal Property. Except as has not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect, the
Company or a Subsidiary of the Company owns and has good and valid title to all of its owned
real property and good title to all of its personal property and has valid leasehold interests under
enforceable leases in all of its leased properties, in the case of each of the foregoing, free and
clear of all Liens (except for Permitted Liens). Except as has not had and would not reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect, all
leases under which the Company or any of its Subsidiaries lease any real or personal property are
valid and effective against the Company or any of its Subsidiaries and the counterparties thereto,
in accordance with their respective terms, and there is not, under any of such leases, any existing
default by the Company or any of its Subsidiaries or the counterparties thereto, or event which,
with notice or lapse of time or both, would become a default by the Company or any of its
Subsidiaries or the counterparties thereto.

3.16 Company Intellectual Property.

(a) Except as has not had and would not reasonably be expected to have
(individually or in the aggregate) a Company Material Adverse Effect, (i) the Company
or one of its Subsidiaries owns, or has a right or license to use, the Company Intellectual
Property necessary for the operation of their respective businesses as currently conducted,
(ii) neither the Company nor any of its Subsidiaries has received any written claim from
any third party contesting the validity, enforceability, use or ownership of any of the
Company Intellectual Property that is currently unresolved and outstanding or, to the
Knowledge of the Company, has any such claim been threatened, (iii) neither the
Company nor any of its Subsidiaries has received any written notices of infringement or
misappropriation by any third party with respect to the Company Intellectual Property,
and (iv) to the Knowledge of the Company, neither the Company nor any of its

A-15
 Subsidiaries has infringed or misappropriated any intellectual property rights of any third
parties.

(b) Except as would not reasonably be expected to have a Company Material

Adverse Effect, (i) the Transactions will not affect the right, title and interest of the
Company and its Subsidiaries in and to the Company Intellectual Property and (ii) the
Company or one of its Subsidiaries, as the case may be, has taken reasonable steps to
maintain and protect the value of the Company Intellectual Property owned by the
Company or such Subsidiary.

3.17 Insurance. Except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, the Company and its
Subsidiaries maintain, or are entitled to the benefits of, insurance covering their properties,
operations, personnel and businesses against such losses and risks customarily insured against by
companies in similar lines of business as the Company and its Subsidiaries and in amounts as are
reasonably adequate to protect them and their businesses. None of the Company or its
Subsidiaries has received notice from any insurer or agent of such insurer that substantial capital
improvements or other expenditures will have to be made in order to continue such insurance,
and all such insurance is outstanding and duly in force on the date hereof and, to the Company’s
Knowledge, will be outstanding and duly in force on the Closing Date.

3.18 Opinion of Financial Advisor. The Company Board has received the opinion of
Candlewood Partners LLC (the “Financial Advisor”) dated January 16, 2018 that based on, and
subject to, the assumptions, qualifications and limitations set forth therein, the Merger
Consideration to be received by holders of Company Shares (other than the New Waxman
Shareholders, Parent, Merger Sub and the holders of Dissenting Shares) in connection with the
Merger is fair from a from a financial point of view to such holders. A true, complete and
executed copy thereof has been delivered to Parent. It is agreed and understood that such
opinion is for the information of the Company Board and may not be relied on by Parent or
Merger Sub

3.19 Required Vote of the Company Shareholders Under Applicable Law. The
affirmative vote of the holders of issued and outstanding Common Shares and Class B Common
Shares, voting together as a single class, representing at least a majority of all the votes entitled
to be cast thereupon by holders of Common Shares and Class B Common Shares is the only vote
of holders of securities of the Company that is required to adopt this Agreement under applicable
Law and the Company’s governing documents (the “Company Shareholder Approval”).

3.20 Finders or Brokers. Except for the Financial Advisor and as set forth on Schedule
3.20, neither the Company nor any of its Subsidiaries has engaged any investment banker, broker
or finder in connection with the Merger that might be entitled to any fee or any commission in
connection with or upon consummation of the Merger.

3.21 State Takeover Statutes; Rights Agreement. The Company Board and the
Company have taken all necessary actions to ensure that the “moratorium,” “fair price,” “control
share acquisition” or other similar anti-takeover provisions of DGCL or similar Laws of any
jurisdiction and any anti-takeover or similar provisions contained in the governing documents of
A-16
the Company or any of its Subsidiaries do not, and will not, apply to the Transactions. The
Company is not party to a rights agreement, “poison pill” or similar agreement or plan that
would have the effect of preventing the Transactions.

3.22 No Other Representations or Warranties. Except for the representations and

warranties made by the Company in this Article III, none of the Company, any of its Subsidiaries
or any other Person makes any representations or warranties, and the Company hereby disclaims
any other representations or warranties, with respect to the Company, its Subsidiaries, or its or
their businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects or
the negotiation, execution, delivery or performance of this Agreement by the Company. None of
the Company, any of its Subsidiaries, or any other Person, will have or be subject to any liability
or indemnification obligation to Parent or Merger Sub resulting from the delivery or disclosure to
Parent or its Affiliates or representatives of any documentation, forecasts or other information
with respect to any one or more of the foregoing, and each of Parent and Merger Sub
acknowledge the foregoing.

IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Except as disclosed in the disclosure schedule delivered by Parent to the Company (the
“Parent Disclosure Schedule”) prior to the execution of this Agreement (with specific reference
to the representations and warranties in this Article IV to which the information in such schedule
relates, provided that any disclosure set forth in any section of the Parent Disclosure Schedule
will be deemed set forth for purposes of any other section to the extent that it is reasonably
apparent that such disclosure is relevant to such other section), Parent and Merger Sub represent
and warrant to the Company as follows:

4.1 Qualification; Organization. Each of Parent and Merger Sub is a legal entity duly
organized, validly existing and in good standing under the Laws of its respective jurisdiction of
organization and has the requisite corporate, limited liability company or similar power and
authority to own, lease and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a foreign
corporation or limited liability company, as applicable, in each jurisdiction where the ownership,
leasing or operation of its assets or properties or conduct of its business requires such
qualification, except where the failure to be so organized, validly existing, qualified or in good
standing, or to have such power or authority, would not, individually or in the aggregate, prevent
or materially delay or materially impair the ability of Parent or Merger Sub to consummate the
Merger and the other transactions contemplated hereby (a “Parent Material Adverse Effect”).
Parent has made available to the Company true and correct copies of the certificate of
incorporation, bylaws or similar organizational documents, each as amended to date, of Parent
and Merger Sub.

4.2 Corporate Authority Relative to this Agreement; Noncontravention.

(a) Each of Parent and Merger Sub has the requisite corporate power and
authority to enter into this Agreement and, in the case of Parent and Merger Sub, to
consummate the transactions contemplated hereby. The execution and delivery of this
Agreement, in the case of Parent and Merger Sub, and the consummation of the
A-17
 transactions contemplated hereby, in the case of Parent and Merger Sub, have been duly
and validly authorized by the Boards of Directors of Parent and Merger Sub, as
applicable, and, except for the adoption of this Agreement by Parent as sole shareholder
of Merger Sub (which will occur immediately after the execution and delivery of this
Agreement), no other corporate or equivalent proceedings on the part of Parent or Merger
Sub are necessary to authorize the consummation of the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by Parent and
Merger Sub and, assuming this Agreement constitutes the valid and binding agreement of
the Company, this Agreement constitutes the valid and binding agreement of Parent and
Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its
terms, subject to the Bankruptcy and Equity Exception.

(b) Other than in connection with or in compliance with the DGCL or as may
otherwise be set forth in Section 4.2(b) of the Parent Disclosure Schedule (collectively,
the “Parent Approvals”), no authorization, consent or approval of, or filing with, any
Governmental Entity is necessary for the consummation by Parent or Merger Sub of the
transactions contemplated by this Agreement in accordance with applicable Law, other
than any authorizations, consents or approvals or filings that, if not obtained, made or
given, would not reasonably be expected to have a Parent Material Adverse Effect.

(c) The execution and delivery by Parent and Merger Sub of this Agreement
does not, and, in the case of Parent and Merger Sub, the consummation of the
transactions contemplated hereby and compliance with the provisions hereof will not
(i) conflict with or result in any violation of any provision of the certificate of
incorporation or by-laws or other equivalent organizational document, in each case as
amended, of (A) Parent, or (B) any Subsidiaries of Parent, or (ii) assuming that the
authorizations, consents and approvals referred to in Section 4.2(b) are obtained and the
filings referred to in Section 4.2(b) are made, (x) result in any violation of, or default
(with or without notice or lapse of time, or both) under, require consent under, or give
rise to a right of termination, cancellation or acceleration of any obligation or to the loss
of any benefit under any loan, guarantee of indebtedness or credit agreement, note, bond,
mortgage, indenture, lease, agreement, contract, instrument, permit, concession,
franchise, right or license binding upon Parent or any of its Subsidiaries, (y) result in the
creation of any Lien upon any of the properties or assets of Parent or any of its
Subsidiaries or (z) conflict with or violate any applicable Laws, other than, in the case of
clauses (i)(C) and (ii), any such violation, conflict, default, termination, cancellation,
acceleration, right, loss or Lien that has not had and would not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect.

4.3 Information Statement; Other Information. None of the information supplied or

to be supplied by Parent or Merger Sub in writing for inclusion or incorporation by reference in
the Information Statement will at the time of the mailing of the Information Statement to the
shareholders of the Company, at the time of the Company Meeting, and at the time of any
amendments thereof or supplements thereto, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in order to make the
statements therein, at the time and in light of the circumstances under which they were made, not
misleading.
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 4.4 Rollover Agreement. Parent has delivered to the Company, as of the date hereof a
true, accurate and complete copy of the executed Contribution Agreement executed by Parent
and the New Waxman Shareholders. The Contribution Agreement is in full force and effect and
is a legal, valid and binding obligation of Parent and the New Waxman Shareholders. It has not
been withdrawn or terminated or otherwise amended or modified in any respect, and no
withdrawal, termination, amendment or modification is contemplated. No event has occurred
which, with or without notice, lapse of time or both, would or would reasonably be expected to
constitute a default or breach on the part of Parent or the New Waxman Shareholders under the
Contribution Agreement. There are no conditions precedent or other contingencies related to the
obligations of the New Waxman Shareholders under the Contribution Agreement to contribute to
Parent prior to the Effective Time all of the Rolled Shares, other than as expressly set forth in or
expressly contemplated by the Contribution Agreement.

4.5 Voting Agreement. Concurrently with the execution of this Agreement, Parent
has delivered to the Company the duly executed Voting Agreement. The Voting Agreement is in
full force and effect and is the legal, valid, binding and enforceable obligation of each New
Waxman Shareholder, subject to the Bankruptcy and Equity Exception. No event has occurred
which, with or without notice, lapse of time or both, would constitute a default on the part of any
New Waxman Shareholder under such Voting Agreement.

4.6 Finders or Brokers; Payments.

(a) As of the date of this Agreement, neither the Parent nor Merger Sub has
engaged any investment banker, broker or finder in connection with the transactions
contemplated by this Agreement who might be entitled to any fee or any commission in
connection with or upon consummation of the Merger or the other transactions
contemplated hereby.

(b) Section 4.6(b) of the Parent Disclosure Schedule sets forth a good faith
estimate of the fees and expenses incurred by the New Waxman Shareholders or Parent
on or prior to the date of this Agreement and expected to be incurred prior to the Closing
in connection with the transactions contemplated by this Agreement.

4.7 Solvency. Assuming (a) satisfaction of the conditions to Parent and Merger Sub’s
obligation to consummate the Merger, and after giving effect to the payment of the aggregate
Merger Consideration, (b) the accuracy in all material respects of the representations and
warranties of the Company set forth in Article III and the Company’s performance of and
compliance with, in all material respects, its covenants and agreements contained in this
Agreement, (c) all estimates, projections or forecasts of the Company that have been provided to
Parent and its representatives prior to the date of this Agreement have been prepared in good
faith based upon assumptions that were and continue to be reasonable, (d) payment of all
amounts required to be paid in connection with the consummation of the Merger, and
(e) payment of all related fees and expenses, each of Parent and the Surviving Corporation will
be Solvent as of the Effective Time and immediately after consummation of the Merger.

4.8 Certain Arrangements. Except as set forth on Section 4.8 of the Parent Disclosure
Schedule, there are no Contracts (i) between Parent, Merger Sub or any of their respective
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Affiliates (other than the Company), on the one hand, and any member of the Company’s
management or directors, on the other hand, as of the date hereof that relate to the Company or
any of its Subsidiaries or the Merger or (ii) between Parent or Merger Sub and any shareholder
of the Company pursuant to which such shareholder of the Company would be entitled to receive
consideration of a different amount or nature than the Merger Consideration or pursuant to which
any such shareholder of the Company agrees to vote to adopt this Agreement or the Merger
(other than the Voting Agreement).

4.9 Investigations; Litigation. There are no (a) investigations or proceedings pending

(or, to the Knowledge of Parent or Merger Sub, threatened) by any Governmental Entity with
respect to Parent or Merger Sub or (b) actions, suits, inquiries, investigations or proceedings
pending (or, to the Knowledge of Parent or Merger Sub, threatened) against or affecting Parent
or Merger Sub, or any of their respective properties at law or in equity before, and there are no
orders, judgments or decrees of, any Governmental Entity against Parent or Merger Sub, in each
case of clause (a) or (b), which have had or would reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect.

4.10 Ownership and Operations of Merger Sub and Parent. The authorized capital
stock of Merger Sub consists solely of 100 shares of common stock, par value $0.01 per share,
and 100 shares of Class B common stock, par value $0.01 per share, all of which are validly
issued and outstanding. All of the issued and outstanding stock of Merger Sub is, and as of the
Effective Time will be, directly owned by Parent. Section 4.10 of the Parent Disclosure
Schedule sets forth a complete and correct statement of the capitalization of Parent as of the date
hereof and as of immediately prior to the consummation of the transactions contemplated by the
Contribution Agreement. Parent and Merger Sub have each been formed solely for the purpose
of engaging in the transactions contemplated hereby. Prior to the Effective Time, neither the
Parent nor the Merger Sub will have engaged in other business activities or will have incurred
any liabilities or obligations other than as contemplated herein.

4.11 Company Estimates, Projections, Forecasts, Forward-Looking Statements and

Business Plans. In connection with the due diligence investigation of the Company by Parent
and Merger Sub, Parent and Merger Sub have received and may continue to receive from the
Company certain estimates, projections, forecasts and other forward-looking information, as well
as certain business plan information, regarding the Company and its business and operations.
Parent and Merger Sub hereby acknowledge that there are uncertainties inherent in attempting to
make such estimates, projections, forecasts and other forward-looking statements, as well as in
such business plans, with which Parent and Merger Sub and their Affiliates are familiar, that
Parent and Merger Sub are taking full responsibility for making their own evaluation of the
adequacy and accuracy of all estimates, projections, forecasts and other forward-looking
information, as well as such business plans, so furnished to them (including the reasonableness
of the assumptions underlying such estimates, projections, forecasts, forward-looking
information or business plans), and that Parent and Merger Sub will have no claim against the
Company, any of its Subsidiaries, or any other Person, with respect thereto.

4.12 No Other Representations or Warranties. Except for the representations and

warranties made by Parent and Merger Sub in this Article IV, Parent and Merger Sub make no
representations or warranties, and Parent and Merger Sub hereby disclaim any other
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representations or warranties, with respect to Parent, Merger Sub, their Affiliates or their
businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects or the
negotiation, execution, delivery or performance of this Agreement by Parent and its Affiliates,
notwithstanding the delivery or disclosure to the Company or its affiliates or representatives of
any documentation or other information with respect to any one or more of the foregoing.

V. COVENANTS

5.1 Conduct of Business by the Company and Parent.

(a) From and after the date hereof and prior to the Effective Time or the date,
if any, on which this Agreement is earlier terminated pursuant to Section 7.1, and except
(i) as may be required by applicable Law or as expressly required by this Agreement or as
permitted by Section 5.1(b), (ii) as disclosed in Section 5.1(a) of the Company Disclosure
Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and
(B) below (which consent shall not be unreasonably withheld, conditioned or delayed),
the Company will, and will cause each of its Subsidiaries to (A) conduct its business in
all material respects in the ordinary course consistent with past practice, (B) use
commercially reasonable efforts to maintain and preserve intact its business organization
and advantageous business relationships and to retain the services of its key officers and
key employees, and (C) take no action which would materially and adversely affect or
delay the ability of any of the Parties to obtain any necessary approvals of any regulatory
agency or other Governmental Entity required for the Transactions or otherwise
materially delay or prohibit the Transactions.

(b) Without limiting the generality of the foregoing, between the date hereof
and the Effective Time, except (i) as set forth in Section 5.1(b) of the Company
Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to
any matter referred to in items (v), (vii), (viii), (ix), (xv) and (xvi) (with respect to any of
the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned
or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company
will not and will cause each of its Subsidiaries not to:

(i) adjust, split, combine or reclassify any capital stock or otherwise

amend the terms of its capital stock;

(ii) make, declare or pay any dividend, or make any other distribution
on, or directly or indirectly redeem, purchase or otherwise acquire or encumber,
any shares of its capital stock or any securities or obligations convertible (whether
currently convertible or convertible only after the passage of time or the
occurrence of certain events) into or exchangeable for any shares of its capital
stock;

(iii) grant any Person any right to acquire any shares of its capital
stock;

(iv) issue any shares of capital stock;

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 (v) purchase, sell, transfer, mortgage, encumber or otherwise dispose
of any properties or assets having a value in excess of $100,000 in the aggregate
to any Person (other than to a wholly owned Subsidiary), other than
encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of
the date of this Agreement or in the ordinary course of business consistent with
past practice;

(vi) incur, assume, guarantee, prepay or become obligated with respect

to any indebtedness for borrowed money or offer, place or arrange any issue of
debt securities, other than any of the foregoing that is pursuant to working capital
borrowings or letter of credit issuances under existing credit facilities, in each
case, in the ordinary course of business consistent with past practice;

(vii) except as specifically contemplated in Section 5.1(b) of the

Company Disclosure Schedule, make any investment in excess of $100,000 in the
aggregate, whether by purchase of stock or securities of, contributions to capital
to, or purchase of any property or assets of any other Person;

(viii) make any acquisition of another Person or business, whether by

purchase of stock or securities or contributions to capital in excess of $100,000 in
the aggregate, other than acquisitions pursuant to Contracts in effect as of the date
of this Agreement;

(ix) except to the extent required by Law or any Company Benefit Plan
in effect as of the date hereof, (A) increase in any manner the compensation or
benefits of any employees, officers, directors, consultants or independent
contractors of the Company or any of its Subsidiaries, except for increases in base
salary in the ordinary course of business consistent with past practice, (B) pay any
severance or retirement benefits to any employees, directors, consultants or
independent contractors of the Company or any of its Subsidiaries, except with
respect to officers, directors and consultants in the ordinary course of business
consistent with past practice, (C) accelerate the vesting of, or the lapsing of
forfeiture restrictions or conditions with respect to, any equity or equity-based
awards, (D) establish or cause the funding of any “rabbi trust” or similar
arrangement, (E) establish, adopt, amend or terminate any arrangement that would
be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend,
alter, adopt, implement or otherwise make any commitment to do any of the
foregoing;

(x) amend or waive any provision of the Charter Documents;

(xi) take any action that is intended or would reasonably be expected to

result in any of the conditions to the Merger set forth in Article VI not being
satisfied;

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 (xii) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of such
entity;

(xiii) implement or adopt any material change in its Tax or financial

accounting principles, practices or methods, other than as may be required by
GAAP or applicable Law;

(xiv) (A) make, change or revoke any material Tax election, (B) change
any method of reporting for Tax purposes, (C) settle or compromise any material
Tax claim, audit or dispute, or (D) make or surrender any claim for a material
refund of Taxes, in the case of each of (C) or (D) in excess of $100,000;

(xv) other than in the ordinary course of business consistent with past
practice, enter into any new, or materially amend or otherwise materially alter any
current, agreement or obligations with any Affiliate of the Company.

(c) For purposes of this Section 5.1 and the definition of Company Material
Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of
Parent.

5.2 Access and Information. From the date hereof until the Effective Time and
subject to the requirements of applicable Law and the Confidentiality Agreement, the Company
will (a) provide to Parent, its counsel, financial advisors, auditors and other authorized
representatives, reasonable access during normal business hours to the offices, properties, books
and records of the Company and its Subsidiaries and to such other information as Parent
reasonably requests and (b) instruct the employees, counsel, financial advisors, auditors and
other authorized representatives of the Company and its Subsidiaries to cooperate reasonably
with Parent with respect to the foregoing matters. Prior to the Effective Time, the Company will
provide to Parent and its representatives, as promptly as practicable when finalized and available
for distribution, (i) consolidated financial statements of the Company and its Subsidiaries
(including statement of financial position, income statement and statement of cash flows) for
each month through the Effective Time, as prepared by management for internal use and (ii) any
update of quarterly projections. Any activities pursuant to this Section 5.2 will be conducted in
such manner as not to interfere unreasonably with the conduct of the business of the Company
and its Subsidiaries. No information or knowledge obtained by Parent or Merger Sub pursuant to
the activities contemplated by this Section 5.2 will affect or be deemed to modify any
representation or warranty made by the Company in Article III.

5.3 Intentionally Deleted.

5.4 Information Statement; Shareholder Approval.

(a) As promptly as practicable following the date of this Agreement, the

Company will prepare the Information Statement. Parent and the Company will
cooperate with each other in connection with the preparation of the Information
Statement. The Company will use its reasonable best efforts to cause the Information

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Statement to be mailed to the Company’s shareholders as promptly as practicable after
the date hereof. Notwithstanding the foregoing, the Company assumes no responsibility
with respect to information supplied in writing by or on behalf of Parent or Merger Sub
(including with respect to any of the New Waxman Shareholders) for inclusion or
incorporation by reference in the Information Statement. If at any time prior to the
Company Meeting, any information should be discovered by any Party which should be
set forth in an amendment or supplement to the Information Statement so that the
Information Statement would not include any misstatement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading,
the Party which discovers such information will promptly notify the other Parties and, to
the extent required by applicable Law, an appropriate amendment or supplement
describing such information shall be promptly disseminated by the Company to the
shareholders of the Company.

(b) The Company will (i) take all action necessary in accordance with the
DGCL and its certificate of incorporation and bylaws to duly call, give notice of, convene
and hold a meeting of its shareholders as promptly as practicable following the mailing of
the Information Statement for the purpose of obtaining the Company Shareholder
Approval (such meeting or any adjournment or postponement thereof, the “Company
Meeting”) and (ii) subject to Section 5.3, use reasonable best efforts to solicit from its
shareholders proxies in favor of the adoption of this Agreement. Notwithstanding
anything in this Agreement to the contrary, unless this Agreement is terminated in
accordance with Section 7.1 and subject to compliance with Section 7.2, the Company
will take all of the actions contemplated by this Section 5.4 and will submit this
Agreement for adoption by the shareholders of the Company at such meeting.

5.5 Reasonable Best Efforts.

(a) Subject to the terms and conditions set forth in this Agreement, each of the
Parties will use its reasonable best efforts (subject to, and in accordance with, applicable
Law) to take promptly, or to cause to be taken, all actions, and to do promptly, or to cause
to be done, and to assist and cooperate with the other Parties in doing, all things
reasonably necessary, proper or advisable to consummate and make effective the Merger
and the other transactions contemplated hereby, including (i) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals, including the Company
Approvals and the Parent Approvals, from Governmental Entities and the making of all
necessary registrations and filings and the taking of all steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or waivers
from third parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, and (iv) the execution and delivery of any additional
instruments reasonably necessary to consummate the transactions contemplated hereby.

(b) Subject to the terms and conditions herein provided and without limiting
the foregoing, the Company and Parent will (i) cooperate with each other in
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 (A) determining whether any other filings are required to be made with, or consents,
permits, authorizations, waivers or approvals are required to be obtained from, any third
parties or other Governmental Entities in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby and
(B) timely making all such filings and timely seeking all such consents, permits,
authorizations or approvals, (ii) use reasonable efforts to take, or to cause to be taken, all
other actions and to do, or to cause to be done, all other things necessary, proper or
advisable to consummate and make effective the Merger and the other transactions
contemplated hereby, and to avoid or eliminate each and every impediment under any
Law that may be asserted by any Governmental Entity with respect to the Merger so as to
enable the Closing to occur as soon as reasonably possible (and in any event no later than
the End Date (as hereinafter defined)), (iii) subject to applicable Law, keep each other
apprised in all material respects of the status of matters relating to the completion of the
transactions contemplated by this Agreement including, to the extent permitted by
applicable Law, promptly furnishing the other with true and complete copies of notices or
other material communications sent or received by the Company or Parent, as the case
may be, or any of their Subsidiaries, to or from any third party and/or any Governmental
Entity with respect thereto, and permit the other to review in advance any proposed
material communication by such party to any supervisory or Governmental Entity, and
(iv) give the other reasonable notice of, and, to the extent permitted by such
Governmental Entity, allow the other to attend and participate at any meeting with any
Governmental Entity in respect of any filings, investigation or other inquiry or
proceeding relating thereto. The Company and Parent will permit counsel for the other
party reasonable opportunity to review in advance, and consider in good faith the views
of the other party in connection with, any proposed written communication to any
Governmental Entity.

(c) Subject to the rights of Parent in Section 5.9, and in furtherance and not in
limitation of the covenants of the Parties contained in this Section 5.5, if any
administrative or judicial action or proceeding, including any proceeding by a private
party, is instituted (or threatened to be instituted) challenging the Merger or any other
transaction contemplated by this Agreement, each of the Company and Parent will
cooperate in all respects with each other and use their respective reasonable best efforts to
contest and resist any such action or proceeding and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or restricts
consummation of the Merger or any other transactions contemplated hereby.
Notwithstanding the foregoing or any other provision of this Agreement, nothing in this
Section 5.5 will limit a Party’s right to terminate this Agreement pursuant to the terms
hereof so long as such Party has, prior to such termination, complied with its obligations
under this Section 5.5.

5.6 Takeover Statute. If any “fair price,” “moratorium,” “control share acquisition”
or other form of anti-takeover statute or regulation becomes applicable to the Merger or the other
transactions contemplated by this Agreement, each of the Company and Parent and the members
of their respective Boards of Directors will grant such approvals and take such actions as are

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reasonably necessary so that the Merger and the other transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated herein and otherwise act to
eliminate or minimize the effects of such statute or regulation on the Merger and the other
transactions contemplated hereby.

5.7 Public Announcements. Neither the Company nor Parent will issue any press
release or other public statement or comment relating to this Agreement or the transactions
contemplated hereby without the prior consent of the other party and each of Parent and the
Company will consult with each other prior to making any filings with any third party and/or any
Governmental Entity with respect thereto, in all cases except as a Party may determine in good
faith is required by applicable Law, by obligations pursuant to any listing agreement with any
national securities exchange, by request of any Governmental Entity or as permitted under
Section 5.3. The press release announcing the execution and delivery of this Agreement will be
in substantially the form previously approved by the Parties.

5.8 Indemnification and Insurance.

(a) From and after the Effective Time through the sixth anniversary of the
date on which the Effective Time occurs, each of Parent and the Surviving Corporation
will indemnify and hold harmless each Indemnified Party with respect to all claims,
liabilities, losses, damages, judgments, fines, penalties, costs (including amounts paid in
settlement or compromise) and expenses (including fees and expenses of legal counsel) in
connection with any claim, suit, action, proceeding or investigation (whether civil,
criminal, administrative or investigative), whenever asserted, based on or arising out of,
in whole or in part, (i) the fact that an Indemnified Party was a director or officer of the
Company or any of its Subsidiaries or (ii) acts or omissions by such Indemnified Party in
the Indemnified Party’s capacity as a director, officer, employee or agent of the Company
or a Subsidiary of the Company or taken at the request of the Company or a Subsidiary of
the Company (including in connection with serving at the request of the Company or
such Subsidiary as a director, officer, employee, agent, trustee or fiduciary of another
Person), in each case under (i) or (ii), at, or at any time prior to, the Effective Time
(including any claim, suit, action, proceeding or investigation relating in whole or in part
to the Merger or the enforcement of this provision or any other indemnification or
advancement right of any Indemnified Party), to the fullest extent permitted under the
DGCL, but only to the extent that such Indemnified Party may be indemnified pursuant
to the respective Charter Documents of the Company or any of its Subsidiaries as in
effect on the date of this Agreement or in any written agreement in existence as of the
date of this Agreement providing for indemnification between an Indemnified Party and
the Company or any of its Subsidiaries.

(b) Parent guarantees, and the Surviving Corporation will assume, all
obligations of the Company and any of its Subsidiaries in respect of rights of exculpation,
indemnification and advancement of expenses for acts or omissions occurring at or prior
to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time,
existing in favor of the Indemnified Parties as provided in the respective Charter
Documents of the Company or any of its Subsidiaries or in any written agreement
described on the Company Disclosure Schedule or available under the DGCL; provided,
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however, that all rights to indemnification in respect of any Action pending or asserted or
any claim made within such period will continue until the disposition of such Action or
resolution of such claim. Without limiting the foregoing, Parent, from and after the
Effective Time until six years from the Effective Time, will cause, unless otherwise
required by Law, the certificate of incorporation and bylaws or similar organizational
documents of the Surviving Corporation to contain provisions no less favorable to the
Indemnified Parties with respect to limitation of liabilities of directors and officers and
indemnification than are set forth as of the date of this Agreement in the Charter
Documents and/or available under the DGCL, which provisions will not be amended,
repealed or otherwise modified in a manner that would adversely affect the rights
thereunder of the Indemnified Parties. In addition, from the Effective Time until six
years from the Effective Time, Parent will, and will cause the Surviving Corporation to,
advance any expenses (including fees and expenses of legal counsel) of any Indemnified
Party under this Section 5.8 (including in connection with enforcing the indemnity and
other obligations referred to in this Section 5.8) as incurred to the fullest extent permitted
under applicable Law, provided that the individual to whom expenses are advanced
provides an undertaking to repay such advances if it shall be determined that such person
is not entitled to be indemnified pursuant to this Section 5.8(b).

(c) Parent or the Surviving Corporation will have the right, but not the
obligation, to assume and control the defense of any threatened or actual litigation, claim
or proceeding relating to any acts or omissions covered under this Section 5.8 (each, a
“Claim”), provided that none of Parent or the Surviving Corporation will settle,
compromise or consent to the entry of any judgment in any such Claim for which
indemnification has been sought by an Indemnified Party hereunder, unless such
settlement, compromise or consent includes an unconditional release of such Indemnified
Party from all liability arising out of, and no admission of wrongdoing in respect of, such
Claim or such Indemnified Party otherwise consents in writing to such settlement,
compromise or consent. Each of Parent, the Surviving Corporation and the Indemnified
Parties will cooperate in the defense of any Claim and will provide access to properties
and individuals as reasonably requested and furnish or cause to be furnished records,
information and testimony, and attend such conferences, discovery proceedings, hearings,
trials or appeals, as may be reasonably requested in connection therewith.

(d) The provisions of this Section 5.8 will survive the consummation of the
Merger and expressly are intended to benefit, and are enforceable by, each Indemnified
Party, and his or her heirs and his or her representatives, and are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any such
individual may have under the Charter Documents, by contract or otherwise. The
obligations of Parent and the Surviving Corporation under this Section 5.8 may not be
terminated or modified in such a manner as to adversely affect the rights of any
Indemnified Party to whom this Section 5.8 applies unless (i) such termination or
modification is required by applicable Law or (ii) the affected Indemnified Party shall
have consented in writing to such termination or modification (it being expressly agreed
that the Indemnified Parties to whom this Section 5.8 applies will be third party
beneficiaries of this Section 5.8).

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 (e) In the event Parent, the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other Person and is not the
continuing or surviving corporation or entity in such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any Person, then, and in
either such case, proper provision will be made so that the successors and assigns of
Parent or the Surviving Corporation, as the case may be, assume the obligations set forth
in this Section 5.8.

5.9 Shareholder Litigation. Prior to the Effective Time, Parent will give prompt
notice to the Company, and the Company will give prompt notice to Parent, of any actions, suits,
claims or proceedings commenced or, to the Company’s Knowledge, on the one hand, and
Parent’s Knowledge, on the other hand, threatened against such party which relate to this
Agreement and the transactions contemplated hereby. The Company will give Parent the
opportunity to participate in the defense or settlement of any shareholder litigation against the
Company and/or its directors relating to the Merger or any other transactions contemplated
hereby, whether commenced prior to or after the execution and delivery of this Agreement;
provided, however, that the Company will not settle any such litigation without Parent’s prior
written consent.

5.10 Resignation of Directors of the Company; Nomination of Directors of the

Surviving Corporation. Prior to the Effective Time, to the extent requested by Parent, the
Company will use reasonable best efforts to cause each member of the Company Board to
execute and deliver a letter effectuating his or her resignation as a member of the Company
Board effective immediately after the Effective Time and to nominate a successor director
thereto specified by Parent for election to the board of directors of the Surviving Corporation by
Parent, in its capacity as the sole shareholder of the Surviving Corporation.

5.11 Notification of Certain Matters. The Company will give prompt notice to Parent,
and Parent will give prompt notice to the Company, of (a) any notice or other communication
received by such party from any Governmental Entity in connection with the Merger or the other
transactions contemplated hereby or from any Person alleging that the consent of such Person is
or may be required in connection with the Merger or the other transactions contemplated hereby,
if the subject matter of such communication or the failure of such party to obtain such consent
could be material to the Company, the Surviving Corporation or Parent, (b) any actions, suits,
claims, investigations or proceedings commenced or, to such party’s Knowledge, threatened
against, relating to or involving or otherwise affecting such party or any of its Subsidiaries which
relate to the Merger or the other transactions contemplated hereby, or (c) the discovery of any
fact or circumstance that, or the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which, would reasonably be expected to cause or result in any of the
conditions to the Merger set forth in Article VI not being satisfied or satisfaction of those
conditions being materially delayed in violation of any provision of this Agreement; provided,
however, that the delivery of any notice pursuant to this Section 5.11 will not (i) cure any breach
of, or non-compliance with, any other provision of this Agreement or (ii) limit the remedies
available to the party receiving such notice.

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 5.12 Parent Vote. Immediately following the execution of this Agreement, Parent will
execute and deliver, in accordance with Section 228 of the DGCL and in its capacity as the sole
shareholder of Merger Sub, a written consent adopting the Agreement.

5.13 Financing. Parent and Merger Sub will use their respective reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things
reasonably necessary, proper or advisable to obtain the consent of Huntington National Bank, the
Company’s current lender (“Huntington”), to the transactions contemplated by this Agreement.

5.14 Merger Sub and Surviving Corporation. Parent will take all actions necessary to
(a) cause Merger Sub and the Surviving Corporation to perform promptly their respective
obligations under this Agreement, as applicable and (b) cause Merger Sub to consummate the
Merger on the terms and conditions set forth in this Agreement.

VI. CONDITIONS TO THE MERGER

6.1 Conditions to Each Party’s Obligation to Effect the Merger. The respective
obligations of each Party to effect the Merger are subject to the fulfillment or waiver by all
Parties at or prior to the Effective Time of the following conditions:

(a) The Company Shareholder Approval shall have been obtained;

(b) No restraining order, preliminary or permanent injunction or other order

issued by any court of competent jurisdiction or other legal restraint or prohibition
preventing, or making illegal, the consummation of the Transactions shall be in effect;
and

6.2 Conditions to Obligation of the Company to Effect the Merger. The obligation of
the Company to effect the Merger is further subject to the fulfillment or waiver in writing by the
Company of the following conditions:

(a) The representations and warranties of Parent and Merger Sub shall be true
and correct at and as of the date of this Agreement and at and as of the Closing Date as
though made at and as of the Closing Date except where the failure of such
representations and warranties to be so true and correct (without giving effect to any
“materiality” or “Parent Material Adverse Effect” qualifications set forth therein) does
not have, and would not reasonably be expected to have, individually or in the aggregate,
a Parent Material Adverse Effect; provided, however, that representations and warranties
that are made as of a specified date or period shall be so true and correct as described
above only as of such specified date or period;

(b) Each of Parent and Merger Sub shall have in all material respects
performed all obligations and complied with all covenants required by this Agreement to
be performed or complied with by it at or prior to the Effective Time; and

(c) Parent shall have delivered to the Company a certificate, dated the
Effective Time and signed by its Chief Executive Officer or another senior executive

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 officer, certifying that the conditions set forth in Section 6.2(a) and Section 6.2(b) have
been satisfied.

6.3 Conditions to Obligation of Parent and Merger Sub to Effect the Merger. The
obligation of Parent and Merger Sub to effect the Merger is further subject to the fulfillment or
waiver in writing by Parent and Merger Sub of the following conditions:

(a) The representations and warranties of the Company shall be true and
correct at and as of the date of this Agreement and at and as of the Closing Date as
though made at and as of the Closing Date, except where the failure of such
representations and warranties to be so true and correct (without giving effect to any
“materiality” or “Company Material Adverse Effect” qualification set forth therein) does
not have, and would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect; provided, however, that representations and
warranties that are made as of a specified date or period shall be so true and correct as
described above only as of such specified date or period; and provided further, however,
that (i) the representations and warranties contained in Section 3.1(a) (Qualification,
Organization, Subsidiaries, etc.) (with respect to the Company only), Section 3.20
(Finders or Brokers) and Section 3.21 (State Takeover Statutes; Rights Agreement) shall
be true and correct in all material respects and (ii) the representations and warranties
contained in Section 3.2 (Capital Stock) shall be true and correct in all respects, except
for such inaccuracies as are de minimis in nature and amount relative to each such
representation and warranty taken as a whole and (iii) the representations and warranties
contained in Section 3.3(a) (Corporate Authority Relative to this Agreement;
Noncontravention), the second sentence of Section 3.9 (Absence of Certain Changes or
Events), Section 3.18 (Opinion of Financial Advisor) and Section 3.19 (Required Vote of
the Company Shareholders Under Applicable Law) shall be true and correct in all
respects;

(b) The Company shall have in all material respects performed all obligations
and complied with all covenants required by this Agreement to be performed or complied
with by it at or prior to the Effective Time; and

(c) The Company shall have delivered to Parent a certificate, dated the
Effective Time and signed by a senior executive officer of the Company (other than any
Affiliate of Parent), certifying that the conditions set forth in Section 6.3(a) and
Section 6.3(b) have been satisfied; and

(d) Parent and Merger Sub shall have received the consent of Huntington to
the transactions contemplated by this Agreement

(e) Since the date of this Agreement, there shall not have been any Company
Material Adverse Effect; provided, however, that, for the purposes of this Section 6.3(e),
facts, circumstances, events, changes, effects or occurrences that are set forth in the
Company Disclosure Schedule (to the extent that it is reasonably apparent that such
disclosure is relevant) will not be taken into account for purposes of determining whether
a Company Material Adverse Effect has occurred.
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 6.4 Frustration of Closing Conditions. None of Parent, Merger Sub or the Company
may rely on the failure of any condition set forth in Sections 6.1, 6.2, or 6.3, as the case may be,
to be satisfied if such failure was caused by such Party’s failure to use the standard of efforts
required from such Party to consummate the Transactions, including as required by and subject
to Section 5.5.

VII. TERMINATION

7.1 Termination. Notwithstanding anything contained in this Agreement to the

contrary, this Agreement may be terminated at any time prior to the Effective Time, whether
before or after the Company Shareholder Approval:

(a) by the mutual written consent of the Company and Parent;

(b) by either the Company or Parent, if:

(i) the Effective Time shall not have occurred on or before 11:59 p.m.
on March 31, 2018 (the “End Date”), provided, however, that the right to
terminate this Agreement pursuant to this Section 7.1(b)(i) is not available to any
Party whose failure to perform any of its obligations under this Agreement has
been the primary cause of the failure of the Merger to be consummated by such
time;

(ii) any Governmental Entity of competent jurisdiction enters an

injunction, order, decision, opinion, decree or ruling or takes other action
permanently restraining, enjoining or otherwise prohibiting the consummation of
the Merger and such injunction, other legal restraint or order shall have become
final and non-appealable; provided, that the Party seeking to terminate this
Agreement pursuant to this Section 7.1(b)(ii) shall have used its reasonable best
efforts to remove such injunction, other legal restraint or order in accordance with
Section 5.5; or

(iii) if the Company Meeting has concluded, and the Company

Shareholder Approval shall not have been obtained;

(c) by the Company:

(i) if there shall have been a breach of any of the covenants or failure
to be true of any of the representations or warranties on the part of Parent, which
breach or failure to be true, either individually or in the aggregate (A) would
result in a failure of a condition set forth in Section 6.1 or Section 6.2 and
(B) which is not cured within the earlier of (1) the End Date and (2) 30 days
following written notice to Parent; provided, that (x) the Company shall have
given Parent written notice, delivered at least 30 days prior to such termination (or
promptly, if such notice is given within 30 days of the End Date), stating the
Company’s intention to terminate this Agreement pursuant to this
Section 7.1(c)(i) and the basis for such termination and (y) the Company will not

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 have the right to terminate this Agreement pursuant to this Section 7.1(c)(i) if the
Company is then in material breach of any of its representations, warranties,
covenants or agreements contained in this Agreement; or

(ii) if, prior to obtaining the Company Shareholder Approval, the

Company (A) has otherwise complied in all material respects with the terms of
this Agreement, including Section 5.3 (including having complied fully with the
notice and information requirements thereof) and (B) concurrently with the
termination of this Agreement, enters into a definitive transaction agreement
providing for the consummation of the transaction contemplated by a Superior
Proposal;

(d) by Parent:

(i) if there shall have been a breach of any of the covenants or failure
to be true of any of the representations or warranties on the part of the Company
which breach or failure to be true, either individually or in the aggregate
(A) would result in a failure of a condition set forth in Section 6.1 or Section 6.3
and (B) which is not cured within the earlier of (1) the End Date and (2) 30 days
following written notice to the Company; provided, that Parent shall have given
the Company written notice, delivered at least 30 days prior to such termination
(or promptly, if such notice is given within 30 days of the End Date), stating
Parent’s intention to terminate this Agreement pursuant to this Section 7.1(d)(i)
and the basis for such termination; provided, further, that Parent shall not have the
right to terminate this Agreement pursuant to this Section 7.1(d)(i) if Parent is
then in material breach of any of its representations, warranties, covenants or
agreements contained in this Agreement;

(ii) if, prior to obtaining the Company Shareholder Approval, the

Company Board (A) makes a Recommendation Change or (B) fails to make the
Recommendation; or

(iii) if, prior to obtaining the Company Shareholder Approval, the

Company or any of its Subsidiaries or Representatives materially breaches its
obligations under Section 5.3 or Section 5.4 and such breach is not cured within
five Business Days following written notice by Parent to the Company.

7.2 Specified Expenses.

(a) In the event that:

(i) (A) an Alternative Proposal has been publicly disclosed or has

been made directly to the Company’s shareholders generally or any Person has
publicly announced an intention (whether or not conditional) to make a bona fide
Alternative Proposal, (B) thereafter this Agreement is terminated by the Company
or Parent pursuant to Section 7.1(b)(i) or by the Parent pursuant to
Section 7.1(d)(i), and (C) the Company enters into a definitive agreement with

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 respect to, or consummates, a transaction contemplated by any Alternative
Proposal within 12 months of the date this Agreement is terminated; provided that
for purposes of clause (C) of this Section 7.2(a)(i), the references to “20%” in the
definition of Alternative Proposal will be deemed to be references to “50%”;

(ii) this Agreement is terminated by the Company pursuant to

Section 7.1(c)(ii);

(iii) this Agreement is terminated by Parent pursuant to

Section 7.1(d)(ii) or Section 7.1(d)(iii); or

(iv) this Agreement is terminated by either Parent or the Company

pursuant to Section 7.1(b)(iii);

then in any such event under clause (i), (ii), (iii) or (iv) of this Section 7.2(a), the Company
will pay to Parent an amount equal to the sum of Parent’s and Merger Sub’s expenses up to
$500,000 (the “Specified Expenses”); provided, however, that the amount of the Specified
Expenses payable in connection with a termination pursuant to Section 7.2(a)(i) will be
reduced by the amount of any expenses actually paid by the Company to Parent pursuant to
Section 8.2.

(b) Any payment required to be made pursuant to Section 7.2(a)(i) will be

made to Parent promptly following the earlier of the execution of a definitive agreement
with respect to, or the consummation of, any transaction contemplated by an Alternative
Proposal. Any payment required to be made pursuant to Section 7.2(a)(iii) or
Section 7.2(a)(iv) will be made to Parent promptly (and in any event not later than two
Business Days after delivery to the Company of notice of demand for payment) following
termination of this Agreement by Parent pursuant to Section 7.1(d)(ii) or
Section 7.1(d)(iii) or by either Parent or the Company pursuant to Section 7.1(b)(iii), as
applicable, and such payment will be made by wire transfer of immediately available
funds to an account to be designated by Parent. Any payment required to be made
pursuant to Section 7.2(a)(ii) will be made to Parent simultaneously with such
termination by the Company pursuant to Section 7.1(c)(ii).

7.3 Effect of Termination. In the event of termination of this Agreement pursuant to

Article VII, this Agreement will terminate, and there will be no other liability on the part of the
Company, Parent or Merger Sub or their respective directors, officers, Affiliates, successors or
assigns, except that (a) the provisions of Section 7.2 and Section 7.3, Article VIII, the
Confidentiality Agreement and the Voting Agreement, all of which shall survive termination of
this Agreement as provided therein and (b) no Party will be relieved or released from liability for
damages of any kind, including consequential damages and any other damages (whether or not
communicated or contemplated at the time of execution of this Agreement) arising out of, any
(i) knowing material breach of any of its representations and warranties contained in this
Agreement or (ii) deliberate material breach of any of its covenants contained in this Agreement,
in the case of the Company, up to an amount equal to the Specified Expenses, and in the case of
Parent and Merger Sub, subject to the terms and limitations of the Voting Agreement. No Party
claiming that such breach occurred will have any duty or otherwise be obligated to mitigate any
A-33
such damages. For purposes of this Section 7.3, (A) a “knowing” breach of a representation and
warranty will be deemed to have occurred only if the officers of the Company (in the case of the
Company) or the officers of the Parent had actual knowledge of such breach as of the date of this
Agreement (without any independent duty of investigation or verification other than an actual
reading of the representations and warranties as they appear in this Agreement by such parties)
and (B) a “deliberate” breach of any covenant or agreement will be deemed to have occurred
only if the other Party took or failed to take action with actual knowledge that the action so taken
or omitted to be taken constituted a breach of such covenant or agreement.

VIII. MISCELLANEOUS

8.1 No Survival of Representations and Warranties. This Article VIII and the
agreements of the Company, Parent and Merger Sub contained in Article II and Section 5.8
(Indemnification and Insurance) will survive the consummation of the Merger. All other
representations and warranties, covenants and agreements set forth in this Agreement will
terminate at the Effective Time. This Section 8.1 will not affect any covenant or obligation of
the Parties that by its terms contemplates performance after the Effective Time.

8.2 Expenses. Except as expressly set forth in Section 7.2, whether or not the Merger
is consummated, all costs and expenses incurred in connection with the Merger shall be paid by
the Party incurring or required to incur such expenses; provided, however, if the Merger is
consummated, all costs and expenses incurred by Parent or Merger Sub in connection with the
Merger, this Agreement and the transactions contemplated hereby will be paid by the Surviving
Corporation. Notwithstanding the foregoing, the costs and expenses of printing and mailing the
Information Statement in connection with the Merger will be borne by the Company.

8.3 Governing Law; Jurisdiction. This Agreement shall be governed by and

construed in accordance with the Laws of the State of Delaware without reference to such state’s
principles of conflict of laws. Each of the Parties irrevocably consents to the exclusive
jurisdiction of the state and federal courts of the State of Delaware (or the appellate courts
thereof) in connection with any matter based upon or arising out of this Agreement or the matters
contemplated herein, agrees that process may be served upon them in any manner authorized by
the Laws of the State of Delaware for such Persons and waives and covenants not to assert or
plead any objection that they might otherwise have.

8.4 Specific Performance; Remedies.

(a) The Parties agree that irreparable harm would occur in the event any of the
provisions of this Agreement were not to be performed in accordance with the terms
hereof (including failing to take such actions as are required of them hereunder to
consummate the Merger), that the right of specific performance is an integral part of this
Agreement and that without that right neither the Company nor Parent or Merger Sub
would have entered into this Agreement and that, except as set forth in Section 8.4(b), the
Parties will be entitled to an injunction or injunctions to prevent breaches of this
Agreement or to enforce specifically the performance of the terms hereof without proof
of damages or otherwise, in addition to any other remedies to which they are entitled at
Law or in equity. Each of the Parties hereby waives any defenses in any action for
A-34
 specific performance, including the defense that a remedy at Law would be adequate.
Except as otherwise provided herein, all remedies available under this Agreement, at Law
or otherwise, will be deemed cumulative and not alternative or exclusive of other
remedies. The exercise by any Party of a particular remedy will not preclude the exercise
of any other remedy.

(b) The Company will be entitled to seek specific performance of Parent’s

obligation to cause the transactions contemplated by the Contribution Agreement to be
effected and to consummate the Merger only in the event that (i) the conditions to
Closing set forth in Section 6.1 and Section 6.3 have been satisfied, (ii) Parent and
Merger Sub fail to complete the Closing in accordance with the terms of this Agreement,
and (iii) the Company has irrevocably confirmed that if specific performance is granted,
then it will take the actions required of it by this Agreement to cause the Closing to occur.
Each of the Parties agrees that it will not oppose the granting of an injunction, specific
performance and other equitable relief when expressly available pursuant to the terms of
this Agreement on the basis that the other Parties have an adequate remedy at law or an
award of specific performance is not an appropriate remedy for any reason at law or
equity. Any Party seeking an injunction or injunctions to prevent breaches of this
Agreement when expressly available pursuant to the terms of this Agreement and to
enforce specifically the terms and provisions of this Agreement when expressly available
pursuant to the terms of this Agreement will not be required to provide any bond or other
security in connection with such order or injunction.

8.5 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO

IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

8.6 Notices. All notices, requests, permissions, waivers and other communications
hereunder will be in writing and will be deemed to have been duly given (a) when sent, if sent by
facsimile, (b) when delivered, if delivered personally to the intended recipient and (c) one
Business Day following sending by overnight delivery via an international courier service and, in
each case, addressed to a Party at the following address for such Party:

To Parent or Merger Sub:

c/o Waxman Industries, Inc.

24460 Aurora Road
Bedford Heights, Ohio 44146
Facsimile: (440) 439-8678
Attention: Larry Waxman

with copies (which shall not constitute notice) to:

Benesch, Friedlander, Coplan & Aronoff LLP

200 Public Square, Suite 2300
Cleveland, Ohio 44114
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 Facsimile: 216-363-4588
Attention: Ira C. Kaplan

To the Company or the Company Board:

Waxman Industries, Inc.

24460 Aurora Road
Bedford Heights, Ohio 44146
Facsimile: (440) 439-8678
Attention: Mark Wester

and

Paul H. Cascio
3S Advisors
1954 Epping Road
Gates Mills, Ohio 44040

with copies (which shall not constitute notice) to:

Benesch, Friedlander, Coplan & Aronoff LLP

200 Public Square, Suite 2300
Cleveland, Ohio 44114
Facsimile: 216-363-4588
Attention: Ira C. Kaplan

or to such other address as any Party may specify by written notice given in accordance with this
Section 8.6.

8.7 Assignment. Neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by any of the Parties (whether by operation of Law or otherwise)
without the prior written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon and will inure to the benefit of the Parties and their respective
successors and assigns.

8.8 Entire Agreement; Parties in Interest.

(a) This Agreement (including the exhibits and schedules hereto), the
Contribution Agreement, the Confidentiality Agreement and the Voting Agreement
constitute the entire agreement, and supersede all other prior agreements and
understandings, both written and oral, among the Parties, or any of them, with respect to
the subject matter hereof and thereof.

(b) This Agreement will be binding upon and inure solely to the benefit of
each Party and their respective successors, legal representatives and permitted assigns,
and, except for the provisions of Section 5.8, which will be enforceable by the
beneficiaries contemplated thereby, nothing in this Agreement, express or implied, is
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 intended to or shall confer upon any other Person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement, except for the right of
shareholders to receive the Merger Consideration under Article II following the Closing.

8.9 Amendments; Waivers. At any time prior to the Effective Time, any provision of
this Agreement may be amended or waived if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by the Company, Parent and Merger Sub, or in
the case of a waiver, by the Party against whom the waiver is to be effective; provided, however,
that after receipt of the Company Shareholder Approval, if any such amendment or waiver shall,
by applicable Law, require further approval of the shareholders of the Company, the
effectiveness of such amendment or waiver shall be subject to the approval of the shareholders of
the Company. Notwithstanding the foregoing, no knowledge, investigation or inquiry, or failure
or delay by the Company or Parent in exercising any right hereunder will operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or further exercise of
any other right hereunder.

8.10 Severability. In the event that any provision of this Agreement, or the application
thereof becomes or is declared by a court of competent jurisdiction to be illegal, void, invalid or
unenforceable, the remainder of this Agreement will continue in full force and effect and the
application of such provision to other Persons or circumstances will be interpreted so as
reasonably to effect the intent of the Parties. The Parties further agree to replace such illegal,
void, invalid or unenforceable provision of this Agreement with a legal, valid and enforceable
provision that achieves, to the extent possible, the economic, business and other purposes of such
illegal, void, invalid or unenforceable provision.

8.11 Interpretation. When a reference is made in this Agreement to an Article or

Section, such reference will be to an Article or Section of this Agreement unless otherwise
indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement,
they will be deemed to be followed by the words “without limitation.” The words “hereof,”
“herein” and “hereunder” and words of similar import when used in this Agreement will refer to
this Agreement as a whole and not to any particular provision of this Agreement. All terms
defined in this Agreement will have the defined meanings when used in any certificate or other
document made or delivered pursuant thereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any agreement or instrument
that is referred to herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or instruments) by
waiver or consent and (in the case of statutes) by succession of comparable successor statutes
and references to all attachments thereto and instruments incorporated therein. The headings
contained in this Agreement are for reference purposes only and do not affect in any way the
meaning or interpretation of this Agreement. The terms “or”, “any” and “either” are not
exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a
subject or other thing extends, and such phrase shall not mean simply “if”. The word “will” shall
be construed to have the same meaning and effect as the word “shall”. All terms defined in this
Agreement shall have the defined meanings when used in any document made or delivered

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pursuant hereto unless otherwise defined therein. References to a Person are also to its permitted
assigns and successors.

8.12 Construction. Each of the Parties has participated in the drafting and negotiation
of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement
must be construed as if it is drafted by all the Parties, and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of authorship of any of the provisions of
this Agreement.

8.13 Counterparts; Effectiveness. This Agreement may be executed in any number of

counterparts (including by facsimile or by electronic transmission in “portable document format”
(“.pdf”) form), each of which will be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument, and will become effective when one or more
counterparts have been signed by each of the Parties and delivered (by telecopy or otherwise) to
the other Parties.

8.14 Definitions. For purposes of this Agreement, the following terms will have the
following meanings when used herein with initial capital letters:

“Action” means any actual or threatened claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative.

“Affiliate” means, as to any Person, any other Person which, directly or indirectly,
controls, or is controlled by, or is under common control with, such Person. As used in this
definition, “control” (including, with its correlative meanings, “controlled by” and “under
common control with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of management or policies of a Person, whether through the ownership of
securities or partnership or other ownership interests, by Contract or otherwise.

“Agreement” has the meaning set forth in the Preamble.

“Alternative Proposal” means any inquiry, proposal or offer from any Person (other than
Parent and its Subsidiaries) or “group”, within the meaning of Section 13(d) of the Exchange
Act, relating to any (i) direct or indirect acquisition or purchase of a business that constitutes
20% or more of the net sales, net income or the total assets of the Company and its Subsidiaries,
taken as a whole, (ii) direct or indirect acquisition or purchase of 20% or more of any class of
equity securities of the Company, (iii) tender offer or exchange offer that if consummated would
result in any Person beneficially owning 20% or more of the outstanding shares of any class of
equity securities of the Company, (iv) merger, consolidation, business combination, asset
purchase, recapitalization or similar transaction involving the Company, or any of its
Subsidiaries constituting 20% or more of the value of the Company and its Subsidiaries, taken as
a whole, other than the Merger, or (v) related combination of the foregoing types of transactions
if the sum of any of (A) percentage of net sales, (B) net income, or (C) total assets, in each case
taken separately, of the Company and its Subsidiaries (on a consolidated basis) that is subject to
the related combination is 20% or more; in each case other than the Merger.

“Audited Financial Statements” has the meaning set forth in Section 3.4.

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 “Bankruptcy and Equity Exception” has the meaning set forth in Section 3.3(a).

“Beneficially Own” means ownership in accordance with Section 240.13d-3 of the SEC
regulations promulgated under the Exchange Act.

“Book-Entry Shares” has the meaning set forth in Section 2.2(a).

“Business Day” means any day ending at 11:59 p.m. (Eastern Time) other than a
Saturday, Sunday or a day on which the banks in the City of New York are authorized by law or
executive order to be closed.

“Cancelled Shares” has the meaning set forth in Section 2.1(c).

“Certificate of Merger” has the meaning set forth in Section 1.3.

“Certificates” has the meaning set forth in Section 2.2(a).

“Charter Documents” has the meaning set forth in Section 3.1(b).

“Claim” has the meaning set forth in Section 5.8(d).

“Class B Common Shares” means the issued and outstanding class B common shares,
par value $0.01 per share, of the Company outstanding immediately prior to the Effective Time.

“Closing” has the meaning set forth in Section 1.2.

“Closing Date” has the meaning set forth in Section 1.2.

“Code” has the meaning set forth in Section 2.2(b)(iii).

“Common Shares” means the issued and outstanding common shares, par value $0.01
per share, of the Company outstanding immediately prior to the Effective Time.

“Company” has the meaning set forth in the Preamble.

“Company Approvals” has the meaning set forth in Section 3.3(b).

“Company Benefit Plans” means (i) all “employee benefit plans,” as defined in
Section 3(3) of ERISA, (ii) all other severance pay, salary continuation, bonus, incentive, stock
option, retirement, pension, profit sharing or deferred compensation plans, contracts, programs,
funds, or arrangements of any kind, and (iii) all other employee benefit plans, contracts,
programs, funds, or arrangements (whether written or oral, qualified or nonqualified, funded or
unfunded, foreign or domestic) and any trust, escrow, or similar agreement related thereto,
whether or not funded, in respect of any present or former employees, directors, officers,
shareholders, consultants, or independent contractors of the Company or any of its Subsidiaries
that are sponsored or maintained by the Company or any of its Subsidiaries or with respect to
which the Company or any of its Subsidiaries is required to make payments, transfers, or
contributions.

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 “Company Board” has the meaning set forth in the Recitals.

“Company Disclosure Schedule” has the meaning set forth in Article III.

“Company Intellectual Property” means all of the following that is owned by, issued or
licensed to the Company or any of its Subsidiaries or used in the business of the Company or any
of its Subsidiaries: (i) all patents, trademarks, trade names, trade dress, assumed names, service
marks, logos, copyrights, Internet domain names and corporate names together with all
applications, registrations, renewals and all goodwill associated therewith, (ii) all trade secrets
and confidential information (including know-how, formulae, manufacturing and production
processes, research, financial business information and marketing plans), (iii) information
technologies (including software programs, data and related documentation), and (iv) other
intellectual property rights.

“Company Material Adverse Effect” means any fact, circumstance, event, change, effect
or occurrence (whether or not constituting any breach of a representation, warranty, covenant or
agreement set forth in this Agreement) that (i) has had or would reasonably be expected to have a
material adverse effect on the assets, properties, liabilities, business, results of operation or
financial condition of the Company and its Subsidiaries, taken as a whole, but will not include
facts, circumstances, events, changes, effects or occurrences to the extent, or to the extent
attributable to: (A) generally affecting the industry in the geographies in which the Company
operates, (B) generally affecting the economy, credit or financial markets in the geographies in
which the Company operates, (C) changes after the date of this Agreement in Law or in
generally accepted accounting principles or in accounting standards, or any regulatory and
political conditions or developments, (D) the announcement of this Agreement or the
consummation of the Merger (other than for purposes of any representation or warranty
contained in Sections 3.3(b)-(c)), (E) acts of war or military action, sabotage or terrorism, or any
escalation or worsening of any such acts of war or military action, sabotage or terrorism,
(F) earthquakes, hurricanes, tornados or other natural disasters, except, in the case of each of
clauses (A), (B), (C), (E) and (F), to the extent any fact, circumstance, event, change, effect or
occurrence disproportionately impacts the assets, properties, business, results of operation or
financial condition of the Company and its Subsidiaries, taken as a whole, relative to other
participants in the industries in which the Company and its Subsidiaries operate, (G) any action
taken by the Company or its Subsidiaries (1) that is expressly required by this Agreement (other
than with respect to the Company’s obligations to comply with Section 5.1(a) or Section 5.5),
(2) taken with Parent’s written consent, or (3) resulting from any action taken at the written
request of Parent, (H) resulting from any change in the market price or trading volume of
securities of the Company in and of itself; provided that a fact, circumstance, event, change,
effect or occurrence causing or contributing to the change in market price or volume will not be
disregarded from the determination of a Company Material Adverse Effect, or (I) the fact of any
failure to meet revenue or earnings projections, forecasts, estimates or guidance for any period,
whether relating to financial performance or business metrics, including revenues, net incomes,
cash flows or cash positions, provided that a fact, circumstance, event, change, effect or
occurrence causing or contributing to such failure shall not be disregarded from the
determination of a Company Material Adverse Effect; or (ii) that would reasonably be expected
to prevent or materially delay or impair the ability of the Company to perform its obligations
under this Agreement or to consummate the Transactions.
A-40
 “Company Material Contract” has the meaning set forth in Section 3.12.

“Company Meeting” has the meaning set forth in Section 5.4(b).

“Company Permits” has the meaning set forth in Section 3.6(b).

“Company Shareholder Approval” has the meaning set forth in Section 3.19.

“Company Shares” means the issued and outstanding shares of the Company, including
the Common Shares and the Class B Common Shares.

“Contracts” means any contracts, agreements, licenses, notes, bonds, mortgages,

indentures, commitments, leases or other instruments or obligations, whether written or oral.

“Contribution Agreement” has the meaning set forth in the Recitals.

“Controlled Group” means a trade or business (whether or not incorporated) (i) under
common control within the meaning of Section 4001(b)(1) of ERISA with the Company or
(ii) which together with the Company is treated as a single employer under Section 414(t) of the
Code.

“DGCL” has the meaning set forth in Section 1.1.

“Dissenting Shares” has the meaning set forth in Section 2.1(f).

“Effective Time” has the meaning set forth in Section 1.3.

“Employees” has the meaning set forth in Section 3.14.

“End Date” has the meaning set forth in Section 7.1(b)(i).

“Environmental Law” means any Law relating to (i) the protection, preservation or
restoration of the environment (including air, water vapor, surface water, groundwater, drinking
water supply, surface land, subsurface land, plant and animal life or any other natural resource)
or (ii) the exposure to, or the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of Hazardous Substances.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Exchange Act” means the Securities Exchange Act of 1933, as amended.

“Exchange Fund” has the meaning set forth in Section 2.2(a).

“Excluded Shares” has the meaning set forth in Section 2.1(f).

“Financial Advisor” has the meaning set forth in Section 3.18.

“Financial Statements” has the meaning set forth in Section 3.4.

A-41
 “GAAP” has the meaning set forth in Section 3.4.

“Governmental Entity” has the meaning set forth in Section 3.3(b).

“Hazardous Substance” means any substance presently listed, defined, designated or

classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any
Environmental Law. Hazardous Substance includes any substance to which exposure is
regulated by any Governmental Entity or any Environmental Law including any toxic waste,
pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste,
industrial substance or petroleum or any derivative or byproduct thereof, radon, radioactive
material, asbestos or asbestos containing material, urea formaldehyde, foam insulation or
polychlorinated biphenyls.

“Indemnified Party” means each current and former director or officer of the Company
or any of its Subsidiaries and each such person who serves or served at the request of the
Company as a director, officer, member, trustee or fiduciary of another corporation, partnership,
joint venture, trust, pension or other employee benefit plan or enterprise, together with such
person’s heirs, executors or administrators.

“Information Statement” has the meaning set forth in Section 3.11.

“IRS” means the United States Internal Revenue Service.

“Knowledge” means, with respect to the Company, the actual knowledge after due
inquiry of the officers of the Company and, with respect to Parent or Merger Sub the actual
knowledge after due inquiry of Melvin Waxman, Armond Waxman and Laurence Waxman.

“Law” has the meaning set forth in Section 3.6(a).

“Laws” has the meaning set forth in Section 3.6(a).

“Lien” has the meaning set forth in Section 3.3(c).

“Merger” has the meaning set forth in the Recitals.

“Merger Consideration” has the meaning set forth in Section 2.1(a).

“Merger Sub” has the meaning set forth in the Preamble.

“New Waxman Shareholders” means the Persons listed on Exhibit A.

“Parent” has the meaning set forth in the Preamble.

“Parent Approvals” has the meaning set forth in Section 4.2(b).

“Parent Disclosure Schedule” has the meaning set forth in Article IV.

“Parent Material Adverse Effect” has the meaning set forth in Section 4.1.

A-42
 “Parties” has the meaning set forth in the Preamble.

“Paying Agent” has the meaning set forth in Section 2.2(a).

“Permitted Liens” means (a) easements, rights-of-way, encroachments, restrictions,

conditions and other similar Liens incurred or suffered in the ordinary course of business and
which, individually or in the aggregate, do not and would not materially impair the use (or
contemplated use), utility or value of the applicable real property or otherwise materially impair
the present or contemplated business operations at such location, (b) zoning, entitlement,
building and other land use regulations imposed by Governmental Entities having jurisdiction
over such real property, (c) statutory Liens for current Taxes or other governmental charges not
yet due and payable or the amount or validity of which is being contested in good faith and by
appropriate proceedings and for which adequate reserves have been established in the Financial
Statements, (d) mechanics’, materialmen’s, carriers’, workmen’s, warehouseman’s, repairmen’s,
landlords’ and similar Liens granted or which arise in the ordinary course of business,
(e) pledges or deposits by the Company or any of its Subsidiaries under workers’ compensation
Laws, unemployment insurance Laws or similar legislation, or good faith deposits in connection
with bids, tenders, Contracts (other than for the payment of indebtedness) or leases to which such
entity is a party, or deposits to secure public or statutory obligations of such entity or to secure
surety or appeal bonds to which such entity is a party, or deposits as security for contested Taxes,
(f) rights of consignors of goods or bailors of equipment, whether or not perfected by the filing
of a financing statement under the Uniform Commercial Code, (g) statutory rights of setoff in
favor of depository institutions in funds of the Company and its Subsidiaries held in operating
accounts at such institutions, together with Liens that are contractual rights of setoff in such
funds relating to the establishment of depository relationships with banks, and not given in
connection with the issuance of indebtedness, (h) non-exclusive licenses to Company Intellectual
Property granted in the ordinary course of business consistent with past practice, (i) other
encumbrances securing indebtedness that do not, individually or in the aggregate, materially
impair the continued use, operation, value or marketability of the property to which they relate or
the conduct of the business of the Company and its Subsidiaries as presently conducted, (j) Liens
arising from judgments, decrees or attachments not constituting an Event of Default under the
Credit Agreement (as defined thereunder), and (k) Liens securing indebtedness under, or
otherwise permitted under, the Credit Agreement or under the Company’s accounts receivables
program.

“Person” means an individual, a corporation, a partnership, a limited liability company,

an association, a trust or any other entity, group (as such term is used in Section 13 of the
Exchange Act) or organization, including a Governmental Entity, and any permitted successors
and assigns of such Person.

“Recommendation” has the meaning set forth in Section 3.3(a).

“Recommendation Change” means the Company Board approves or recommends, or

publicly proposes to approve, endorse or recommend, any Alternative Proposal.

“Representatives” has the meaning set forth in Section 5.3(a).

A-43
 “Rolled Shares” has the meaning set forth in the Recitals.

“Solvent” when used with respect to any Person, means that, as of any date of
determination (a) the amount of the “fair saleable value” of the assets of such Person will, as of
such date, exceed (i) the value of all “liabilities of such Person, including contingent and other
liabilities,” as of such date, as such quoted terms are generally determined in accordance with
applicable Laws governing determinations of the insolvency of debtors, and (ii) the amount that
will be required to pay the probable liabilities of such Person, as of such date, on its existing
debts (including contingent and other liabilities) as such debts become absolute and mature,
(b) such Person will not have, as of such date, an unreasonably small amount of capital for the
operation of the businesses in which it is engaged or proposed to be engaged following such
date, (c) such Person will be able to pay its liabilities, as of such date, including contingent and
other liabilities, as they mature and (d) such Person is not insolvent under the Delaware Uniform
Fraudulent Transfer Act. For purposes of this definition, “not have an unreasonably small
amount of capital for the operation of the businesses in which it is engaged or proposed to be
engaged” and “able to pay its liabilities, including contingent and other liabilities, as they
mature” means that such Person will be able to generate enough cash from operations, asset
dispositions and refinancing, or a combination thereof, to meet its obligations as they become
due.

“Specified Expenses” has the meaning set forth in Section 7.2(a).

“Subsidiaries” of any party means any corporation, partnership, association, trust or other
form of legal entity of which (i) more than 50% of the outstanding voting securities are on the
date hereof directly or indirectly owned by such party, or (ii) such party or any Subsidiary of
such party is a general partner (excluding partnerships in which such party or any Subsidiary of
such party does not have a majority of the voting interests in such partnership).

“Superior Proposal” means a bona fide written Alternative Proposal (except that the
references to “20%” in the definition thereof will be deemed “50%”) that the Company Board
determines in its good faith judgment (after consulting with outside counsel and its financial
advisor), taking into account all legal, financial and regulatory and other aspects of the proposal
(including any break-up fees, expense reimbursement provisions and conditions to
consummation), the likelihood and timing of required governmental approvals and
consummation and the Person making the proposal, would be more favorable to the shareholders
of the Company (other than the New Waxman Shareholders, Parent and Merger Sub) (solely in
their capacity as such) from a financial point of view than the Merger (including any adjustment
to the terms and conditions proposed by Parent in response to such Alternative Proposal,
including with respect to the Merger Consideration).

“Surviving Corporation” has the meaning set forth in Section 1.1.

“Surviving Shares” has the meaning set forth in Section 2.1(d).

“Tax Return” means any return, report or similar filing (including attached schedules)
required to be filed with respect to Taxes, including any information return, claim for refund,
amended return or declaration of estimated Taxes.
A-44
 “Taxes” means any and all domestic or foreign, federal, state, local or other taxes of any
kind (together with any and all interest, penalties, additions to tax and additional amounts
imposed with respect thereto) imposed by any Governmental Entity, including taxes on or with
respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital
stock, payroll, employment, unemployment, social security, workers’ compensation or net worth,
and taxes in the nature of excise, withholding, ad valorem or value added.

“Transactions” means the Merger and other transactions contemplated by this

Agreement.

“Unaudited Financial Statements” has the meaning set forth in Section 3.4.

“Voting Agreement” has the meaning set forth in the Recitals.

[Signature Page Follows]

A-45
 IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
and delivered as of the date first above written.

Waxman Holdings, Inc.

By: /s/ Melvin Waxman

Name: Melvin Waxman
Title: President and CEO

Waxman Merger Sub, Inc.

By: /s/ Melvin Waxman

Name: Melvin Waxman
Title: President and CEO

Waxman Industries, Inc.

By: /s/ Melvin Waxman

Name: Melvin Waxman
Title: President and CEO

SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER

10661257 v6
 Exhibit A
New Waxman Shareholders

Class B
Common Common
Shares Shares
Melvin Waxman 100,000 2,500
Armond Waxman 173,079 77,029
Larry Waxman 293,002 104,220
Mitch Waxman 6,226 4,126
Sharon Waxman 6,788 3,113
Todd Waxman 6,591 2,160
Gregg Waxman 4,041 2,160
Shari Waxman 4,041 2,160
Judy Robins 7,975 7,525
Karen Polonsky 8,000 --
Howard Amster 106,000 --
This Page Intentionally Left Blank
 Annex B
      CLEVELAND    
      600 SUPERIOR AVE.
SUITE 1800
CLEVELAND, OH 44114
216.472.6660 PHONE
216.923.0740 FAX
    WWW.CANDLEWOODPARTNERS.COM
NEW YORK 
      477 MADISON AVENUE
NEW YORK, NY 10022

January 16, 2018

Board of Directors
Waxman Industries, Inc.
24460 Aurora Road
Bedford Heights, Ohio 44146

Members of the Board of Directors:

You have requested our opinion as to the fairness, from a financial point of view, to the holders of
the outstanding shares of common stock (the “Common Stock”) of Waxman Industries, Inc. (the
“Company”) as to the go-private transaction (the “Transaction”) whereby the Company’s largest
shareholder will acquire all outstanding and issued Common Stock at a per-share price of $1.87. We have
been asked to render an opinion to you, as legal counsel to the Company, as to the fairness of such
transaction, from a financial point of view, to the common stockholders of the Company (“Opinion”).

Candlewood Partners LLC (“Candlewood”) as part of its investment banking business, provides
valuations of businesses in connection with mergers and acquisitions, private placements, financial
restructurings and other financial services. We have been engaged by you pursuant to an engagement
letter dated November 29, 2016 (the “Engagement Letter”) to render a fairness Opinion in connection
with the Transaction. We will receive a fee for our services pursuant to the Engagement Letter, which will
be payable upon delivery of this Opinion, and we also will be reimbursed for expenses incurred. The
Company has agreed to indemnify Candlewood against liabilities arising out of or in connection with the
services rendered and to be rendered by Candlewood under such Engagement Letter. Candlewood does
not typically trade or hold securities, and does not, and has no expectation to, trade or hold securities of
the Company and its respective affiliates.

This Opinion is furnished solely for your benefit and may not be relied upon by any other person
without our express, prior written consent. This Opinion is delivered to each recipient subject to the
conditions, scope of engagement, limitations and understandings set forth in the Opinion and subject to
the understanding that the obligations of Candlewood and any of its affiliates in the Transaction are solely
corporate obligations, and no officer, director, employee, agent, shareholder, or controlling person of
Candlewood or any of its affiliates shall be subjected to any personal liability whatsoever to any person
(other than for gross negligence or willful misconduct) nor will any such claim be asserted by or on behalf
of the Company against any such person with respect to the Opinion other than Candlewood.

In conducting our analysis and arriving at the Opinion expressed herein, we have, among other
things, (i) reviewed certain information about the Company and its industry that was publicly available;
(ii) reviewed information furnished to us by the Company’s management, including certain internal
financial analyses, budgets, reports and other information; (iii) held discussions with various members of
senior management of the Company and its Board of Directors concerning historical and current
operations, financial conditions and prospects, including recent financial performance; (iv) reviewed the
recent activity involving the Company’s privately-held shares; (v) reviewed the valuation of the Company
implied by the terms of the Transaction; (vi) reviewed the valuations of publicly traded companies that we
deemed comparable in certain respects to the Company, which included a review of the general economic
conditions of the industry; (vii) reviewed the financial terms of selected acquisition transactions involving
companies in lines of business that we deemed comparable in certain respects to the business of the
Company; (viii) prepared a discounted cash flow analysis of certain businesses of the Company on a
stand-alone basis. In addition, we have conducted such other quantitative reviews, analyses and inquiries
relating to the Company as we considered appropriate in rendering this Opinion.

In our review and analysis and in rendering this Opinion, we have assumed and relied upon, but
have not assumed any responsibility to independently investigate or verify, the accuracy, completeness
and fair presentation of all financial and other information that was provided to us by the Company or that
was publicly available to us (including, without limitation, the information described above), or that was
otherwise reviewed by us (including the Company’s calculation of outstanding Common Stock). This
Opinion is expressly conditioned upon such information (whether written or oral) being complete,
accurate and fair in all respects material to our analysis. We have further relied upon the assurance of
management of the Company that they are unaware of any facts that would make the information
provided to us incomplete or misleading in any respect. Our analyses were based, among other things, on
the financial projections of the Company (the “Financial Projections”) furnished to us by senior
management of the Company. With respect to the Financial Projections, we note that projecting future
results of any company is inherently subject to uncertainty. We express no opinion as to the Financial
Projections or the assumptions on which they are based. In addition, in rendering this Opinion, we have
assumed that the Financial Projections have been reasonably prepared by management and reflect
management’s best currently available estimates and good faith judgment of the future competitive,
operating and regulatory environment and related financial performance of the Company, and that the
Financial Projections and the assumptions derived therefrom provide a reasonable basis for our Opinion.
Although the Financial Projections did not form the principal basis for our Opinion, but rather constituted
one of many items that we employed, changes to the Financial Projections could affect the Opinion
rendered herein.

In our analysis and in connection with the preparation of this Opinion, Candlewood has made
numerous assumptions with respect to industry performance, general business, market and economic
conditions and other matters, many of which are beyond the control of any party involved in the
Transaction. Our Opinion is necessarily based on business, economic, market and other conditions as they
exist and can be evaluated by us at the date of this letter. Candlewood’s Opinion is conditioned upon the
terms of the final Transaction being consistent in all material respects with those in the draft reviewed.

Our Opinion does not address the underlying business decision of the Company to engage in the
Transaction, or the relative merits of the Transaction as compared to any strategic alternatives that may be
available to the Company. This Opinion addresses only the fairness from a financial point of view, as of
the date hereof, of the Transaction as to the common stockholders of the Company. We do not express
any view on, and our Opinion does not address, any other term or aspect of the Transaction, including,
without limitation, the fairness of the Transaction to, or any consideration received in connection
therewith by, the holders of any other class of securities, creditors, or other constituencies of the
Company; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any
of the officers, directors or employees of the Company, or class of such persons in connection otherwise.
We are not expressing any opinion as to the prices at which the common stock of the Company will trade
at any time. Our Opinion is necessarily based on economic, monetary, market and other conditions as in
effect on, and the information made available to us as of, the date hereof and we assume no responsibility
for updating, revising or reaffirming this Opinion based on circumstances, developments or events
occurring after the date hereof. Our advisory services and the Opinion expressed herein are provided for

2
the information and assistance of the Board of Directors of the Company in connection with its
consideration of the Transaction and such Opinion does not constitute a recommendation as to how any
holder of Common Stock should vote with respect to such Transaction or any other matter.

Based upon and subject to the foregoing, it is our Opinion that, as of the date hereof, the
Transaction is fair, from a financial point of view, to the common stockholders of the Company.

Very Truly Yours,

3
This Page Intentionally Left Blank
 Annex C

Delaware General Corporations Law Section 262

(a) Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a
demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such
shares through the effective date of the merger or consolidation, who has otherwise complied with subsection
(d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value
of the stockholder's shares of stock under the circumstances described in subsections (b) and (c) of this section.
As used in this section, the word "stockholder" means a holder of record of stock in a corporation; the words
"stock" and "share" mean and include what is ordinarily meant by those words; and the words "depository
receipt" mean a receipt or other instrument issued by a depository representing an interest in 1 or more shares,
or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.

(b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent
corporation in a merger or consolidation to be effected pursuant to § 251 (other than a merger effected pursuant
to § 251(g) of this title and, subject to paragraph (b)(3) of this section, § 251(h) of this title), § 252, § 254, §
255, § 256, § 257, § 258, § 263 or § 264 of this title:

(1) Provided, however, that, except as expressly provided in § 363(b) of this title, no appraisal rights under
this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in
respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of
stockholders to act upon the agreement of merger or consolidation, were either: (i) listed on a national securities
exchange or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be
available for any shares of stock of the constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of this title.

(2) Notwithstanding paragraph (b)(1) of this section, appraisal rights under this section shall be available
for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263 and
264 of this title to accept for such stock anything except:

a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or
depository receipts in respect thereof;

b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock
(or depository receipts in respect thereof) or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or held of record by more than 2,000
holders;

c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs
(b)(2)a. and b. of this section; or

d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or
fractional depository receipts described in the foregoing paragraphs (b)(2)a., b. and c. of this section.

(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under §
251(h), § 253 or § 267 of this title is not owned by the parent immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
 (4) In the event of an amendment to a corporation's certificate of incorporation contemplated by § 363(a)
of this title, appraisal rights shall be available as contemplated by § 363(b) of this title, and the procedures of
this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as
practicable, with the word "amendment" substituted for the words "merger or consolidation," and the word
"corporation" substituted for the words "constituent corporation" and/or "surviving or resulting corporation."

(c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section
shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all
or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision,
the provisions of this section, including those set forth in subsections (d), (e), and (g) of this section, shall apply
as nearly as is practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to
be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the
meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or
such members who received notice in accordance with § 255(c) of this title) with respect to shares for which
appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section
and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Each stockholder
electing to demand the appraisal of such stockholder's shares shall deliver to the corporation, before the taking
of the vote on the merger or consolidation, a written demand for appraisal of such stockholder's shares. Such
demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's shares. A proxy or vote against the
merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do
so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become effective; or

(2) If the merger or consolidation was approved pursuant to § 228, § 251(h), § 253, or § 267 of this title,
then either a constituent corporation before the effective date of the merger or consolidation or the surviving or
resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of
such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation
and that appraisal rights are available for any or all shares of such class or series of stock of such constituent
corporation, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a
nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date
of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such
notice or, in the case of a merger approved pursuant to § 251(h) of this title, within the later of the
consummation of the offer contemplated by § 251(h) of this title and 20 days after the date of mailing of such
notice, demand in writing from the surviving or resulting corporation the appraisal of such holder's shares. Such
demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation
shall send a second notice before the effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective
date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice
to all such holders on or within 10 days after such effective date; provided, however, that if such second notice
is sent more than 20 days following the sending of the first notice or, in the case of a merger approved pursuant
to § 251(h) of this title, later than the later of the consummation of the offer contemplated by § 251(h) of this
title and 20 days following the sending of the first notice, such second notice need only be sent to each
stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder's shares in
accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the
corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days
prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the
merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is
given prior to the effective date, the record date shall be the close of business on the day next preceding the day
on which the notice is given.

(e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting
corporation or any stockholder who has complied with subsections (a) and (d) of this section hereof and who is
otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of
Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder
who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right
to withdraw such stockholder's demand for appraisal and to accept the terms offered upon the merger or
consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has
complied with the requirements of subsections (a) and (d) of this section hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement
setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect
to which demands for appraisal have been received and the aggregate number of holders of such shares. Such
written statement shall be mailed to the stockholder within 10 days after such stockholder's written request for
such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever is later.
Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held
either in a voting trust or by a nominee on behalf of such person may, in such person's own name, file a petition
or request from the corporation the statement described in this subsection.

(f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the
surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register
in Chancery in which the petition was filed a duly verified list containing the names and addresses of all
stockholders who have demanded payment for their shares and with whom agreements as to the value of their
shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such
petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown
on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1
week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington,
Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the stockholders who have complied with
this section and who have become entitled to appraisal rights. The Court may require the stockholders who have
demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates
of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if
any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such
stockholder. If immediately before the merger or consolidation the shares of the class or series of stock of the
constituent corporation as to which appraisal rights are available were listed on a national securities exchange,
the Court shall dismiss the proceedings as to all holders of such shares who are otherwise entitled to appraisal
rights unless (1) the total number of shares entitled to appraisal exceeds 1% of the outstanding shares of the
class or series eligible for appraisal, (2) the value of the consideration provided in the merger or consolidation
for such total number of shares exceeds $1 million, or (3) the merger was approved pursuant to § 253 or § 267
of this title.

(h) After the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be
conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing
appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive
of any element of value arising from the accomplishment or expectation of the merger or consolidation, together
with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value,
the Court shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for
good cause shown, and except as provided in this subsection, interest from the effective date of the merger
through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the
Federal Reserve discount rate (including any surcharge) as established from time to time during the period
between the effective date of the merger and the date of payment of the judgment. At any time before the entry
of judgment in the proceedings, the surviving corporation may pay to each stockholder entitled to appraisal an
amount in cash, in which case interest shall accrue thereafter as provided herein only upon the sum of (1) the
difference, if any, between the amount so paid and the fair value of the shares as determined by the Court, and
(2) interest theretofore accrued, unless paid at that time. Upon application by the surviving or resulting
corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its
discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an
appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation
pursuant to subsection (f) of this section and who has submitted such stockholder's certificates of stock to the
Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined
that such stockholder is not entitled to appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the
surviving or resulting corporation to the stockholders entitled thereto. Payment shall be so made to each such
stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the certificates representing such stock. The
Court's decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or of any state.

(j) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court
deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of
the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without
limitation, reasonable attorney's fees and the fees and expenses of experts, to be charged pro rata against the
value of all the shares entitled to an appraisal.

(k) From and after the effective date of the merger or consolidation, no stockholder who has demanded
appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose
or to receive payment of dividends or other distributions on the stock (except dividends or other distributions
payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of
this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of
such stockholder's demand for an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in subsection (e) of this section or
thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall
cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to
any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as
the Court deems just; provided, however that this provision shall not affect the right of any stockholder who has
not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the merger or consolidation within 60
days after the effective date of the merger or consolidation, as set forth in subsection (e) of this section.

(l ) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders
would have been converted had they assented to the merger or consolidation shall have the status of authorized
and unissued shares of the surviving or resulting corporation.

8 Del. C. 1953, § 262; 56 Del. Laws, c. 50; 56 Del. Laws, c. 186, § 24; 57 Del. Laws, c. 148, §§ 27-29; 59
Del. Laws, c. 106, § 12; 60 Del. Laws, c. 371, §§ 3-12; 63 Del. Laws, c. 25, § 14; 63 Del. Laws, c. 152, §§ 1, 2;
64 Del. Laws, c. 112, §§ 46-54; 66 Del. Laws, c. 136, §§ 30-32; 66 Del. Laws, c. 352, § 9; 67 Del. Laws, c. 376,
§§ 19, 20; 68 Del. Laws, c. 337, §§ 3, 4; 69 Del. Laws, c. 61, § 10; 69 Del. Laws, c. 262, §§ 1-9; 70 Del. Laws,
c. 79, § 16; 70 Del. Laws, c. 186, § 1; 70 Del. Laws, c. 299, §§ 2, 3; 70 Del. Laws, c. 349, § 22; 71 Del. Laws,
c. 120, § 15; 71 Del. Laws, c. 339, §§ 49-52; 73 Del. Laws, c. 82, § 21; 76 Del. Laws, c. 145, §§ 11-16; 77 Del.
Laws, c. 14, §§ 12, 13; 77 Del. Laws, c. 253, §§ 47-50; 77 Del. Laws, c. 290, §§ 16, 17; 79 Del. Laws, c. 72, §§
10, 11; 79 Del. Laws, c. 122, §§ 6, 7; 80 Del. Laws, c. 265, §§ 8-11.
This Page Intentionally Left Blank
Annex F-1

WAXMAN INDUSTRIES, INC.

CONSOLIDATED FINANCIAL STATEMENTS AND

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE QUARTERS ENDED SEPTEMBER 30, 2017 AND 2016

Date Issued: October 27, 2017

 WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT

Section 1. Financial Statements (Unaudited)

Condensed Consolidated Statements of Operations -

Three Months Ended September 30, 2017 and 2016................................................................................... 4

Condensed Consolidated Balance Sheets – September 30, 2017 and June 30, 2017 ............................... 5-6

Condensed Consolidated Statements of Cash Flows -

Three Months Ended September 30, 2017 and 2016................................................................................... 7

Notes to Condensed Consolidated Financial Statements ....................................................................... 8-13

Section 2. Management’s Discussion and Analysis of Financial

Condition and Results of Operations .................................................................................................... 14-17

Section 3. Quantitative and Qualitative Disclosures About Market Risk .............................................................. 18

2
 Waxman Industries, Inc. Quarterly Report

This report provides general information and an analysis of the business performance for the fiscal quarters
ended September 30, 2017 and 2016, and other matters for Waxman Industries, Inc. and subsidiaries (the “Company”),
and is intended for use by its Directors, Executive Management and Key Employees, or by outside organizations that
the Executive Management has approved to receive this report, primarily for the purpose of a banking, insurance or
other business relationships (the “Quarterly Report”). This Quarterly Report is for the review of the recipient only.
Any distribution of this Quarterly Report is unauthorized, and any reproduction of this Quarterly Report or the divulging
of any of its contents, without the express written consent of the Company is prohibited. The information contained in
this report may constitute material non-public information concerning the Company. The United States securities laws
prohibit any person who has material, non-public information concerning a company from purchasing or selling
securities of such company or from communicating such information to any such person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell such securities. The delivery of this Quarterly
Report or other information does not imply that this Report or other information is correct as of any time subsequent to
the date appearing on the cover of this Quarterly Report. This Quarterly Report and the information contained herein
has not been prepared in accordance with the rules of, or reviewed by, any regulatory authority, including the Securities
and Exchange Commission.

3
SECTION I. FINANCIAL INFORMATION

WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

For the Three Months Ended September 30, 2017 and 2016
(In Thousands, Except Per Share Data)

Three months
2017 2016
Net sales $ 20,678 $ 22,554
Cost of sales 12,548 14,267
Gross profit 8,130 8,287
Selling, general and admin expenses 7,969 8,162
Operating income 161 125
Gain on sale of assets 50 47
Dividend income 0 0
Interest income 17 21
Interest (expense) (135) (114)
Income before taxes 93 79
Provision for income taxes 103 140
Net loss $ (10) $ (61)

Other comprehensive income (loss):

Net loss $ (10) $ (61)
Foreign currency translation adjustment 116 143
Comprehensive income $ 106 $ 82

Net loss per share $ (0.01) $ (0.05)

Weighted average shares 1,321 1,321

The accompanying Notes to Consolidated Financial Statements

are an integral part of these statements.

4
 WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2017 and June 30, 2017

(In Thousands)

ASSETS

September 30, June 30,

2017 2017
(Unaudited) (Audited)

Current Assets:
Cash and cash equivalents $ 6,695 $ 7,399
Short-term investments 96 -
Trade receivables, net 15,910 15,173
Other receivables 1,898 1,738
Inventories 12,462 9,023
Prepaid expenses 663 727
Deferred tax charge 0 238
Total current assets 37,724 34,298

Property and Equipment:

Land 373 373
Buildings 5,722 5,669
Equipment 13,978 13,744
20,073 19,786
Less accumulated depreciation and amortization (13,104) (12,718)
Property and equipment, net 6,969 7,068

Receivable from Officer's Life Insurance Policies 6,039 5,895

Notes Receivable from Related Parties 358 369
Joint Venture Investments 118 117
Deferred Tax Asset, Long Term 285 -
Other Assets 195 220
$ 51,688 $ 47,967

The accompanying Notes to Consolidated Financial Statements

are an integral part of these statements.

5
 WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2017 and June 30, 2017

(In Thousands)

LIABILITIES AND STOCKHOLDERS' EQUITY

September 30, June 30,

2017 2017
Unaudited Audited

Current Liabilities:
Short-term borrowings $ 12,769 $ 12,573
Current portion of long-term debt 197 207
Accounts payable 12,773 8,845
Accrued liabilities 5,090 5,552
Total current liabilities 30,829 27,177

Other Long-Term Debt, Net of Current Portion 231 268

Unrecognized Tax Benefits 717 717

Stockholders' Equity
Controlling Interests:
Preferred stock, $.01 par value per share:
200 shares authorized at September 30, 2017 and June 30,
2017, none issued - -
Common stock, $.01 par value per share:
8,000 shares authorized at September 30, 2017 and June 30,
2017, 1,111 shares issued and outstanding 100 100
Class B common stock, $.01 par value per share:
1,500 shares authorized at September 30, 2017 and June 30,
2017, 210 shares issued and outstanding 21 21
Paid-in Capital 21,394 21,394
Retained Earnings (2,332) (2,322)
19,183 19,193
Accumulated other comprehensive income 728 612
Total stockholders' equity 19,911 19,805
$ 51,688 $ 47,967

The accompanying Notes to Consolidated Financial Statements

are an integral part of these statements.

6
 WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
For the Three Months Ended September 30, 2017 and 2016
(In Thousands)

2017 2016
Cash Provided By (Used For):
Operations:
Net loss $ (10) $ (61)
Adjustments to reconcile net loss to net
cash (used for) provided by operating activities:
Net loss on retirement of fixed assets 10 65
Gain on sale of joint venture (50) (47)
Depreciation and amortization 374 330
Bad debt provision 21 21
Changes in assets and liabilities:
Trade and other receivables (918) 362
Inventories (3,439) (128)
Prepaid expenses and other assets (92) (82)
Accounts payable 3,928 384
Accrued liabilities (462) 604
Net cash (used for) provided by operations (638) 1,448

Investments:
Capital expenditures (208) (243)
Change in short-term investments (96) (2,581)
Investment in joint ventures 50 47
Net cash used for investments (254) (2,777)

Financing:
Net change in short-term borrowings 196 420
Repayment of long-term debt (64) (56)
Net cash provided by financing 132 364

Effect of exchange rate changes 56 148

Net decrease in cash and cash equivalents (704) (817)

Balance, beginning of year 7,399 9,025
Balance, end of year $ 6,695 $ 8,208

Supplemental schedule of non-cash investing and financing activities:

Equipment purchased under capital lease $ 17 $ 122

The accompanying Notes to Consolidated Financial Statements

are an integral part of these statements.

7
 WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September 30, 2017

Note 1 – Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements include the accounts of Waxman Industries, Inc. (“Waxman
Industries”), its wholly-owned subsidiaries and other companies where the company has a controlling interest
(collectively, the “Company”). All significant intercompany transactions and balances are eliminated in consolidation.
Certain reclassifications have been made to the prior year statements in order to conform to the current year
presentation.

The condensed consolidated statements of operations for the three months ended September 30, 2017 and
2016, the condensed balance sheet as of September 30, 2017 and the condensed statements of cash flows for the
three months ended September 30, 2017 and 2016 have been prepared by the Company without audit, while the
condensed balance sheet as of June 30, 2017 was derived from audited financial statements. In the opinion of
management, these financial statements include all adjustments, all of which are normal and recurring in nature,
necessary to present fairly the financial position, results of operations and cash flows of the Company as of September
30, 2017 and for all periods presented. Certain information and footnote disclosures normally included in audited
financial statements prepared in accordance with accounting principles generally accepted in the United States have
been condensed or omitted. The Company believes that the disclosures included herein are adequate and provide a
fair presentation of interim period results. Interim financial statements are not necessarily indicative of financial
position or operating results for an entire year or other interim periods. It is suggested that these condensed interim
financial statements be read in conjunction with the audited financial statements and the notes thereto included in
the Company’s Consolidated Financial Statements for the fiscal year ended June 30, 2017.

Accounting Estimates

The consolidated financial statements of the Company are prepared in conformity with accounting principles
generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements
requires management of the Company to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
period presented. Actual amounts could differ from these estimates and different amounts could be reported using
different assumptions and estimates.

Foreign Currency Translation, Transactions and Hedging Contracts

All balance sheet accounts of foreign subsidiaries are translated at the exchange rate as of the end of the fiscal
period. Income statement items are translated at the average currency exchange rates during the fiscal year. The
resulting translation adjustment is recorded as a component of stockholders’ equity and comprehensive income.
Foreign currency transaction gains or losses are included in selling, general and administrative expenses as incurred.

On occasion, the Company may use forward foreign exchange contracts to minimize exposure to adverse
changes in currency exchange rates for its operations in China, including customer pricing and vendor purchase
adjustments that may be indexed to exchange rates. These foreign currency exchange contracts are treated as cash flow
hedges in which the Company is hedging the variability of cash flows related to the market value of the Chinese RMB
versus the fixed rate. The difference between the fair market value of the Chinese RMB and the fixed rate in the
contract would be recorded in earnings. The Company did not hedge or enter in to any additional foreign exchange
contracts in fiscal 2017 and 2018.

8
Revenue Recognition

Revenue is recognized as risk and title to the product transfers to the customer, which usually occurs at the
time the shipment is made.

Dividend Policy

The Company records dividends received from investments accounted for under the cost method of accounting
as dividend income in the year received.

Dividends received from wholly-owned subsidiaries are accounted for as a reduction in that operation’s
retained earnings, with dividend income being recognized by the operation receiving the dividend. A corresponding
consolidating entry is recorded to eliminate this intercompany transaction. In the three months of fiscal 2018 and 2017,
the Company did not declare dividends between wholly-owned subsidiaries.

The Company has not paid a dividend to its shareholders since fiscal 1993, and the Company has restrictions
from paying a dividend under its current bank agreement.

Shipping and Handling Fees

In accordance with accounting guidance on shipping and handling costs, the Company records freight and
any directly related associated cost of transporting finished product to customers as a component of its selling,
general and administrative (“SG&A”) expenses. Included in SG&A expenses are approximately $722,000 and
$747,000 for the three months ended September 30, 2017 and 2016, respectively.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of assets and liabilities and their respective tax basis and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax laws and rates
expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or
settled. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax assets will
not be realized. Management evaluates the realizability of the deferred tax assets and assesses the need for a valuation
allowance yearly. In assessing the realizability of its net deferred tax asset, the Company considered its historic
performance and the uncertainty of it being able to generate enough domestic taxable income to utilize these assets.

The Company recognizes the tax benefits of uncertain tax positions only when the position is more likely
than not to be sustained under examination by the appropriate taxing authority. The amount recognized is measured
as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. See
Note 3 of the Company’s Consolidated Financial Statements and Footnotes for the year ended June 30, 2017 for
further discussion.

Split Dollar Life Insurance Policies

The Company funds two split dollar life insurance policies for Melvin Waxman, providing for total death
benefits of $7,535,000, two policies for Armond Waxman, providing for total death benefits of $8,000,000 and, one
policy for Laurence Waxman, providing for death benefits of $6,000,000. In the event of the death of any of the
above-referenced insureds, the Company will be repaid for the aggregate premiums paid by the Company totaling
$8,305,000 from the insurance proceeds paid to the split dollar life insurance trusts which own such policies.
Therefore the related receivables are deemed collectible as long the policies have not lapsed.

The premiums paid on policies that began subsequent to September 17, 2003 are being treated as a loan to the
executive, providing interest income to the Company (“Loan Regime Policies”). Split dollar life insurance policies
issued prior to this date are treated under the economic benefit regime and do not provide interest to the Company
9
(“Economic Benefit Policies”) and have been discounted to their present value. In fiscal 2014, Armond and Melvin
Waxman each sold a split dollar life insurance policy that was previously funded by the Company. The amount of the
accumulated premiums paid by the Company will be repaid by the payouts from the remaining policies.

Note 2 – Business

The Company is a supplier of specialty plumbing, floor and surface protection, leak detection and mitigation
and other hardware products to the repair and remodeling market in the United States. The Company distributes its
products to a wide variety of large national and regional retailers, independent retail customers, wholesalers and to
the e-Commerce market. The Company conducts its business primarily through its wholly-owned and majority-
owned subsidiaries, Waxman Consumer Products Group Inc. and its Subsidiaries (“Consumer Products”),
leakSMART Inc. (“leakSMART”), TWI Industrial Inc. (“TWI Industrial”), and Waxman Industrial Group, Inc.
(“WIG”). WIG includes TWI International Taiwan Inc. (“TWI”), located in Taiwan, and CWI International China,
Ltd. (“CWI”), located in China.

Consumer Products, the Company’s largest operation, is a supplier of specialty plumbing, floor and surface
protection, leak detection and mitigation and other hardware products to a wide variety of large retailers.
LeakSMART is a developer and distributor of leak detection and water mitigation products. LeakSMART products
are sold primarily through industrial distributors that serve the professional contractor market, although some sales
are made through ecommerce direct to the consumer. The Company is working on the development of products that
may broaden the sales channels. TWI Industrial is a sales, marketing and management operation that sells products
for TWI and CWI in North America, and manages sales representatives for CWI and TWI throughout Europe and
Asia (collectively “Industrial Sales”). TWI and CWI manufacture, package, source and assemble product purchased
by Consumer Products and non-affiliated businesses. Approximately 64% of Consumer Products’ purchases are from
TWI and CWI.

The Company’s non-intercompany sales are classified into three primary segments; (i) retail sales, which are
made to the Company’s base of retail store customers, (ii) industrial sales, which are made to industrial supply
distributors, O.E.M.’s and other wholesale trade businesses, and (iii) a small but growing e-Commerce sales segment.

The Company's Common Stock trades on the OTC Pink Market under the symbol “WXMN.PK.” The
Company's Class B Common Stock does not trade in the public market due to restricted transferability. However, the
Class B Common Stock may be converted into Common Stock on a share-for-share basis at any time.

Note 3 – Income Taxes

At June 30, 2017, the Company’s net deferred tax assets for the U.S. operations were fully offset by a
valuation allowance. The net deferred tax assets for foreign operations at June 30, 2017 of $289,000 were not offset
by a valuation allowance. The Company believes that the net deferred tax asset for the U.S. operations should
continue to be offset by a valuation allowance. The Company will continue to analyze the trends in the operating
results of its domestic operations to assess the realizability of its deferred tax asset in fiscal 2018.

At June 30, 2017, the Company had $1.3 million of available foreign tax credit carryforwards for financial
reporting purposes, which will expire in fiscal 2021 through 2026.

The Company or its subsidiaries file income tax returns in the United States, China and Taiwan. The
Company is subject to income tax examinations for its U.S. federal income taxes for the fiscal years 2014 through
2016 and, in general, is subject to state and local income tax examinations for the same period. The Company’s
returns in Taiwan have been examined through fiscal year 2015. The Company is subject to income tax examination
in China for calendar years 2012 through 2016. It is reasonably possible that within the next 12 months the China
statute of limitations for calendar year 2012 will expire without an audit being initiated. If so, this would result in a
decrease in unrecognized tax benefits, including interest and penalties, of $94,000.

10
 In the fiscal 2018 three months ended September 30, 2017, the Company recorded a tax provision of
$103,000, which is primarily comprised of a provision for foreign and various state taxes. In the same three month
period last year, the Company reported a tax provision of $140,000, which is primarily comprised of a provision for
foreign and various state taxes.

Note 4 – Foreign Currency Translation, Transactions and Hedging Contracts

The Company incurred net currency transaction losses of $108,000 in the year to date period ended
September 30, 2017. TWI had exchange gains of $26,000 and CWI had exchange losses of $134,000. In the year
to date period ended September 30, 2016, the Company incurred net currency transaction losses of $13,000. TWI
had exchange losses of $55,000 and CWI had exchange gains of $42,000. In addition to exchange gains and losses
TWI also had $95,000 of unrealized holding gains in the current year versus $34,000 of gains in the prior year.

Note 5 - Supplemental Cash Flow Information

Cash interest payments for the three month periods ended September 30, 2017 and 2016 amounted to
$123,000 and $110,000, respectively. In the three month period ended September 30, 2017, the Company paid
approximately $10,000 in state taxes, $46,000 in foreign taxes and no federal taxes. In the three month period ended
September 30, 2016, the Company paid approximately $42,000 in state taxes, $0 in federal taxes and $103,000 in
foreign taxes.

Note 6 - Earnings Per Share

The Company accounts for earnings per share in accordance with the Earnings Per Share Topic of the FASB
ASC. Basic earnings per share represent net income divided by the weighted average number of common shares
outstanding. Reporting periods in fiscal 2018 and 2017 utilize the common stock outstanding in the calculation of
earnings per share and there are no dilutive common stock equivalents; thereby basic shares are also used for the
fully diluted calculation. The weighted average shares were 1,321,000 for the quarters ended September 30, 2017
and 2016.

Note 7 - Segment Information

The Company’s businesses distribute specialty plumbing products, floor and surface protection products and
other products. Products are sold primarily to three customer categories, including (i) retail operations, which includes
national and regional retailers, D-I-Y home centers and smaller independent retailers primarily located in the United
States, (ii) industrial operations, including wholesale and industrial supply distributors which are primarily located in
the United States, and (iii) the e-Commerce market to direct end-user customers. In the fiscal 2018 year-to-date period
ended September 30, 2017, approximately 88.4% of total sales were to the United States, 5.1% to Canada, 1.6% to
Germany, 1.6% to the UK, 1.2% to Mexico and the remaining sales were to multiple other countries. In the same period
last year, approximately 90.2% of total sales were to the United States, 3.2% to Canada, 1.4% to Germany, 1.8% to the
UK, and the remaining sales were to multiple other countries. Set forth below is certain financial data relating to the
Company’s business segments (in thousands of dollars).

11
 Corporate
Period Ending September 30, Retail E-Commerce Industrial and Other Total
Reported net sales:
Fiscal 2018 three months $ 14,738 $ 818 $ 5,122 $ - $ 20,678
Fiscal 2017 three months $ 16,923 $ 606 $ 5,025 $ - $ 22,554

Operating income (loss):

Fiscal 2018 three months $ 1,016 $ 23 $ (101) $ (777) $ 161
Fiscal 2017 three months $ 523 $ 12 $ 368 $ (778) $ 125

Identifiable assets:
September 30, 2017 $ 32,948 $ 1,472 $ 21,089 $ (3,821) $ 51,688
June 30, 2017 $ 30,091 $ 985 $ 17,196 $ (305) $ 47,967
The Company’s foreign operations manufacture, assemble, source and package products that are distributed
by the Company’s wholly-owned operations, retailers and industrial customers. Net sales for those foreign
operations amounted to $14.5 million and $13.4 million for the three month periods ended September 30, 2017 and
2016, respectively. Sales amounts provided in the table above are net of intercompany sales. Identifiable assets for
the foreign operations were $29.9 million at September 30, 2017 and $26.7 million at June 30, 2017.

Note 8 – Fair Value Measurements

The Fair Value Measurements and Disclosures Topic of the FASB ASC applies to the Company’s financial
and non-financial assets and liabilities. The guidance establishes a three-tier fair value hierarchy, which prioritizes
the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted
prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly
or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore
requiring an entity to develop its own assumptions.

The Company has measured at fair value the investment in non-public joint venture operations with Level 3
inputs. At September 30, 2017, the balance of the non-public joint venture operations was $118k, an increase of $1k
due to currency fluctuations.

Note 9 – Retirement Plans

The eligible employees of the Company’s U.S. operations participate in a trusteed, profit sharing and 401(k)
retirement plan. Contributions are discretionary and are determined by the Company’s Board of Directors. There were
no profit sharing contributions in the fiscal periods ended September 30, 2017 or 2016. The Company’s 401(k)
retirement plan meets the Department of Labor’s Safe Harbor Match provisions, and the Company matches 100% of
the first 3% and 50% of the next 2% of deferral by employees, and all contributions are 100% vested. The Company’s
domestic operations currently offer no other retirement, post-retirement or post-employment benefits.

The pension plan of CWI International China Inc. is considered a defined contribution plan under local laws.

The Company’s operation in Taiwan has two types of pension plans: defined benefit and defined contribution
plans, which cover all regular employees. Under the defined benefit plan, pension costs are recognized on the basis
of actuarial calculations. Under the defined contribution pension plan, pension costs are recorded on the basis of the
Company’s required monthly contributions to employees’ individual pension accounts.

The retirement plan funds are administrated by an independently administered pension fund committee and
contributions are required to be deposited in the Central Trust of China, a government approved bank, which

12
administrates the fund and provides a minimum interest rate based on 2 year time deposits, accordingly, the Company
does not have an investment policy for these assets.

As required by the Employer’s Accounting for Defined Benefit Pension and Other Postretirement Plans
Topic of the FASB ASC, the Company is required to recognize a plan’s funded status in its statement of financial
position, measure a plan’s assets and obligations as of the end of the employer’s fiscal year and recognize the changes
in a defined benefit postretirement plan’s funded status in comprehensive income in the year in which the changes
occur. The complete disclosure for the Company’s Retirement Plans is presented in Note 6 of the Company’s
Consolidated Financial Statements and Footnotes for the year ended June 30, 2017.

Note 10 – Authorized Shares

Each share of the Company’s common stock (the “Common Stock”) entitles its holder to one vote, while each
share of Class B common stock entitles its holder to ten votes. Cash dividends on the Class B common stock may not
exceed those on the Common Stock. Due to restricted transferability, there is no trading market for the Class B common
stock. However, the Class B common stock may be converted, at the stockholder's option, into Common Stock on a
share-for-share basis at any time, without cost to the stockholder. No preferred shares have been issued as of September
30, 2017.

The Company’s Certificate of Incorporation authorizes the issuance of 8,000,000 shares of Common Stock,
1,500,000 shares of Class B Common Stock and 200,000 shares of Preferred Stock. The Company has fewer than
100 shareholders of record and terminated its registration under the Securities Exchange Act of 1934 in June 2004.
The Company’s Common Stock trades on the OTC Pink Market.

Note 11 – Related Party Transaction

The Company leases certain of its facilities from, purchases goods and receives services from and makes
payments to certain related parties. A detailed description of these transactions can be found in Note 5 of the
Company’s Consolidated Financial Statements and Footnotes for the year ended June 30, 2017.

Note 12 – Litigation and Contingencies

The Company is subject to various legal proceedings and claims that arise in the ordinary course of business.
In the opinion of management, the amount of any ultimate liability with respect to these actions will not materially
affect the Company's consolidated financial statements or results of operations. In accordance with the Contingencies
Topic of the FASB ASC, the Company accrues for these contingencies by a charge to income when it is both probable
that one or more future events will occur confirming the fact of a loss and the amount of the loss can be reasonably
estimated.

Note 13 – Sale of RiYi Rubber

Effective January 2015, TWI sold its 28% ownership of Tsang Rong (RiYi Rubber) to the majority owner.
TWI will receive approximately $800,000, which includes interest of 4% over 3 years. The Company received a down
payment of $95,000 at the closing and eleven quarterly payments of $55,000 each as of September 30, 2017, which
includes interest. The Company will receive the final payment in December 2017. The sale of RiYi Rubber should
result in approximately $800,000 in cash and a gain of approximately $571,000, which is being amortized over 3
years. TWI will continue to own a 28% investment in land in China that is owned by RiYi Rubber, and will continue
to own it until the land is sold. There is no plan currently to sell the land, which remains on the books for $25,000.
In both the fiscal 2018 and 2017 three months, the Company recognized a gain of approximately $50,000 and $47,000
on the sale of RiYi Rubber, respectively.

13
Section 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report contains certain “forward-looking statements” that are based on the beliefs of the
Company and its management. Statements that are not historical facts, including statements about our confidence in
our prospects and strategies and our expectations about growth of existing markets and our ability to expand into
new markets and to attract new sources of financing, are forward-looking statements that involve risk and
uncertainties. In addition to statements which are forward-looking by reason of context, the words “anticipate,”
“believe,” “continue,” “design,” “estimate,” “expect,” “intend,” “goal,” “may,” “objective,” “optimistic,” “should,”
“will,” and other similar expressions identify forward-looking statements. Such designed statements reflect the
current view of the Company with respect to future events and are subject to certain risks, uncertainties and
assumptions, including, but not limited to, risks associated with currently unforeseen competitive pressures and risks
affecting the Company’s industry, such as decreased consumer spending, customer concentration issues and the
effects of general economic conditions. In light of the risks and uncertainties inherent in all future projections, the
inclusion of forward-looking statements should not be regarded as a representation by us or any other person that
our objectives or plans will be achieved. Many factors could cause our actual results to differ materially and adversely
from those in the forward-looking statements, including:

 the continuity of business relationships with major customers and a high concentration of business with
several customers
 the competitive nature of other suppliers in our business and pricing pressure from retailers and other
customers
 the limited ability to push pricing pressure from customers through to our vendors or absorb these pressures
within our own operations
 the ability of the Company to expand into new markets, attract new customers and develop new products,
including access to sufficient working capital to fund such actions
 any large or unusual cash outlay that would strain our relatively modest positive operating cash flow and
available financing
 the effect of competition by businesses developing sourcing or manufacturing operations in Asia and other
low cost markets
 our ability to continue to meet the terms of our debt and bank credit facilities which include certain financial
covenants and other restrictions
 a prolonged economic slowdown in the retail and industrial economy and / or financial failure, closure or
sale of one of our larger customers
 the effect on our international operations of unexpected changes in regulatory requirements, export
restrictions, currency controls, customs, tariffs and other trade barriers, difficulties in staffing and managing
foreign operations, political and economic instability, fluctuations in currency exchange rates and potential
adverse tax consequences
 a significant amount of product is purchased from our own operations in Asia, which could cause temporary
supply problems if the ability for those operations to provide products was impaired
 the effect of any interruption in supply of material, including any work slowdowns such as the one caused
by the Longshoreman’s strike in fiscal 2003, or the Longshoreman work slowdown in fiscal 2015.

You must consider these risks and others that are detailed in this Quarterly Report in deciding whether to invest and
in assessing any existing investment in the Company. In addition, the Company’s business, operations and financial
condition are subject to the risks, uncertainties and assumptions which are described in the Company’s reports and
statements. Should one or more of those risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described herein.

14
A. Results of Operations

For the Three Months Ended September 30, 2017 and 2016

Net Sales

Net sales for the fiscal 2018 first quarter ended September 30, 2017 totaled $20.7 million, a decrease of $1.9
million as compared to $22.6 million for the same period in the prior fiscal year. The Company’s sales to industrial
customers amounted to $5.1 million for the quarter ended September 30, 2017, as compared to $5.0 million for the
same period last year. Net sales to retailers amounted to $14.7 million and $16.9 million for the quarters ended
September 30, 2017 and 2016, respectively. Retail sales were lower primarily due to competitive price adjustments
with one of the Company’s largest customers. E-Commerce sales totaled $0.8 million for the quarter ended
September 30, 2017, as compared to $0.6 million for the same period last year. LeakSMART sales totaled $0.4
million for the first quarter ended September 30, 2017 and are included in the non-retail and e-Commerce segments
of sales. All of our segments face competition from domestic and foreign manufacturers and wholesalers. The
Company continues to invest in new product initiatives and e-Commerce opportunities, and to work with suppliers
to meet these challenges.

Gross Profit

Gross profit and gross margins for the fiscal 2018 and 2017 first quarters were $8.1 million, or 39.3%, and
$8.3 million, or 36.7%, respectively. Gross profit deteriorated during the quarter due to lower sales but the gross
margin improved due to the mix of sales. Sales to e-Commerce and industrial customers were higher for the quarter
while retail sales were lower. The Company continues to monitor its costs, including prices for oil, certain metals,
VAT in China and currency costs, and to adjust pricing as it can in a competitive market and work with its suppliers
to maintain its margins. As a result of the low demand and excess supply, in addition to easier access to Asian
suppliers, the gross profit margins continue to be impacted for industrial customers.

Selling, General and Administrative Expenses

Selling, general and administrative expenses (“SG&A expenses”) decreased to $8.0 million in the first
quarter of fiscal 2018 as compared to $8.2 million in the same period in the prior year. The ratio of SG&A expenses
to net sales increased from 36.2% for the fiscal 2017 first quarter to 38.5% for the fiscal 2018 first quarter due to the
large decrease in sales. The Company has increased certain sales and marketing costs for marketing initiatives and
product development. Included in the fiscal 2018 first quarter SG&A expenses are net exchange losses of $108,000,
including gains of $26,000 in Taiwan and losses of $134,000 in China. In the fiscal 2017 first quarter, there were net
exchange losses of $13,000, including losses of $55,000 in Taiwan and gains of $42,000 in China. The Company
also reported unrealized holding gains of $95,000 in the fiscal 2018 first quarter as compared to gains of $34,000 in
the same period last year. The Company continues to evaluate and adjust its cost structure where possible, with
certain costs being eliminated or reduced as feasible.

Other Income

Other income amounted to $50,000 and $47,000 for the first quarters ended September 30, 2017 and 2016,
respectively, representing the gain on the sale of RiYi.

Interest Expense

For the quarters ended September 30, 2017 and 2016, interest expense, net of interest income, totaled
$118,000 and $93,000, respectively. Average borrowings for the current year’s quarter amounted to $12.9 million,
with a weighted average interest rate of 3.71%, as compared to $14.2 million in the same prior year quarter, with a
weighted average interest rate of 2.68%. The Company’s debt level may increase in fiscal 2018 due to working
capital needs and its plan to develop certain new products and programs.

15
Provision for Income Taxes

The Company reported a net tax provision of $103,000 and $140,000 for the quarters ended September 30,
2017and 2016, respectively, which is primarily comprised of a provision for foreign and various state taxes.

Net Loss

The Company reported a net loss of $10,000, or $0.01 per share, for the first quarter ended September 30,
2017, as compared to net a loss of $61,000, or $0.05 per share, for the prior fiscal year first quarter. September 30,
2017 results were slightly better than the prior year due to improved gross margins and lower expenses, despite lower
sales.

B. Liquidity and Capital Resources

Management views liquidity on the basis of the Company’s ability to meet operational needs, fund growth
and expansion opportunities of the existing operations and additional investments, including joint ventures or
acquisitions. At September 30, 2017, the Company’s financial condition included working capital of $6.9 million
and a current ratio of 1.22. Inventory, receivable and payable levels have all increased. The Company increased its
domestic short term debt by approximately $0.2 million since June 30, 2017 to provide for the changes in working
capital. In addition, the Company’s foreign operations maintain cash balances, which were approximately $6.7
million at September 30, 2017 and short term investments, which were $0.1 million at September 30, 2017. The
Company has utilized this cash from time to time to fund its U.S. based operations and initiatives. While there are
no restrictions on the use of these funds, there are certain tax consequences for the repatriation of funds to the
Company. No dividends were declared in the three month periods of fiscal 2018 and 2017.

The Company has total future lease commitments for various facilities and other leases totaling $20.1
million, of which approximately $1.5 million relates to the remaining amount to be paid in fiscal 2018. Capital
expenditures for the three month period of fiscal 2018 were $0.2 million, primarily consisting of forklifts and other
manufacturing and warehousing expenses. The Company continues to minimize its capital expenditures during the
current business environment.

The Company believes that currently available cash, available borrowing facilities, including those of its
foreign operations, and its ability to obtain credit lines or establish replacement credit lines with other lenders,
combined with internally generated funds should be sufficient to fund capital expenditures and any increase in
working capital that would be required to accommodate a higher level of business activity.

The Company has a Revolving Credit and Security Agreement with Huntington National Bank
(“Huntington Bank Facility”), with Waxman Industries, Inc., Consumer Products, leakSMART, Inc., Waxman
Industrial Group, Inc. and Waxman USA, Inc. as borrowers (the “Borrowers”) that expires on February 28, 2019.
The Huntington Bank Facility includes interest rate pricing based on a three tiered grid using 30 day LIBOR that
will adjust according to its Fixed Charge Coverage by quarter. Rates can range from LIBOR plus 2.0%, to LIBOR
plus 2.5% or LIBOR plus 3.25%.

Borrowings under the Huntington Bank Facility are secured by the accounts receivable, inventories, certain
general intangibles, and unencumbered fixed assets of Waxman Industries, Inc. and Consumer Products, and a
pledge of 65% of the stock of various foreign subsidiaries. The Huntington Bank Facility requires the Borrowers
to maintain cash collateral accounts into which all available funds are deposited and applied to service the facility
on a daily basis. The bank facility restricts dividends and distributions by the Borrowers. The Huntington Bank
Facility of $20 million can be increased an additional $5 million, in multiples of $1 million increments as needed.
The facility includes a letter of credit sub-facility of $4.0 million and revolving credit advances that utilize (a) up
to 85.0% of the amount of Consumer Product’s eligible accounts receivable plus (b) up to a limit $10.0 million of
Consumer Product’s inventory, at an advance rate of 85% of the net orderly liquidation value of eligible inventory
not to exceed 65% of the lower of cost or market of eligible inventory plus (c) a capital expenditure line with a
yearly equipment sublimit of $500,000, based on 80% of the equipment cost which amortizes over 60 months
16
beginning on March 1 of each year for the previous purchases utilizing this facility for the previous 12 months plus
(d) a $1.25 million sub-facility using 50% of certain accounts receivable from approved customers, invoiced in
Hong Kong or China in U.S. Dollars, as support for the sub-facility; which is subject to temporary suspension if
the Company’s fixed charge coverage is less than 1.25 times and (e) a prepayment penalty of 1.5% in the first year
of the renewal and 0.5% in the second year, with no prepayment penalty thereafter.

The Huntington Bank Facility contains certain customary negative, affirmative and financial covenants
and conditions and also a material adverse change condition that allows Huntington to terminate the agreement
under certain circumstances. The Company was not in compliance with its fixed charge covenant at June 30, 2017.
The Company provided an expense reduction plan and other modifications to preserve the relationship with
Huntington, and completed an amendment to the facility in September 2017. The amendment reset the fixed charge
coverage test period to begin July 1, 2017 and the Company is in compliance at September 30, 2017. The $1.25
million sub-facility supported by certain accounts receivable from approved customers, invoiced in Hong Kong or
China in U.S. Dollars, was temporarily suspended in September until the Company’s fixed charge coverage is
greater than 1.25 times.

The Company has used multiple capital equipment lines of credit, which have been converted to capital
lease term notes. These lines have been used for equipment to expand capabilities at the national distribution center,
as well as for information technology, office and warehouse equipment.

The Company’s operation in China, CWI, has a $2,647,000 facility with the Citibank Shenzhen Bank, of
which $2,205,000 is for short term loan, bank acceptance bill and accounts payable financing, with terms of twelve,
six and three months, respectively. The additional $442,000 is only for bank acceptance bill financing. The floating
annual interest rate for short term loan is approximately 6.5%. While there is no interest on bank acceptance bills,
the bank fee for issuing a bank acceptance bill is equivalent to an annual interest rate of approximately 3%. Citibank
also offers $500,000 for foreign currency hedge transactions. The Citibank facility is secured by the building and
land rights of the CWI facility and is in effect until March 2018. At September 30 2017 and June 30, 2017 there
were no borrowings under this facility.

The Company’s operation in Hong Kong, HWI, has a $1,200,000 facility with SinoPac Bank Hong Kong.
The facility was guaranteed by HWI’s parent company TWI, and requires a 20% deposit. This facility expired in
June 2017 and is currently under review.

The Company paid $56,000 and $145,000 in income taxes in the three months ended September 30, 2017
and 2016, respectively.

The Company relies primarily on Consumer Products for cash flow in the U.S., although it also has access
to cash from its Asian based operations. Consumer Products’ customers include D-I-Y warehouse home centers,
home improvement centers, mass merchandisers and hardware stores. Consumer Products may be adversely affected
by prolonged economic downturns or significant declines in consumer spending. There can be no assurance that any
such prolonged economic downturn or significant decline in consumer spending will not have a material adverse
impact on Consumer Products’ business and its ability to generate cash flow. The Company could also be impacted
by a loss of a significant customer, or significant changes in pricing with a customer, costs, tax or regulatory
provisions or other conditions that could adversely affect its operations in Asia.

Discussion of Cash Flows

Net cash used for operations amounted to $638,000 for the three months September 30, 2017, principally
due to an increase in inventory and receivables and a decrease in accrued liabilities, slightly offset by an increase in
accounts payable. Cash flow used for investments totaled $254,000, which represented a $96,000 increase in short
term investments and $208,000 for capital expenditures, slightly offset by a gain of $50,000 for the sale of the RiYi
joint venture. Cash flow provided by financing activities totaled approximately $132,000 due to the increase in
borrowings less the pay down of capital leases.

17
Section 3. Quantitative and Qualitative Disclosures About Market Risk

The U.S. dollar is the functional currency for a significant portion of the Company’s operations. Intra-
company transactions between Waxman Industries, Inc. and its Industrial operations, TWI and CWI, are effected in
U.S. dollars. The functional currency of the Company’s foreign operations is their local currency. Specifically, the
functional currencies relating to TWI and CWI are the New Taiwan dollar (NT Dollar) and the Chinese Renminbi
(“RMB”), respectively. As a result, the Company is exposed to currency translation risks, which primarily result
from fluctuations of the foreign currencies in which the Company’s foreign subsidiaries deal as compared to the U.S.
dollar over time, which is a non-cash and non profit or loss item. The foreign currency transaction risks arise from
certain receivables and payables being denominated in a currency other than the functional currency.

The majority of TWI’s transaction risk relates to it selling goods in U.S. dollars and the exchange rate
changing in the 30 day to 60 day period that it takes to settle the receivable. TWI purchases very little goods that
are not in NT Dollars, however TWI sells in United States Dollars (“USD”) and is impacted by foreign currency
exchange rates.

CWI sells most of its goods in USD denominations, and the Company has been affected by the fluctuation
in the RMB. The Company initiated several actions in an effort to limit the impact of future currency revaluations,
including a review and adjustment of customer pricing, which may be indexed to the exchange rates and CWI is also
working with its vendors to address the impact of future adjustments.

Gains and losses that result from foreign currency transactions are included in the Company’s consolidated
statements of operations on a current basis and affect the Company’s reported net income (loss). Gains or losses
created by the translation of the foreign company balance sheets are reported as cumulative foreign currency
translation adjustments, and are included as a separate component of stockholders’ equity in the Company’s
consolidated balance sheets and are also reported in comprehensive income in the Company’s consolidated
statements of operations. In the fiscal 2018 three month period, the Company’s operations reported net foreign
currency transaction losses of $108,000, as compared to a net foreign currency exchange losses of $13,000 in the
fiscal 2017 three month period. In addition to exchange gains and losses, TWI also had $95,000 of unrealized
holding gains in the current year versus $34,000 of gains in the prior year.

18
Annex F-2

WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

AND NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

FOR THE FISCAL YEARS ENDED

June 30, 2017 and 2016

1
 INDEX

Independent Auditor’s Report …………..…………………………………….….. 3

Consolidated Balance Sheets ……………………………………………………... 4 – 5

Consolidated Statements of Operations and Comprehensive Income………….…. 6

Consolidated Statements of Stockholders’ Equity …………………………….… 7

Consolidated Statements of Cash Flows …………….……………………… .…… 8

Notes to Consolidated Financial Statements ………………………………….…... 9 – 27

2
 INDEPENDENT AUDITOR’S REPORT

To the Stockholders and Board of Directors

of Waxman Industries, Inc. and Subsidiaries:

We have audited the accompanying consolidated financial statements of Waxman Industries, Inc. and Subsidiaries, which
comprise the consolidated balance sheets as of June 30, 2017 and 2016, and the related consolidated statements of
operations and comprehensive income, stockholders’ equity and cash flows for each of the years in the three-year period
ended June 30, 2017, and the notes to the consolidated financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted
our audits in accordance with auditing standards generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of
material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
consolidated financial position of Waxman Industries, Inc. and Subsidiaries as of June 30, 2017 and 2016 and the results
of their operations and their cash flows for each of the years in the three-year period ended June 30, 2017, in accordance
with accounting principles generally accepted in the United States of America.

MEADEN & MOORE, LTD.

Cleveland, Ohio

September 7, 2017

3
 WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2017 and 2016
(in thousands)

ASSETS

2017 2016

Current Assets:
Cash and cash equivalents $ 7,399 $ 9,025
Trade receivables, net 15,173 15,855
Other receivables 1,738 1,554
Inventories 9,023 10,113
Prepaid expenses 727 949
Deferred tax charge 238 256
Total current assets 34,298 37,752

Property and Equipment:

Land 373 373
Buildings 5,669 5,657
Equipment 13,744 14,229
19,786 20,259
Less accumulated depreciation and amortization (12,718) (12,929)
Property and equipment, net 7,068 7,330

Receivable from Officers' Life Insurance Policies 5,895 5,731

Notes Receivable from Related Parties 369 423
Joint Venture Investments 117 111
Other Assets 220 236
$ 47,967 $ 51,583

The accompanying Notes to Consolidated Financial Statements

are an integral part of these statements.

4
 WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2017 and 2016
(in thousands, except per share data)

LIABILITIES AND STOCKHOLDERS' EQUITY

2017 2016

Current Liabilities:
Short-term borrowings $ 12,573 $ 12,748
Current portion of long-term debt 207 211
Accounts payable 8,845 10,703
Accrued liabilities 5,552 6,379
Total current liabilities 27,177 30,041

Other Long-Term Debt, Net of Current Portion 268 277

Unrecognized Tax Benefits 717 919

Stockholders' Equity
Controlling Interests:
Preferred stock, $.01 par value per share:
200 shares authorized at June 30, 2017 and 2016;
none issued - -
Common stock, $.01 par value per share:
8,000 shares authorized at June 30, 2017 and 2016,
1,111 shares issued and outstanding 100 100
Class B common stock, $.01 par value per share:
1,500 shares authorized at June 30, 2017 and 2016,
210 shares issued and outstanding 21 21
Paid-in Capital 21,394 21,394
Retained Deficit (2,322) (1,533)
19,193 19,982
Accumulated other comprehensive income 612 364
Total stockholders' equity 19,805 20,346
$ 47,967 $ 51,583

The accompanying Notes to Consolidated Financial Statements

are an integral part of these statements.

5
 WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE FISCAL YEARS ENDING JUNE 30, 2017, 2016 and 2015
(in thousands, except per share data)

2017 2016 2015

Net sales $ 86,795 $ 94,075 $ 93,936
Cost of sales 54,522 58,345 60,285
Gross profit 32,273 35,730 33,651
Selling, general and administrative expenses 32,107 32,405 30,767
Operating income 166 3,325 2,884
Gain on sale of fixed assets and joint venture 192 191 121
Dividend income and equity earnings 16 16 14
Interest income 152 143 217
Interest (expense) (487) (500) (575)
Income before taxes 39 3,175 2,661
Provision for income taxes 828 1,105 884
Net (loss) income $ (789) $ 2,070 $ 1,777

Other comprehensive (loss) income:

Net (loss) income $ (789) $ 2,070 $ 1,777
Foreign currency translation adjustment 194 (923) (131)
Additional pension liability adjustment 54 (2) 291
Comprehensive (loss) income $ (541) $ 1,145 $ 1,937

Net (loss) income per share $ (0.60) $ 1.57 $ 1.35

Weighted average shares 1,321 1,321 1,321

The accompanying Notes to Consolidated Financial Statements

are an integral part of these statements.

6
 WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE FISCAL YEARS ENDING JUNE 30, 2017, 2016 and 2015
(in thousands)
Controlling Interest
Accum.
Class B Retained Other Non- Total
Common Common Paid-in Equity Comprehensive controlling Stockholders'
Stock Stock Capital (Deficit) Income (Loss) Interest Equity
Balance June 30, 2014 $ 100 $ 21 $ 21,395 $ (5,348) $ 1,129 $ 1 $ 17,298

Net income - - - 1,777 - - 1,777

Minimum pension liability
adjustment, net of taxes of $60 - - - - 291 - 291
Foreign currency translation
adjustment - - - - (131) - (131)
Balance June 30, 2015 $ 100 $ 21 $ 21,395 $ (3,571) $ 1,289 $ 1 $ 19,235

Net income - - - 2,070 - - 2,070

Stock repurchase - - (1) - - - (1)
Dividends issued - - - (32) - - (32)
Changes attributed to non-
controlling interests - - - - - (1) (1)

Minimum pension liability

adjustment, net of taxes of ($1) - - - - (2) - (2)
Foreign currency translation
adjustment - - - - (923) - (923)
Balance June 30, 2016 $ 100 $ 21 $ 21,394 $ (1,533) $ 364 $ - $ 20,346

Net loss - - - (789) - - (789)

Minimum pension liability

adjustment, net of taxes of ($12) - - - - 54 - 54
Foreign currency translation
adjustment - - - - 194 - 194
Balance June 30, 2017 $ 100 $ 21 $ 21,394 $ (2,322) $ 612 $ - $ 19,805

The accompanying Notes to Consolidated Financial Statements

are an integral part of these statements.

7
 WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Fiscal Year Ended June 30,

Cash (Used For) Provided by: 2017 2016 2015
Operations:
Net (loss) income $ (789) $ 2,070 $ 1,777
Adjustments to reconcile net (loss) income to
net cash (used for) provided by operating activities:
Net loss on retirement of fixed assets 110 72 25
Deferred gain on sale leaseback of Corporate building - - (51)
Gain on sale of joint venture and minority interest (193) (186) (90)
Deferred taxes (3) 4 (13)
Unrecognized tax (benefit) loss (202) 91 184
Depreciation and amortization 1,345 1,345 1,254
Bad debt provision (115) 21 43
Changes in assets and liabilitites:
Trade and other receivables 613 3,771 (2,210)
Inventories 1,090 2,160 (575)
Prepaid expenses and other assets 122 (388) (117)
Accounts payable (1,858) (1,876) 2,392
Accrued liabilities (770) 76 1,176
Net cash (used for) provided by operations (650) 7,160 3,795
Investing:
Capital expenditures (1,001) (1,138) (1,064)
Proceeds from the sale of investment in joint venture 193 185 196
Net cash used for investments (808) (953) (868)
Financing:
Net change in short-term borrowings (175) (3,945) (478)
Repurchase of common stock - (1) -
Repayment of long-term debt (261) (182) (103)
Dividends paid - (32) -
Payment received on shares issued receivable 18 17 17
Net cash used for financing (418) (4,143) (564)

Effect of exchange rate changes 250 (660) (108)

Net (decrease) increase in cash and cash equivalents (1,626) 1,404 2,255
Balance, beginning of year 9,025 7,621 5,366
Balance, end of year $ 7,399 $ 9,025 $ 7,621

Supplemental schedule of non-cash investing and financing activities:

Deferred gain on sale of joint venture $ - $ - $ 488
Equipment purchased under capital lease 248 361 386

The accompanying Notes to Consolidated Financial Statements

are an integral part of these statements.

8
 WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2017, 2016 and 2015
(amounts in tables are in thousands)

1. Summary of Significant Accounting Policies

A. Basis of Consolidation and Description of the Company

The accompanying consolidated financial statements include the accounts of Waxman

Industries, Inc. (“Waxman Industries”), its wholly-owned subsidiaries and other companies where the
company has a controlling interest (collectively, the “Company”). All significant intercompany
transactions and balances are eliminated in consolidation.

The Company is a supplier of specialty plumbing, floor and surface protection, leak detection
and mitigation and other hardware products to the repair and remodeling market in the United States.
The Company distributes its products to a wide variety of large national and regional retailers,
independent retail customers, wholesalers and to the e-Commerce market. The Company conducts its
business primarily through its wholly-owned and majority-owned subsidiaries, Waxman Consumer
Products Group Inc. and its Subsidiaries (“Consumer Products”), TWI Industrial Inc. (“TWI
Industrial”), and Waxman Industrial Group, Inc. (“WIG”). WIG includes TWI International Taiwan
Inc. (“TWI”), located in Taiwan, and CWI International China, Ltd. (“CWI”), located in China.

Consumer Products, the Company’s largest operation, is a supplier of specialty plumbing, floor
and surface protection, leak detection and mitigation and other hardware products to a wide variety
of large retailers. Consumer Products included an operation formed in Hong Kong to manage various
product sales programs, SWI Ltd. (“SWI”), which was 90% owned by Consumer Products. SWI was
dissolved in March 2016. TWI Industrial is a sales, marketing and management operation that sells
products for TWI and CWI in North America, and manages sales representatives for CWI and TWI
throughout Europe and Asia (collectively “Industrial Sales”). TWI and CWI manufacture, package,
source and assemble product purchased by Consumer Products and non-affiliated businesses.

B. Accounting Estimates

The consolidated financial statements of the Company are prepared in conformity with
accounting principles generally accepted in the United States of America (“U.S. GAAP”). The
preparation of these financial statements requires management of the Company to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the period presented. Actual
amounts could differ from these estimates and different amounts could be reported using different
assumptions and estimates.

C. Cash and Cash Equivalents

Cash balances include certain unrestricted operating accounts and accounts of foreign
operations. The Company considers all highly liquid temporary cash investments with original
maturities of less than three months to be cash equivalents. Cash investments are valued at cost plus
accrued interest, which approximates market value.

9
 The Company’s cash position includes amounts held by foreign subsidiaries, and, as a result,
the repatriation of certain cash balances from some of the Company’s foreign subsidiaries would result
in additional tax costs. However, these cash balances are generally available without legal restriction
to fund local business operations. In addition, a portion of the Company’s cash balances is held in U.S.
dollars by foreign subsidiaries, whose functional currency is their local currency. Such U.S. dollar
balances are reported on the foreign subsidiaries books, in their foreign currency, with the impact from
foreign currency exchange rate differences recorded in other income (expense). The Company’s cash
holdings at the end of fiscal years 2017 and 2016 were as follows:

2017 2016
Non-U.S. dollar balances held by non-U.S. dollar $ 1,565 $ 4,428
functional currency subsidiaries
U.S. dollar balances held by non-U.S. dollar 5,944 4,853
functional currency subsidiaries
Non-U.S. dollar balances held by U.S. dollar - -
functional currency subsidiaries
U.S. dollar balances held by U.S. dollar functional (110) (256)
currency subsidiaries
Total Cash $ 7,399 $ 9,025

D. Trade Receivables

Trade receivables are presented net of allowances for doubtful accounts of $453,000 and
$594,000 at June 30, 2017 and June 30, 2016, respectively. The allowance for doubtful accounts is
based on a reserve for specific customer balances in addition to a percentage of the accounts receivable
balance at each year end. In fiscal 2017, the Company reduced its allowance for doubtful accounts
balance. The net bad debt provision is approximately ($115,000), $21,000, and $43,000 in fiscal 2017,
2016 and 2015, respectively.

The Company sells specialty plumbing, floor and surface protection, leak detection and
mitigation and other hardware products throughout the United States to do-it-yourself (“D-I-Y”)
retailers, mass merchandisers, smaller independent retailers, wholesalers and the e-Commerce market.
The Company performs ongoing credit evaluations of its customers' financial conditions. The
Company’s largest customers are retailers. As a percentage of the Company’s net sales, the largest three
customers accounted for 58.4%, 62.2%, and 59.4% for fiscal 2017, 2016 and 2015, respectively, and
those customers accounted for approximately 60.0% and 59.8% of accounts receivable at June 30, 2017
and 2016, respectively.

E. Inventories

At June 30, 2017 and 2016, inventories, consisting primarily of finished goods, are carried at
the lower of average cost or market. The Company regularly evaluates its inventory carrying value, with
appropriate consideration given to any excess, slow-moving and/or nonsalable inventories.

10
Inventory consists of the following at June 30:
2017 2016
Raw Materials and Component Parts $ 1,734 $ 1,706
Merchandise Inventory 7,289 8,407
$ 9,023 $ 10,113

The above amounts are net of a reserve for obsolete inventory in the amount of approximately
$1,502,000 and $1,445,000 for fiscal 2017 and 2016, respectively.

F. Property and Equipment

Property and equipment are stated at cost. For financial reporting purposes, buildings and
equipment are depreciated on a straight-line basis over the estimated useful lives of the related assets.
Included in Land are the land use rights in China, which are amortized over 50 years. Depreciable lives
are 15 to 40 years for buildings and 3 to 15 years for equipment. Leasehold improvements are amortized
on a straight-line basis over the term of the lease or the useful life of the asset, whichever is shorter. For
income tax purposes, accelerated methods of depreciation are used. Depreciation expense totaled
$1,345,000 in fiscal 2017, $1,345,000 in fiscal 2016 and $1,254,000 in fiscal 2015. Repairs and
maintenance are expensed as incurred.

G. Receivables from Split Dollar Life Insurance Policies

The Company funds two split dollar life insurance policies for Melvin Waxman, providing
for total death benefits of $7,535,000, two policies for Armond Waxman, providing for total death
benefits of $8,000,000 and, one policy for Laurence Waxman, providing for death benefits of
$6,000,000. In the event of the death of any of the above-referenced insureds, the Company will be
repaid for the aggregate premiums paid by the Company totaling $8,160,000 from the insurance
proceeds paid to the split dollar life insurance trusts which own such policies. Therefore the related
receivables are deemed collectible as long the policies have not lapsed.

The premiums paid on policies that began subsequent to September 17, 2003 are being treated
as a loan to the executive, providing interest income to the Company (“Loan Regime Policies”). Split
dollar life insurance policies issued prior to this date are treated under the economic benefit regime and
do not provide interest to the Company (“Economic Benefit Policies”) and have been discounted to
their present value. The one exception is the Armond Waxman policy that was sold in fiscal 2014.
Since there was a material change to the policy, it is now treated under the Loan Regime.

The Company reports income each year for the increase in value related to the imputed interest
amortization of those receivables, which will offset a portion of the future payment of premiums on
those policies. The accumulated premiums paid on the Loan Regime Policies are not discounted since
they earn interest income. The Company recorded selling, general and administrative income of
$138,000 in fiscal 2017, $67,000 in fiscal 2016, and $69,000 in fiscal 2015.

H. Procurement Charges

The Company’s policy is to account for up-front “slotting fees” charged by retailers for the
right to shelf space as a reduction in revenue.

11
 I. Foreign Currency Translation and Transactions

All balance sheet accounts of foreign subsidiaries are translated at the exchange rate as of the
end of the fiscal year. Income statement items are translated at the average currency exchange rates
during the fiscal year. The resulting translation adjustment is recorded as a component of stockholders’
equity and comprehensive loss. Foreign currency transaction gains or losses that arise from the
settlement of trade receivables and payables are included in the consolidated statements of operations,
in Selling, General and Administrative expenses, as incurred. The Company incurred net currency
transaction losses of $52,000 in fiscal 2017 as compared to net currency transaction gains of $898,000
and $51,000 in fiscal 2016 and 2015, respectively.

For the period of June 2015 through November 2015, the Company entered into six forward
foreign exchange contracts to minimize exposure to adverse changes in currency exchange rates for its
operations in China, including customer pricing and vendor purchase adjustments that may be indexed
to exchange rates. These foreign currency exchange contracts were treated as cash flow hedges in which
the Company hedged the variability of cash flows related to the market value of the Chinese RMB
versus the fixed rate. The difference between the fair market value of the Chinese RMB and the fixed
rate in the contract was recorded in earnings until those policies matured. Each of the monthly forward
foreign exchange contracts were for $1 million. All of the forward foreign exchange contracts were
settled in fiscal 2016 with the net result being a loss of approximately $66,000. Based on the fair market
value of those contracts, the Company had a $13,000 gain in fiscal 2015. The Company had no foreign
exchange contracts at June 30, 2017 and June 30, 2016.

J. Revenue Recognition

The Company’s policy is to recognize revenue as risk and title to the product transfers to the
customer, which usually occurs at the time the shipment is made and when the sales price is fixed and
determinable and the collectability of the revenue is reasonably assured.

K. Dividend Policy
The Company records dividends received from investments accounted for under the cost
method of accounting as dividend income in the year received. Dividends received from investments
accounted for under the equity method of accounting are recorded as reductions in the investment in the
year received.

Dividends received from wholly-owned subsidiaries are accounted for as a reduction in that
operation’s retained earnings, with dividend income being recognized by the operation receiving the
dividend. A corresponding consolidating entry is recorded to eliminate this intercompany transaction.
In fiscal 2017, 2016 and 2015, there was a dividend of $2,191,000, $1,091,000 and $890,000,
respectively, from TWI to Corporate. In fiscal 2017, 2016 and 2015, there was a dividend of $1,566,000,
$500,000 and $0, respectively, from CWI to TWI.

The Company has not paid a dividend to its shareholders since fiscal 1993, and the Company
has restrictions from paying a dividend under its current bank agreement.

L. Shipping and Handling Fees

In accordance with accounting guidance on shipping and handling costs, the Company has
historically recorded freight and any directly related associated cost of transporting finished product
12
to customers as a component of its selling, general and administrative (“SG&A”) expenses. Included
in SG&A expenses are $3.1 million, $3.1 million and $3.3 million in shipping and handling costs for
fiscal 2017, 2016 and 2015, respectively.

M. Earnings per Share

As required by the Earnings Per Share topic of the FASB Accounting Standards Codification
(“FASB ASC”), the Company reports “basic earnings per share,” which represents net income
divided by the weighted average number of common shares outstanding and diluted earnings per
share, which utilizes the weighted average number of common stock and common stock equivalents,
including stock options and warrants. The Company does not have any outstanding common stock
equivalents at June 30, 2017, 2016 and 2015; thereby basic shares are also used for the fully diluted
calculation.

The number of common shares used to calculate earnings per share are 1,321,000 for fiscal
2017, 2016 and 2015.

N. Joint Venture Investments

The Company, through TWI, is invested in Everbrite, a joint venture operation in Asia. An
additional joint venture, Tsang Roug Industrial (Shenzhen) Ltd., was sold effective January 2015 (see
Note 14).

Everbrite has been accounted for using the cost method of accounting because TWI does not
exercise significant influence over the operating and financial policy decisions of this entity.
Accordingly, the Company has recognized the distributions received from this entity as dividend
income. The Company reported dividend income from Everbrite of $16,000, $16,000 and $14,000
for fiscal 2017, 2016 and 2015, respectively. TWI owns 6.4% of this entity with an investment of
$92,800 and $87,500 at June 30, 2017 and 2016, respectively.

O. Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of assets and liabilities and their
respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities
are measured using enacted tax laws and rates expected to apply to taxable income in the years in which
these temporary differences are expected to be recovered or settled. A valuation allowance is provided
if it is more likely than not that some or all of the deferred tax assets will not be realized. Management
evaluates the realizability of the deferred tax assets and assesses the need for a valuation allowance
yearly. In assessing the realizability of its net deferred tax asset, the Company considered its historic
performance and the uncertainty of it being able to generate enough domestic taxable income to utilize
its assets.

The Company recognizes the tax benefits of uncertain tax positions only when the position is
more likely than not to be sustained under examination by the appropriate taxing authority. The amount
recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being
realized upon ultimate settlement. See Note 3 for further discussion.

13
 P. Reclassifications

Certain prior year amounts have been reclassified to conform with the current year’s
presentation.

2. Debt

A. Total Debt

Total debt consists of the following at June 30, 2017 and 2016 (in thousands, except
percentages):
2017 2016
Revolving Credit Agreement $ 12,573 $ 12,748
Capital Leases Maturing in Fiscal 2018-2022 475 488
Subtotal 13,048 13,236
Less: Current Portion (12,780) (12,959)
Long-Term Debt, Net of Current Portion $ 268 $ 277

The Company has a Revolving Credit and Security Agreement with Huntington National
Bank (“Huntington Bank Facility”), with Waxman Industries, Inc., Consumer Products,
leakSMART, Inc., Waxman Industrial Group, Inc. and Waxman USA, Inc. as borrowers (the
“Borrowers”) that expires on February 28, 2019. The Huntington Bank Facility includes interest
rate pricing based on a three tiered grid using 30 day LIBOR that will adjust according to its Fixed
Charge Coverage by quarter. Rates can range from LIBOR plus 2.0%, to LIBOR plus 2.5% or
LIBOR plus 3.25%.

Borrowings under the Huntington Bank Facility are secured by the accounts receivable,
inventories, certain general intangibles, and unencumbered fixed assets of Waxman Industries, Inc.
and Consumer Products, and a pledge of 65% of the stock of various foreign subsidiaries. The
Huntington Bank Facility requires the Borrowers to maintain cash collateral accounts into which all
available funds are deposited and applied to service the facility on a daily basis. The bank facility
restricts dividends and distributions by the Borrowers. The Huntington Bank Facility of $20 million
can be increased an additional $5 million, in multiples of $1 million increments as needed. The
facility includes a letter of credit sub-facility of $4.0 million and revolving credit advances that
utilize (a) up to 85.0% of the amount of Consumer Product’s eligible accounts receivable plus (b)
up to a limit $10.0 million of Consumer Product’s inventory, at an advance rate of 85% of the net
orderly liquidation value of eligible inventory not to exceed 65% of the lower of cost or market of
eligible inventory plus (c) a capital expenditure line with a yearly equipment sublimit of $500,000,
based on 80% of the equipment cost which amortizes over 60 months beginning on March 1 of each
year for the previous purchases utilizing this facility for the previous 12 months plus (d) a $1.25
million sub-facility using 50% of certain accounts receivable from approved customers, invoiced in
Hong Kong or China in U.S. Dollars, as support for the sub-facility; which is subject to temporary
suspension if the Company’s fixed charge coverage is less than 1.25 times and (e) a prepayment
penalty of 1.5% in the first year of the renewal and 0.5% in the second year, with no prepayment
penalty thereafter.
14
 The Huntington Bank Facility contains certain customary negative, affirmative and financial
covenants and conditions and also a material adverse change condition that allows Huntington to
terminate the agreement under certain circumstances. The Company was not in compliance with its
fixed charge covenant at June 30, 2017. The Company provided an expense reduction plan and
other modifications to preserve the relationship with Huntington, and completed an amendment to
the facility in September 2017. The amendment resets the fixed charge coverage test period to begin
July 1, 2017. The $1.25 million sub-facility supported by certain accounts receivable from approved
customers, invoiced in Hong Kong or China in U.S. Dollars was temporarily suspended in
September until the Company’s fixed charge coverage is greater than 1.25 times.

The Company has used multiple capital equipment lines of credit, which have been converted
to capital lease term notes. These lines have been used for equipment to expand capabilities at the
national distribution center, as well as for information technology, office and warehouse equipment.

The Company’s operation in China, CWI, has a $2,647,000 facility with the Citibank
Shenzhen Bank, of which $2,205,000 is for short term loan, bank acceptance bill and accounts
payable financing, with terms of twelve, six and three months, respectively. The additional
$442,000 is only for bank acceptance bill financing. The floating annual interest rate for short term
loan is approximately 6.5%. While there is no interest on bank acceptance bills, the bank fee for
issuing a bank acceptance bill is equivalent to an annual interest rate of approximately 3%. Citibank
also offers $500,000 for foreign currency hedge transactions. The Citibank facility is secured by the
building and land rights of the CWI facility and is in effect until March 2018. At June 30, 2017 and
2016 there were no borrowings under this facility.

The Company’s operation in Hong Kong, HWI, has a $1,200,000 facility with SinoPac Bank
Hong Kong. The facility was guaranteed by HWI’s parent company TWI, and requires a 20% deposit.
This facility expired in June 2017 and is currently under review. At June 30, 2017 and 2016, there
were no borrowings under this facility.

B. Capital Leases

The Company has certain obligations under capital leases which are included in the debt
balances in the Total Debt table provided in Note 2A. The obligations under capital leases have fixed
interest rates of 4.20% to 8.00% and are collateralized by property, plant and equipment. Property
under capitalized leases consists of the following (in thousands):

2017 2016
Machinery and Equipment $ 996 $ 747
Less: Accumulated Depreciation 263 120
$ 733 $ 627

15
 The future minimum payments under these leases are as follows (in thousands):
2018 $ 227
2019 160
2020 81
2021 36
2022 6
Total Minimum Lease Obligation 510
Less Interest 35
Present Value of Total Minimum Lease Obligation $ 475

C. Miscellaneous

The Company made cash interest payments of $477,000, $496,000 and $582,000 in fiscal 2017,
2016 and 2015, respectively.

Management believes the carrying value of its bank loan approximates its fair value as it bears
interest based upon the bank’s prime lending rates.

3. Income Taxes

The components of income (loss) before income taxes for the fiscal years ended June 30, 2017,
2016 and 2015 are as follows (in thousands):

2017 2016 2015

Domestic $ (1,917) $ 169 $ 1,242
Foreign 1,956 3,006 1,419
Total $ 39 $ 3,175 $ 2,661

The components of the provision (benefit) for income taxes for the fiscal years ended June 30,
2017, 2016 and 2015 are (in thousands):
2017 2016 2015
Current:
Federal $ (231) $ 156 $ 374
Foreign 1,032 913 482
State and local 30 32 41
$ 831 $ 1,101 $ 897
Deferred:
Foreign $ (3) $ 4 $ (13)
$ (3) $ 4 $ (13)
Total provision $ 828 $ 1,105 $ 884

16
 The following table reconciles income taxes based on the U.S. federal statutory rate to the
Company's provision (benefit) for income taxes (in thousands):

2017 2016 2015

Income tax expense at statutory rate $ 14 $ 1,111 $ 931
State and local income taxes, net of federal tax benefit 30 32 41
International items, net of foreign tax credit 199 (278) 425
Nontaxable and nondeductible items 75 - 63
Charitable contribution carryforward expiration 242 213 40
Accruals and settlements (201) 91 (247)
Valuation allowance 461 (64) (452)
Other, net 8 - 83
Total provision $ 828 $ 1,105 $ 884

The deferred tax assets and liabilities as of June 30, 2017 and 2016 are as follows (in thousands):

2017 2016
Foreign tax credit carryforward $ 1,269 $ 590
Charitable contribution carryforward 26 242
Accrued expense 571 814
Inventories 992 1,101
Allowance for doubtful accounts 114 161
Patent and trademark amortization 96 74
Other 34 26
Deferred tax asset 3,102 3,008
Property and equipment (172) (176)
Other (26) (26)
Deferred tax liabilities (198) (202)
Net deferred tax asset 2,904 2,806
Valuation allowance (2,615) (2,496)
$ 289 $ 310

The Company believes that it is more likely than not that the net deferred tax asset will not be
fully realized and, therefore, has reduced the deferred tax asset by a valuation allowance. In assessing
the realizability of its net deferred tax asset, the Company considered its historic performance and the
uncertainty of it being able to generate enough domestic taxable income to utilize these assets. At
June 30, 2017 and 2016, the Company’s net deferred tax assets for the U.S. operations are fully offset
by a valuation allowance. The net deferred tax assets for foreign operations at June 30, 2017 and
2016 of $289,000 and $310,000 are not offset by a valuation allowance. The Company will continue
to analyze the trends in the operating results of its domestic operations to assess the realizability of
its deferred tax asset in fiscal 2018.

At June 30, 2017, the Company had $1.3 million of available foreign tax credit carryforwards
for financial reporting purposes, which will expire in fiscal 2021 through 2026.

17
 Undistributed earnings of the Company’s foreign operations that are considered to be
indefinitely invested were approximately $11.2 million as of June 30, 2017. Since these earnings are
considered to be indefinitely reinvested, no deferred U.S. federal or state taxes have been provided
on a hypothetical distribution of these earnings.

The following chart reconciles the Company’s total gross unrecognized tax benefits excluding
interest and penalties for the years ended June 30, 2017, 2016 and 2015 (in thousands):

2017 2016 2015

Balance at the beginning of year $ 744 $ 624 $ 382
Additions based on tax positions for the current year 31 183 319
Reduction for tax positions of prior years (240) - -
Statute lapse (18) (63) (77)
Balance at end of year $ 517 $ 744 $ 624

At June 30, 2017, the Company had unrecognized tax benefits of $0.5 million that, if
recognized, would have a favorable effect on the annual effective income tax rate.

The Company recognizes interest and penalties accrued on unrecognized tax benefits as a
component of income tax expense. The provision for income taxes in fiscal 2017 and 2016 included
$25,000 and $(29,000) for interest and penalties associated with unrecognized tax benefits,
respectively. At June 30, 2017 and 2016, accrued interest and penalties were $200,000 and $175,000,
respectively.

The Company or its subsidiaries file income tax returns in the United States, China and
Taiwan. The Company is subject to income tax examinations for its U.S. federal income taxes for
the fiscal years 2014 through 2016 and, in general, is subject to state and local income tax
examinations for the same period. The Company is subject to income tax examination in China for
calendar years 2012 through 2016. The Company’s returns in Taiwan have been examined through
fiscal year 2015. It is reasonably possible that within the next 12 months the China statute of
limitations for calendar year 2012 will expire without an audit being initiated. If so, this would result
in a decrease in unrecognized tax benefits, including interest and penalties, of $94,000.

The Company did not make any federal income tax payments in fiscal 2017. The Company
received refunds net of federal income tax payments of $7,000 in fiscal 2016 and made federal income
tax payments of $10,000 in fiscal 2015, respectively. The Company made foreign tax payments of
$1,274,000, $665,000 and $608,000 in fiscal 2017, 2016 and 2015, respectively. The Company paid
$74,000, $75,000 and $45,000 in state taxes for fiscal 2017, 2016 and 2015, respectively.

4. Lease Commitments

The Company leases certain warehouse and office facilities and equipment under operating
lease agreements, which expire at various dates through 2031. The future minimum rental payments
are as follows (in thousands):

18
 2018 $ 1,882
2019 1,764
2020 1,677
2021 1,684
2022 1,278
Thereafter 11,815
$ 20,100

Total lease expense charged to operations was $1.9 million in fiscal 2017 and $2.0 million in
each of the fiscal years 2016 and 2015. The Company leases certain warehouse space from related
parties, which are detailed in Note 5. Rent expense on leases with related parties totaled $0.6 million
in fiscal 2017, $1.5 million in fiscal 2016 and $1.7 million in fiscal 2015.

5. Related-Party Transactions

The Company’s Consumer Products operation purchases certain products, which it cannot
manufacture with its existing operations, from WDI International, Inc. (“WDI International”), a
company owned in part by certain members of the Waxman family and other non-affiliated
individuals. In fiscal 2017, 2016 and 2015, purchases from WDI International amounted to $375,000,
$537,000 and $551,000, respectively. The Company believes that the prices it receives are on terms
comparable to those that would be available from unaffiliated third parties.

The Company leases its corporate office building from Omega Realty LLC, which is owned by
Melvin and Armond Waxman, the Company’s Co-Chairmen of the Board and members of their
family. Rent expense amounted to $243,000 in each of the fiscal years 2017, 2016 and 2015. The
Company recognized a gain on the sale of the building of approximately $873,000, which was sold
to the family in 2005 and was amortized over the life of the lease for financial statement purposes,
which ended in January 2015. The Company amortized approximately $51,000 in fiscal 2015 of the
deferred gain.

The Company’s Consumer Products operation leases 9,000 square feet of executive and
administrative office space as well as approximately 42,000 square feet of warehouse space in
Bedford Heights, Ohio from Aurora Investment Co., a partnership owned by Melvin Waxman and
Armond Waxman together with certain other members of their families, which expires in May 2021.
Rent expense under this lease was $327,000 in the fiscal years 2017, 2016, and 2015, which
management believes is competitive with other rates in the area.

Until its sale in March 2016, Consumer Products leased 4,000 square feet of office space and
351,000 square feet of warehouse space for its national distribution center from A & M Properties,
LLC, an entity owned by Melvin and Armond Waxman and certain members of their families. Until
the time this facility was sold, rent expense paid to A&M was $891,000 in fiscal 2016 and $1,163,000
in fiscal 2015, which management believes is competitive with other rates in the area. The Company
had approximately $1,000 in rent expense for fiscal 2017 due to past CAM charges.

19
 At June 30, 2017 and 2016, the Company had the following receivables from related parties
(in thousands):

Related Party: 2017 2016

Armond Waxman, Co-Chairman $ 22 $ 22
Laurence Waxman, CEO & President 220 254
Waxman Development 45 48
Aurora Investments Co. 81 95
All Other related parties 1 4
Total $ 369 $ 423

All of the related party and officer notes receivable are documented by promissory notes that
bear interest at the minimum rates established by the Internal Revenue Service to avoid imputed
interest attribution. Waxman Development is a real estate development and management company
that is majority owned by certain members of the Waxman family, including Melvin Waxman,
Armond Waxman, Laurence Waxman and Todd Waxman. Aurora Investments and Waxman
Development have been paying interest and principal payments and are payable over a twenty year
period. Laurence Waxman’s receivable relates to the purchase of 100,000 shares of Company stock,
which is being repaid over 10 years, and for certain expenses paid on behalf of Mr. Waxman by the
Company, which is being forgiven over the next 10 years subject to his continued employment with
the Company.

6. Retirement Plans

The eligible employees of the Company’s U.S. operations participate in a Safe Harbor 401(k)
retirement plan. The Company matches up to 100% of the first 3% and 50% for the next 2% of
deferral by employees, which amounted to $229,000, $232,000 and $218,000 in fiscal 2017, 2016 and
2015, respectively. According to Safe Harbor provisions, all contributions are 100% vested. The
Company’s U.S. operations currently offer no other retirement, post-retirement or post-employment
benefits.

The pension plan of CWI International China, Ltd. is considered a defined contribution plan
under local laws.

The Company’s operation in Taiwan has two types of pension plans: defined benefit and
defined contribution plans, which cover all regular employees. Under the defined benefit plan,
pension costs are recognized on the basis of actuarial calculations. Under the defined contribution
pension plan, pension costs are recorded on the basis of the Company’s required monthly
contributions to employees’ individual pension accounts.

For the defined benefit plan, prior service costs are amortized on a straight-line basis over the
average period from the plan effective date or amendment until the benefits become vested. When the
benefits are already vested after the introduction of, or changes in, the plan, the Company recognizes
the prior service cost as expense immediately. If the defined benefit plan is curtailed or settled, the
curtailment or settlement gain or loss is recognized as part of the net pension cost for the period.

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 The retirement plan funds are administrated by an independently administered pension fund
committee and contributions are required to be deposited in the Central Trust of China, a government
approved bank, which administrates the fund and provides a minimum interest rate based on 2 year
time deposits, accordingly, the Company does not have an investment policy for these assets.

The Labor Pension Act of the ROC (the “Act”), which took effect July 1, 2005, allowed
employees who were hired before June 30, 2005 and at work on July 1, 2005 to choose the pension
scheme either under the Labor Standards Law, a defined benefit plan, or under this Act, a defined
contribution plan.

Employees who are hired after July 1, 2005 can only choose to adopt the pension plan
regulated by the Act. Once an employee switches to the defined contribution plan they cannot go back
to the defined benefit plan. The new defined contribution plan is a portable plan with a minimum
contribution of 6% being made monthly by the company and allowing the employee to voluntarily
deduct up to 6% of their compensation. Retiring employees can choose between a lump sum and an
annuity type benefit under the new plan. TWI has 22 employees that chose to participate in the
defined contribution plan. TWI has recognized pension costs of approximately $30,000 and $29,000
for fiscal 2017 and 2016, respectively, for these employees.

The remaining 5 employees at TWI chose to participate in the defined benefit plan under the
Labor Standards Law. This plan provides for the payment of benefits based on length of service and
basic pay at the time of retirement. An employee should receive a lump sum of retirement payments
equal to 2 base units for each year of service, with each year of service exceeding 15 years entitled to
only one 1 unit of base wage, for a maximum of 45 units. The plan is fully funded as of June 30, 2017.
The balance for pension funds deposited into the Central Trust of China amounted to $295,000 and
$418,000 at June 30, 2017 and 2016, respectively. The Company had an unrecognized benefit
expense of $175,000 for employees that retired from the defined benefit plan in fiscal 2017.

As required by the Employer’s Accounting for Defined Benefit Pension and Other
Postretirement Plans Topic of FASB ASC, the Company is required to recognize a plan’s funded
status in its statement of financial position, measure a plan’s assets and obligations as of the end of
the employer’s fiscal year and recognize the changes in a defined benefit postretirement plan’s funded
status in comprehensive income in the year in which the changes occur.

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Changes in the projected benefit obligation and fair value of plan assets, and the funded status of the
Company’s defined benefit pension plan were as follows, in thousands:

2017 2016
Change in benefit obligation:
Benefit obligation at beginning of year $ 503 $ 465
Service cost 25 22
Interest cost 7 8
Actuarial loss/(gain) 11 29
Curtailment or settlement loss (193) -
Currency exchange rate changes 31 (21)
Benefit obligation at end of year 384 503

Change in plan assets:

Fair value of plan assets at beginning of year 418 21
Actual return on plan assets 4 2
Employer contributions 22 396
Benefit payments (175) -
Currency exchange rate changes 26 (1)
Fair value of plan assets at end of year 295 418

Underfunded
Accrued benefit
status
costat end of year $ (89) $ (85)

The accrued benefit cost is included in the Consolidated Statement of Financial Position in the
following captions, in thousands:
2017 2016
Amount recognized in the Statement of Financial Position
Accrued benefit liability $ (89) $ (85)
Intangible asset - -
Accrued benefit cost $ (89) $ (85)
Amounts recognized in accumulated other comprehensive loss:
Net actuarial loss $ 128 $ 178
Net prior service cost (credit) - -
Net transition obligation 21 37
Pension deferred tax asset (25) (37)
Accumulated other comprehensive loss $ 124 $ 178

The estimated net loss, prior service cost and transition obligation that will be amortized from
accumulated other comprehensive income into periodic benefit cost over the next fiscal year are
approximately $7,000, $0 and $5,000, respectively.

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 The following table presents significant weighted-average assumptions to determine projected
benefit obligations of the defined benefit plan:

2017 2016
Discount rate used in determining present values 1.25% 1.25%
Rate of compensation increase 2.00% 2.00%

The following table presents significant weighted-average assumptions to determine net

periodic benefit cost of the defined benefit plan:

2017 2016
Discount rate used in determining present values 1.25% 1.75%
Expected long-term return on plan assets 1.75% 1.75%
Rate of compensation increase 2.00% 2.00%

For 2017, the net periodic pension cost was based on long-term rates of return as noted above.
In developing these expected long-term rate of return assumptions, consideration was given to
expected returns based on the current investment policy and historical return for the asset classes.

The following table presents selected pension plan information, in thousands:

2017 2016
Projected benefit obligation $ (384) $ (503)
Accumulated benefit obligation $ (305) $ (400)
Fair value of plan assets $ 295 $ 418

A summary of the components of net periodic benefit cost for the pension plan is as follows, in
thousands:
2017 2016 2015
Components of net periodic benefit cost:
Service cost $ 25 $ 22 $ 41
Interest cost 7 8 18
Expected return on plan assets (8) (1) (7)
Amortization of transition obligation 8 8 19
Amortization of prior service cost - - (1)
Amortization of actuarial loss 10 8 22
Curtailment loss 57 - 276
Net periodic benefit cost recognized $ 99 $ 45 $ 368

Changes in other comprehensive income (loss):

Actuarial income (loss) $ (50) $ 13 $ (264)
Prior service cost - - 1
Transition obligation (16) (10) (88)
Pension deferred tax asset 12 (1) 60
Change in accum. other comprehensive inc (loss) $ (54) $ 2 $ (291)

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 At June 30, 2017 and 2016, the assets of the plan are held in trust and allocated as follows:

2017 2016
Equity securities (Level 1) 8% 7%
Debt securities (Level 2) 5% 5%
Cash and Other 87% 88%

The Company’s basis for determining (1) the expected 1.75% long term rate of return on the
assets was based on the historic investment return and expected future returns and (2) the discount
rates of 1.25% for fiscal 2017 and 2016 were based on management’s review of risk free rates over
long-term periods.

The plan’s investment strategy seeks long-term growth and stability throughout conservative
investments. See the above table for descriptions of inputs used to measure fair value.

At June 30, 2017, the benefits expected to be paid in each of the next five years, and in
aggregate for the five years thereafter, relating to the Company’s defined benefit pension plan, were
as follows:

Expected benefit payments (in thousands):

2018 $9
2019 9
2020 22
2021 14
2022 12
2023-2027 120

7. Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) is a separate line within stockholders’ equity
that reports the Company’s cumulative income that has not been reported as part of net income on the
Company’s income statement.
2017
Gross Tax effect Net Amount
Foreign currency translation $ 736 $ - $ 736
Minimum pension liability (149) 25 (124)
$ 587 $ 25 $ 612

2016
Gross Tax effect Net Amount
Foreign currency translation $ 542 $ - $ 542
Minimum pension liability (215) 37 (178)
$ 327 $ 37 $ 364

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8. Legal Reserve

The Company owns and operates subsidiaries in China and Taiwan, the Republic of China.
According to the laws of the Republic of China, the annual earnings of a company should first be
used to pay income tax and offset any prior years’ deficit; thereafter, 10% of the remainder, if any,
shall then be appropriated to legal reserve, until it is equal to issued capital stock. Such legal reserve
could only be used to provide additional capital or offset any prior years’ deficit and cannot be used
otherwise other than upon liquidation. Additions to capital are possible on the condition that the legal
reserve amounts to over half of issued capital stock and such addition is within a limit of half of the
legal reserve. The Company’s subsidiaries had a legal reserve of $1,606,000 and $2,298,000 at June
30, 2017 and 2016, respectively.

9. Capital Stock

The Company has common stock, Class B common stock and preferred stock. Each share of
the Company’s common stock (the “Common Stock”) entitles its holder to one vote, while each share
of Class B common stock entitles its holder to ten votes. Cash dividends on the Class B common stock
may not exceed those on the Common Stock. Due to restricted transferability, there is no trading market
for the Class B common stock. However, the Class B common stock may be converted, at the
stockholder's option, into Common Stock on a share-for-share basis at any time, without cost to the
stockholder. No preferred shares have been issued as of June 30, 2017. The Company has 8,000,000
authorized shares of Common Stock, 1,500,000 shares of Class B Common Stock and 200,000 shares
of Preferred Stock for issuance in the future.

The Company currently has approximately 53 shareholders of record and in prior year had
deregistered from the United States Securities and Exchange Commission and delisted from the Over-
The-Counter Bulletin Board (“OTCBB”). The Company's Common Stock trades on the Pink Sheets.

10. Litigation and Contingencies

The Company is subject to various legal proceedings and claims that arise in the ordinary
course of business. In the opinion of management, the amount of any ultimate liability with respect
to these actions will not materially affect the Company's consolidated financial statements or results
of operations. In accordance with the Contingencies Topic of FASB ASC, the Company accrues for
these contingencies by a charge to income when it is both probable that one or more future events
will occur confirming the fact of a loss and the amount of the loss can be reasonably estimated.

The Company was named as a defendant in a lawsuit by KeyBank N.A. against the Co-
Chairmen of the Company and various Waxman family members, alleging that the Company was the
“alter ego” of those defendants and should be responsible for the settlement of approximately $2.7
million in promissory notes owed to the bank by those individuals. The Company defended its
position and, without any admission of guilt, the claim was settled and dismissed without prejudice
in July 2017. The Company incurred approximately $527,000 in the defense and settlement of this
matter.

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11. Segment Information

The Company’s businesses distribute specialty plumbing products, floor and surface protection
products and other products. Products are sold primarily to three customer categories, including (i) retail
operations, which includes national and regional retailers, D-I-Y home centers and smaller independent
retailers primarily located in the United States, (ii) industrial operations, including wholesale and
industrial supply distributors which are primarily located in the United States, and (iii) the e-Commerce
market to direct end-user customers. There were less than 2% of retail sales made outside of the United
States in fiscal 2017, 2016 and 2015, respectively.

2017 2016 2015

US 90% 90% 89%
Canada 3% 2% 3%
Germany 1% 2% 2%
UK 2% 2% 2%
Mexico 1% 1% 1%
Other 3% 3% 3%
100% 100% 100%

Certain financial data relating to the Company’s business segments follows (in thousands). Sales
amounts provided in the table below are net of intercompany sales.

Corporate
Retail e-Commerce Industrial and Other Total
Reported net sales:
Fiscal 2017 $ 64,369 $ 2,648 $ 19,778 $ - $ 86,795
Fiscal 2016 $ 71,974 $ 1,774 $ 20,327 $ - $ 94,075
Fiscal 2015 $ 73,087 $ 992 $ 19,857 $ - $ 93,936

Operating income (loss):

Fiscal 2017 $ 3,011 $ 86 $ 658 $ (3,589) $ 166
Fiscal 2016 $ 4,423 $ 99 $ 1,995 $ (3,192) $ 3,325
Fiscal 2015 $ 4,872 $ 75 $ 1,274 $ (3,337) $ 2,884

Identifiable assets:
June 30, 2017 $ 30,091 $ 985 $ 17,196 $ (305) $ 47,967
June 30, 2016 $ 33,122 $ 677 $ 18,989 $ (1,205) $ 51,583

The Company’s foreign operations manufacture, assemble, source and package products that
are distributed by the Company’s wholly-owned operations, retailers and industrial customers. Net
sales for those foreign operations amounted to $51.5 million, $51.8 million and $55.9 million for
fiscal 2017, 2016 and 2015, respectively. Identifiable assets for the foreign operations were $26.7
million and $28.2 million at June 30, 2017 and 2016, respectively.

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12. Fair Value Measurements

The Fair Value Measurements and Disclosures Topic of FASB ASC applies to the Company’s
financial and non-financial assets and liabilities. The guidance defines fair value as “the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.” Furthermore, it establishes a three-tier fair value
hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1,
defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other
than quoted prices in active markets that are either directly or indirectly observable; and Level 3,
defined as unobservable inputs in which little or no market data exists, therefore requiring an entity
to develop its own assumptions.

The Company has other financial instruments which are evaluated for fair value, including,
among others, accounts receivable, accounts payable and long-term debt. The book value of accounts
receivable and accounts payable are considered to be representative of fair value because of the short
maturity of these instruments. The fair values of long-term debt borrowings approximate book values
based on the contractual interest rate spread options in effect. The fair value and the methodology of
estimating fair values of other significant financial instruments for the Company are disclosed
elsewhere in these Notes.

13. Noncontrolling Interests

In fiscal 2006, Consumer Products formed a joint venture and owned 90% of SWI Limited. SWI
Ltd. was formed to market certain shower products to retail customers in the United States that were
produced by the joint venture partner. Due to inactivity, SWI was dissolved in fiscal 2016. The
noncontrolling interest in equity of this subsidiary was approximately $1,000 for fiscal 2015.

14. Sale of Majority Owned Business

Effective January 1, 2015, TWI sold its 28% ownership of Tsang Rong (RiYi Rubber) to the
majority owner. TWI will receive approximately $800,000, which includes interest of 4% over 3 years.
The transaction closed on January 31, 2015. The Company received a down payment of $95,000 at the
closing and ten quarterly payments of $55,000 each as of June 30, 2017, which includes interest. The
Company will receive the remaining 2 payments quarterly with the final payment expected to be paid
in December 2017. The sale of RiYi Rubber should result in a gain of approximately $571,000, which
is being amortized over 3 years. TWI will continue to own a 28% investment in land in China that is
owned by RiYi Rubber, and will continue to own it until the land is sold. There is no plan currently
to sell the land, which remains on the books for $25,000. In fiscal 2017, 2016 and 2015, the Company
recognized a gain of $193,000, $185,000 and $71,000, respectively, net of expenses, on the sale of
RiYi Rubber.

15. Subsequent Events

The Company evaluates events and transactions occurring subsequent to the date of the
financial statements for matters requiring recognition or disclosure in the financial statements. The
accompanying financial statements consider events through September 7, 2017.

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