Exhibit (a)(3)
--------------
REGISTRATION NO. 333-58876
-----------------------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 3
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
FEDDERS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 3585 ▇▇-▇▇▇▇▇▇▇
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
TELEPHONE: (▇▇▇) ▇▇▇-▇▇▇▇
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
FEDDERS CORPORATION
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
TELEPHONE: (▇▇▇) ▇▇▇-▇▇▇▇
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable following the date that this registration statement has become effective and all
other conditions to the merger of FC Merger Sub, Inc. with and into Fedders Corporation
pursuant to the merger agreement described in the enclosed document have been satisfied or
waived.
If the securities being registered on this form are being offered in connection with
the formation of a holding company and there is compliance
with General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY
BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT
WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT
TO SAID SECTION 8(a), MAY DETERMINE.
----------------------------------------------------------------------------------------------
PROXY STATEMENT/PROSPECTUS FOR FEDDERS CORPORATION
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 26, 2002
29,888,620 SHARES OF COMMON STOCK, PAR VALUE $.01
2,493,046 SHARES OF CLASS B STOCK, PAR VALUE $.01
--------------------------
January ___, 2002
Dear Fellow Stockholder:
You are cordially invited to attend the annual meeting of
stockholders of Fedders Corporation to be held at 10:30 a.m., on February
26, 2002.
In addition to the election of directors and other matters
customarily addressed at our annual meeting, you are being asked to approve
(i) a proposal to amend Fedders' certificate of incorporation to delete
Section VI of clause A of Article Second which provides that in any merger
or consolidation the holders of Class A Stock are entitled to receive the
same per share consideration as is received by the holders of the Common
Stock, (ii) a proposal to recapitalize Fedders through a merger of FC
Merger Sub, Inc., a wholly owned subsidiary of Fedders, with and into
Fedders, with Fedders as the surviving corporation, and (iii) each of the
changes to Fedders' certificate of incorporation that will be made as a
result of the recapitalization.
In the recapitalization, Fedders voting Common Stock, par value
$1.00 per share, and non-voting Class A Stock, par value $1.00 per share,
will be combined into a single class of new voting Common Stock, par value
$.01 per share, and Fedders voting Class B Stock, par value $1.00 per
share, will be exchanged for a class of new voting Class B Stock, par value
$.01 per share. Each share of voting Common Stock will entitle its holder
to 1.1 shares of new voting Common Stock, and each share of non-voting
Class A Stock will entitle its holder to one share of new voting Common
Stock. Each share of voting Class B Stock will entitle its holder to 1.1
shares of new voting Class B Stock. Consummation of the recapitalization is
conditioned on approval of (i) the proposal to delete Section VI of clause
A of Article Second of Fedders' certificate of incorporation, (ii) the
recapitalization and (iii) each of the changes to Fedders' certificate of
incorporation that will be made as a result of the recapitalization.
In evaluating the recapitalization, the board of directors
received an opinion from its financial advisor, TM Capital Corp., as to the
fairness, from a financial point of view, of the proposed transaction. See
"Fairness Opinion of TM Capital Corp." beginning on page 25. Based on this
opinion as well as each board member's independent evaluation of the
recapitalization, the board of directors believes that this simplified
capital structure will enhance stockholder value by eliminating potential
investor confusion, administrative expense, and perceived negative impact
on the market price of our Common Stock and Class A Stock that results from
having a dual, voting and non-voting, class structure for our listed stock.
The board of directors also believes that the combination of our Common
Stock and Class A Stock may potentially increase the liquidity, trading
volume, and trading efficiencies of our listed stock, and potentially
increase our investor base.
The transactions contemplated in this proxy statement/prospectus
involve risks. See "Risk Factors" beginning on page 10.
The accompanying proxy statement/prospectus provides detailed
information about the recapitalization. Please read the entire proxy
statement/prospectus and the appendices carefully.
It is important that your shares be represented at the meeting,
whether or not you are personally able to be present. The board of
directors strongly recommends that you vote FOR approval of each of the
proposals set forth in this proxy statement/prospectus. Please sign, date
and return your proxy as soon as possible. If you do attend and wish to
vote in person, your proxy can be revoked at your request. Your prompt
response in immediately returning the enclosed proxy card will be
appreciated. If you prefer, you may cast your vote toll-free by telephone
or online over the Internet. Simply follow the instructions contained on
the enclosed proxy card.
Sincerely,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
Chairman Emeritus Chairman and Chief Executive Officer
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this document. Any representation
to the contrary is a criminal offense.
The date of this document is _____, 2002 and it is first being mailed to
stockholders on or about ___,_2002.
FEDDERS CORPORATION
LIBERTY CORNER, NEW JERSEY 07938
--------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 26, 2002
--------------------------
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of
Fedders Corporation will be held at the Somerset Hills Hotel, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ on Tuesday, February 26, 2002 at
10:30 a.m. for the following purposes:
1. to approve the amendment of Fedders' certificate of
incorporation to delete Section VI of clause A of Article Second which
provides that in any merger or consolidation the holders of Class A Stock
are entitled to receive the same per share consideration as is received by
the holders of the Common Stock;
2. to approve the recapitalization of Fedders through a merger of FC
Merger Sub, Inc., a wholly owned subsidiary of Fedders, with and into
Fedders, with Fedders as the surviving corporation;
3. to approve each of the following changes to Fedders' certificate
of incorporation that will be made as a result of the recapitalization:
o The elimination of the Class A Stock;
o The par value of the new Common Stock and the new Class B
Stock will be $0.01, currently the par value of the
Common Stock and the Class B Stock is $1.00;
o The new Common Stock and the new Class B Stock will have
alternating preferences with respect to payments or
distributions in the event of any dissolution,
liquidation or winding up of Fedders, currently there is
no such liquidation preference;
o Each share of new Class B Stock will share equally with
each share of new Common Stock in the payment of
dividends, currently each share of Class B Stock receives
90% of the dividends paid to each share of Common Stock;
o The new Class B Stock will automatically be converted
into shares of new Common Stock if the number of
outstanding shares of new Class B Stock falls below 2.5%
of the aggregate number of issued and outstanding shares
of new Common Stock and new Class B Stock, currently the
Class B Stock will automatically be converted into shares
of Common Stock if the number of outstanding shares of
Class B Stock falls below 5% of the aggregate number of
issued and outstanding shares of Common Stock and Class B
Stock; and
o The restated certificate of incorporation will provide
that any action required or permitted to be taken by the
stockholders must be effected at a duly called annual or
special meeting of stockholders and the ability of the
stockholders to consent in writing to the taking of any
action will be specifically denied, currently Fedders'
certificate of incorporation does not contain any such
provision;
4. to elect nine (9) directors to hold office until the next
annual meeting of stockholders and until each such director's successor
shall have been elected and shall have qualified; and
5. to ratify the appointment of Deloitte & Touche LLP as Fedders'
independent auditors.
Consummation of the recapitalization is conditioned on approval of
(i) the proposal to delete Section VI of clause A of Article Second of
Fedders' certificate of incorporation, (ii) the recapitalization and (iii)
each of the changes to Fedders' certificate of incorporation that will be
made as a result of the recapitalization.
In the recapitalization, Fedders voting Common Stock, par value
$1.00 per share, and non-voting Class A Stock, par value $1.00 per share,
will be combined into a single class of new voting Common Stock, par value
$.01 per share, and Fedders voting Class B Stock, par value $1.00 per share,
will be exchanged for a new class of voting Class B Stock, par value $.01 per
share. Each share of voting Common Stock will entitle its holder to 1.1
shares of new voting Common Stock, and each share of non-voting Class A Stock
will entitle its holder to one share of new voting Common Stock. Each share
of voting Class B Stock will entitle its holder to 1.1 shares of new voting
Class B Stock.
By order of the board of directors
▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President and Secretary
Dated: January ____, 2002
Liberty Corner, New Jersey
IMPORTANT: THE BOARD OF DIRECTORS INVITES YOU TO ATTEND THE
MEETING IN PERSON, BUT IF YOU ARE UNABLE TO BE PERSONALLY PRESENT, PLEASE
DATE, SIGN AND RETURN THE ENCLOSED PROXY IMMEDIATELY. NO POSTAGE IS
REQUIRED IF THE PROXY IS RETURNED IN THE ENCLOSED ENVELOPE AND MAILED IN
THE UNITED STATES. IF YOU PREFER, YOU MAY CAST YOUR VOTE TOLL-FREE BY
TELEPHONE OR ONLINE OVER THE INTERNET. SIMPLY FOLLOW THE INSTRUCTIONS
CONTAINED ON THE ENCLOSED PROXY CARD.
The accompanying proxy statement/prospectus incorporates important
business and financial information about Fedders that is not included in or
delivered with this document. Stockholders may obtain documents
incorporated by reference in this document free of charge by requesting
them orally or in writing from Fedders at the following address:
Mail: Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fedders Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Liberty Corner, NJ 07938-0813
E-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
If you would like to request documents from us, please do so by
February 15, 2002 to receive them before the annual meeting.
T A B L E O F C O N T E N T S
PAGE
----
SUMMARY TERM SHEET............................................................1
Description of Business....................................................1
The Recapitalization and Related Matters...................................1
Interests of Certain Persons in the Recapitalization.......................4
Additional Matters to be Considered at the Annual Meeting..................4
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING................................5
RISK FACTORS.................................................................10
MARKET PRICES AND DIVIDENDS..................................................11
SELECTED CONSOLIDATED FINANCIAL DATA.........................................12
COMPARATIVE PER SHARE DATA...................................................14
SELECTED UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL DATA...........15
THE ANNUAL MEETING...........................................................18
Date, Place and Time................................................18
Purpose of the Annual Meeting.......................................18
Record Date; Stock Entitled to Vote; Vote Required; Quorum..........18
Voting of Proxies...................................................18
Revocation of Proxies...............................................19
Matters to be Acted on at the Annual Meeting........................19
How to Vote Your Proxy..............................................19
Proxy Solicitation Information......................................19
SPECIAL FACTORS..............................................................20
Background of the Proposed Recapitalization.........................20
Background of the Proposed Deletion of Section VI of Clause A
of Article Second of the Certificate of Incorporation..........22
Board Review of the Recapitalization................................22
Recommendations of the Fedders Board; Reasons for the
Recapitalization...............................................24
Review of the Recapitalization by Filing Parties....................25
Fairness Opinion of TM Capital Corp.................................25
Effect of the Recapitalization......................................29
Stockholder Vote....................................................30
Interests of Certain Persons in the Recapitalization................30
Material Federal Income Tax Consequences of the Recapitalization....33
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS
OF FEDDERS AND FC MERGER SUB............................................35
Fedders Corporation.................................................35
FC Merger Sub, Inc..................................................36
INFORMATION ABOUT FEDDERS AND CERTAIN AFFILIATES.............................37
Fedders Corporation.................................................37
FC Merger Sub, Inc..................................................37
▇▇▇▇▇▇▇▇ Holding Corporation........................................37
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇..................................................37
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇....................................................38
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.....................................................38
THE RECAPITALIZATION.........................................................39
General ...........................................................39
What Fedders Stockholders Will Receive..............................39
Conditions to Completion of the Recapitalization....................39
Amendment of the Recapitalization Agreement.........................40
Abandonment of the Recapitalization.................................41
Estimated Fees and Expenses of the Recapitalization.................41
Effective Time of the Recapitalization..............................41
Regulatory Matters..................................................41
Appraisal Rights....................................................41
Employee Benefit Plans..............................................43
Employee Stock Options..............................................44
New York Stock Exchange Listing.....................................44
RECENT TRANSACTIONS IN SECURITIES............................................45
FINANCIAL STATEMENTS.........................................................46
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL DATA...........46
RATIO OF EARNINGS TO FIXED CHARGES..................................49
THE RECAPITALIZATION AGREEMENT...............................................50
General ...........................................................50
Effect on Capital Stock.............................................50
Fractional Shares...................................................50
Closing.............................................................50
Restated Certificate of Incorporation...............................50
By-Laws ...........................................................50
Directors and Officers..............................................51
Termination.........................................................51
Amendments and Waiver...............................................51
DESCRIPTION OF FEDDERS CAPITAL STOCK
BEFORE AND AFTER THE RECAPITALIZATION..................................52
General ...........................................................52
FEDDERS COMMON STOCK................................................52
FEDDERS CLASS A STOCK...............................................53
FEDDERS CLASS B STOCK...............................................54
ELECTION OF DIRECTORS........................................................56
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS............................65
LEGAL MATTERS................................................................65
EXPERTS ....................................................................66
ANNUAL REPORT................................................................66
STOCKHOLDER PROPOSALS -- NEXT ANNUAL MEETING.................................66
OTHER MATTERS................................................................66
WHERE YOU CAN FIND MORE INFORMATION..........................................66
FORWARD-LOOKING STATEMENTS...................................................68
LIST OF ANNEXES
Annex A - Recapitalization Agreement and Plan of Merger
Annex B - Fairness Opinion of TM Capital Corp.
Annex C - Section 262 of the General Corporation Law of the State of Delaware
Annex D - Audit Committee Charter
SUMMARY TERM SHEET
This summary highlights the material information contained in this
document, but may not include all of the information that you, as a
stockholder, would like to know. To fully understand the recapitalization
and for a more complete description of the legal terms of the
recapitalization, you should carefully read this entire document, including
the appendices and the other documents we refer to in this document. See
"Where You Can Find More Information" beginning on page 66. The principal
executive offices of Fedders Corporation ("Fedders") are located at ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-0813. Fedders' telephone
number is (▇▇▇) ▇▇▇-▇▇▇▇.
Description of Business
o Fedders Corporation. Fedders, a Delaware corporation, is a leading
global manufacturer of air treatment products, including air
conditioners, air cleaners, dehumidifiers and humidifiers, and
thermal technology products. Fedders was established more than 100
years ago and has been in the air treatment business for more than
50 years. Fedders has been expanding into a broad variety of air
treatment businesses. Fedders is a filing person for the
recapitalization.
o FC Merger Sub, Inc. FC Merger Sub, Inc., a wholly owned subsidiary
of Fedders, is a newly formed Delaware corporation created for the
sole purpose of implementing the recapitalization. It has not
conducted any business since its formation. At the time of the
recapitalization, FC Merger Sub, Inc. will merge into Fedders and
cease to exist. FC Merger Sub, Inc. is a filing person for the
recapitalization.
The Recapitalization and Related Matters
o Amendment of Certificate of Incorporation and Recapitalization. You
are being asked to adopt an amendment to Fedders' certificate of
incorporation to delete Section VI of clause A of Article Second,
which provides that in any merger or consolidation the holders of
Class A Stock are entitled to receive the same per share
consideration as is received by the holders of Common Stock. You
are also being asked to approve a recapitalization of Fedders
through a merger of FC Merger Sub, Inc., a wholly owned subsidiary
of Fedders, with and into Fedders, with Fedders as the surviving
corporation. In addition, you are being asked to approve each of
the changes to Fedders' certificate of incorporation that will be
made as a result of the recapitalization. Consummation of the
recapitalization is conditioned on approval of (i) the proposal to
delete Section VI of clause A of Article Second of Fedders'
certificate of incorporation, (ii) the recapitalization and (iii)
each of the changes to Fedders' certificate of incorporation that
will be made as a result of the recapitalization.
o Changes to be Made to the Certificate of Incorporation as a Result
of the Recapitalization. The changes that will be made to Fedders'
certificate of incorporation if the recapitalization is approved
are as follows:
o The Class A Stock will be eliminated;
o The par value of the new Common Stock and the new Class B
Stock will be $0.01, currently the par value of the Common
Stock and the Class B Stock is $1.00;
o The new Common Stock and the new Class B Stock will have
alternating preferences with respect to payments or
distributions in the event of any dissolution, liquidation or
winding up of Fedders, currently there is no such liquidation
preference;
o Each share of new Class B Stock will share equally with each
share of new Common Stock in the payment of dividends,
currently each share of Class B Stock receives 90% of the
dividends paid to each share of Common Stock;
o The new Class B Stock will automatically be converted into
shares of new Common Stock if the number of outstanding
shares of new Class B Stock falls below 2.5% of the aggregate
number of issued and outstanding shares of new Common Stock
and new Class B Stock, currently the Class B Stock will
automatically be converted into shares of Common Stock if the
number of outstanding shares of Class B Stock falls below 5%
of the aggregate number of issued and outstanding shares of
Common Stock and Class B Stock; and
o The restated certificate of incorporation will provide that
any action required or permitted to be taken by the
stockholders must be effected at a duly called annual or
special meeting of stockholders and the ability of the
stockholders to consent in writing to the taking of any action
will be specifically denied, currently Fedders' certificate of
incorporation does not contain any such provision.
You are being asked to vote upon and approve each of these changes to
our certificate of incorporation. Consummation of the recapitalization
is conditioned on your approval of each of these changes.
o Treatment of the Common Stock in the Recapitalization. At the
effective time of the recapitalization, each outstanding share of
Common Stock will be exchanged for 1.1 shares of new Common Stock.
The new Common Stock will be entitled to one vote per share, and
will be listed for trading on the New York Stock Exchange under
the symbol "FJC." It will have a par value of $0.01 and the new
Common Stock and the new Class B Stock will have alternating
preferences with respect to payments or distributions in the event
of a liquidation of Fedders. See "Description of Fedders Capital
Stock Before and After the Recapitalization", beginning on page 52
of this document.
o Treatment of the Class A Stock in the Recapitalization. The
proposed deletion of Section VI of clause A of Article Second of
the certificate of incorporation will eliminate the right of the
holders of Class A Stock to receive the same per share
consideration as is received by the holders of Common Stock in any
merger or consolidation, which will allow the recapitalization to
be consummated on the terms described in this document.
At the effective time of the recapitalization, each outstanding
share of non-voting Class A Stock will be exchanged for one share
of new voting Common Stock. See "Description of Fedders Capital
Stock Before and After the Recapitalization", beginning on page 52
of this document.
o Treatment of the Class B Stock in the Recapitalization. At the
effective time of the recapitalization, each outstanding share of
Class B Stock will be exchanged for 1.1 shares of new Class B
Stock. The new Class B Stock will have voting rights but will not
be listed for trading. The new Class B Stock will generally be
entitled to one vote per share, but will be entitled to the special
voting rights currently enjoyed by the holders of Class B Stock. It
will have a par value of $0.01 and the new Common Stock and the new
Class B Stock will have alternating preferences with respect to
payments or distributions in the event of a liquidation of Fedders.
To compensate the holders of new Class B Stock for the decrease in
voting power resulting from the ability of the former Class A
stockholders to vote their new Common Stock, a modification will be
made to the dividend rights of the Class B Stock such that after
the recapitalization, holders of the new Class B Stock will share
equally in the payment of dividends with holders of the new Common
Stock. After the recapitalization, the new Class B Stock will
automatically convert into new Common Stock if the number of
outstanding shares of new Class B Stock falls below 2.5% of the
aggregate number of outstanding shares of new Common Stock and new
Class B Stock. See "Description of Fedders Capital Stock Before and
After the Recapitalization", beginning on page 52 of this document.
o Treatment of Stock Options in the Recapitalization. Employee
options to buy shares of Fedders' Common Stock outstanding at the
time of the recapitalization will be adjusted, resulting in
options to purchase a number of shares of new Common Stock
determined by multiplying the number of shares of Common Stock
subject to an option by 1.1. Employee options to buy shares of
Class A Stock outstanding at the time of the recapitalization will
be converted into options to buy an equivalent number of shares of
new Common Stock. See "Employee Stock Options" beginning on page 44.
o Stockholder Vote. The proposed amendment to the certificate of
incorporation to delete Section VI of clause A of Article Second
requires approval of at least a majority of the voting power of the
shares of Common Stock, Class A Stock and Class B Stock, each
voting separately as a class. Assuming the proposed deletion of
Section VI of clause A of Article Second of the certificate of
incorporation is approved, the recapitalization and each of the
changes to Fedders' certificate of incorporation that will be made
as a result of the recapitalization will require the approval of at
least a majority of the voting power of the shares of Common Stock
and Class B Stock, voting together as a single class. Although the
holders of Common Stock and Class B Stock will have a separate vote
on the recapitalization and each of the changes that will be made
to Fedders' certificate of incorporation as a result of the
recapitalization, approval of each of the items is conditional upon
approval of all of the items. Thus, a vote against the
recapitalization or any of the changes that will be made to the
certificate of incorporation will be deemed a vote against all such
proposals. See "Stockholder Vote" beginning on page 30. As of
November 30, 2001, in any vote of stockholders in which the holders
of the Common Stock, Class A Stock and Class B Stock vote as
separate classes and the holders of Class B Stock have one vote per
share, the directors and executive officers of Fedders control
approximately 2.9% of the aggregate voting power of the Common
Stock, 29.3% of the aggregate voting power of the Class A Stock and
99.8% of the aggregate voting power of the Class B Stock. In any
vote of stockholders in which the holders of the Common Stock and
the Class B Stock vote together as a single class and the holders
of Class B Stock have one vote per share, the directors and
executive officers of Fedders control approximately 16.7% of the
aggregate voting power. Approval of the recapitalization is not
conditioned upon the favorable vote of a majority of Fedders'
unaffiliated stockholders.
o Fairness Opinion of TM Capital Corp. In deciding to approve the
recapitalization of the Common Stock, Class A Stock and Class B
Stock, the board of directors considered an opinion from its
financial advisor, TM Capital Corp., as to the fairness, from a
financial point of view, to the Common stockholders and Class A
stockholders, of the exchange of each share of Common Stock for 1.1
shares of new Common Stock and each share of Class A Stock for one
share of new Common Stock. The opinion is summarized in the section
entitled "Fairness Opinion of TM Capital Corp." beginning on page
25 of this document. In addition, the opinion is attached as Annex
B to this document. We encourage you to read both the summary and
the opinion in its entirety.
o Recommendation of Fedders' Board of Directors. ▇▇▇▇▇▇▇' board of
directors has determined that (i) the proposed deletion of Section
VI of clause A of Article Second of Fedders' certificate of
incorporation, (ii) the recapitalization and (iii) each of the
changes that will be made to the certificate of incorporation as a
result of the recapitalization are procedurally and substantively
fair. It has unanimously approved the recapitalization, and
recommends that you vote FOR (i) the proposed deletion of Section
VI of clause A of Article Second of the certificate of
incorporation, (ii) the recapitalization and (iii) each of the
changes to be made to the certificate of incorporation as a result
of the recapitalization.
o Material Federal Income Tax Consequences of the Recapitalization.
In the opinion of ▇▇▇▇▇▇▇, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, which
is based upon the representations of Fedders, the recapitalization
should constitute a "recapitalization" within the meaning of
Section 368(a)(1)(E) of the Internal Revenue Code. Accordingly,
you should not recognize any gain or loss upon the receipt of new
Common Stock or Class B Stock in exchange for your old Common
Stock, Class A Stock or Class B Stock in the recapitalization
(except with respect to cash received in lieu of fractional
shares). See "Material Federal Income Tax Consequences of the
Recapitalization" beginning on page 33.
o Conditions to Completion of the Recapitalization. A number of
conditions must be met or waived before the recapitalization will
be completed. The most significant conditions are that:
o Fedders receives the required stockholder approval for the
proposed amendment to delete Section VI of clause A of
Article Second of the certificate of incorporation;
o Fedders receives the required stockholder approval for the
recapitalization;
o Fedders receives the required stockholder approval for each of
the changes to its certificate of incorporation that will be
made as a result of the recapitalization;
o the registration statement filed with the Securities and
Exchange Commission in connection with the issuance of the
shares of new Common Stock and new Class B Stock after the
recapitalization becomes effective;
o the New York Stock Exchange approves the listing of the shares
of the new Common Stock;
o if a filing becomes necessary under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act, all waiting periods have expired
or terminated;
o Fedders receives all necessary material licenses, permits,
consents, approvals, authorizations, qualifications and orders
of governmental authorities and parties to contracts with
Fedders and its subsidiaries; and
o Fedders files a certificate of merger with the Secretary of
State of Delaware.
o Appraisal Rights. Holders of Class B Stock, which is not listed on
any stock exchange, are entitled to appraisal rights in connection
with the recapitalization. Class B stockholders who do not vote for
the recapitalization proposal and who dissent by complying with the
procedures required by the Delaware General Corporation Law
("DGCL") will have the right to receive payment for the fair value
of their shares as of the effective date of the recapitalization,
as determined by the Delaware Court of Chancery. Any Class B
stockholders who are entitled to appraisal rights must, in order to
exercise such rights, demand such rights BEFORE the vote on the
recapitalization at the annual meeting of stockholders. The
▇▇▇▇▇▇▇▇ Holding Corporation holds approximately 99.8% of the Class
B Stock. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇' Chairman Emeritus and a
director, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇' Chairman and Chief Executive
Officer and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a director of Fedders, exercise all
the voting power of ▇▇▇▇▇▇▇▇ Holding Corporation. They have
unanimously indicated their intention not to cause the ▇▇▇▇▇▇▇▇
Holding Corporation to exercise its statutory appraisal rights.
Holders of Common Stock or Class A Stock are not entitled to
appraisal rights by virtue of the recapitalization because the
Common Stock and the Class A Stock are listed on the New York Stock
Exchange and the Common Stock and Class A Stock are being combined
into new Common Stock in the recapitalization. See "The
Recapitalization - Appraisal Rights" beginning on page 41.
Interests of Certain Persons in the Recapitalization.
o Voting Power. As of November 30, 2001, the directors and executive
officers of Fedders together controlled 393,836 shares of the
Common Stock, or approximately 2.9% of the Common Stock, 4,368,235
shares of Class A Stock, or approximately 29.3% of the Class A
Stock and 2,262,566 shares of the Class B Stock, or approximately
99.8% of the Class B Stock.
As of November 30, 2001, in any vote of stockholders in which the
holders of the Common Stock and the Class B Stock vote together as
a single class and the holders of Class B Stock have one vote per
share, the directors and executive officers of Fedders control
approximately 16.7% of the aggregate voting power. Fedders
estimates that after the recapitalization, in any such vote of
stockholders, the directors and executive officers will control
approximately 22.4% of the aggregate voting power.
As of November 30, 2001, in any vote of stockholders in which the
holders of the Common Stock and the Class B Stock vote together as
a single class and the holders of Class B Stock have ten votes per
share, the directors and executive officers of Fedders controlled
approximately 63.4% of the aggregate voting power. Fedders
estimates that after the recapitalization, in any such vote of
stockholders, the directors and executive officers will control
approximately 54.2% of the aggregate voting power.
o Beneficial Ownership. As of November 30, 2001, Fedders' directors
and executive officers beneficially owned 393,836 shares of Common
Stock, or approximately 2.9% of the Common Stock, 4,368,235 shares
of Class A Stock, or approximately 29.3% of the Class A Stock and
2,262,566 shares of the Class B Stock, or approximately 99.8% of
the Class B Stock. After the recapitalization, the directors and
executive officers will beneficially own approximately 16.1% of the
new Common Stock and 99.8% of the new Class B Stock.
Additional Matters to be Considered at the Annual Meeting
In addition to voting on the recapitalization and related matters, we
are asking holders of Common Stock and Class B Stock to vote their
shares on the following matters:
o to elect nine (9) members to our board of directors; and
o to ratify the appointment of Deloitte & Touche LLP as our
independent auditors.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
Q: What am I being asked to vote on?
A: We are asking the holders of Common Stock, Class A Stock and Class B
Stock to vote their shares for an amendment to Fedders' certificate
of incorporation to delete Section VI of clause A of Article Second,
which provides that in any merger or consolidation the holders of
Class A Stock are entitled to receive the same per share
consideration as is received by the holders of Common Stock.
In addition, we are asking the holders of Common Stock and Class B
Stock to vote their shares on the following matters:
(i) the recapitalization of Fedders Corporation, through the merger of
FC Merger Sub, Inc., a wholly owned subsidiary of Fedders, with and
into Fedders, with Fedders as the surviving corporation;
(ii) each of the changes to Fedders' certificate of incorporation that
will be made as a result of the recapitalization;
(iii) the election of directors; and
(iv) the ratification of the appointment of our independent auditors.
In the proposed recapitalization, Fedders voting Common Stock, par
value $1.00 per share, and non-voting Class A Stock, par value $1.00
per share, will be combined into a single class of new voting Common
Stock, par value $.01 per share, and Fedders voting Class B Stock,
par value $1.00 per share, will be exchanged for a class of new
voting Class B Stock, par value $.01 per share. Each share of voting
Common Stock will entitle its holder to 1.1 shares of new voting
Common Stock, and each share of non-voting Class A Stock will entitle
its holder to one share of new voting Common Stock. Each share of
voting Class B Stock will entitle its holder to 1.1 shares of new
voting Class B Stock.
Q: Who is eligible to vote at the annual meeting?
A: You are eligible to vote your shares of Common Stock, Class A Stock
and Class B Stock at the annual meeting if you were a stockholder of
record of those shares on the record date. The record date for the
annual meeting is the close of business on December 28, 2001.
Q: Why should I vote in favor of the recapitalization, resulting in the
combination of Fedders Common Stock and Class A Stock into one class
of new voting Common Stock and the exchange of voting Class B Stock
for new voting Class B Stock?
A: The recapitalization will simplify Fedders' capital structure.
Fedders believes that its stock is undervalued, limiting, among other
things, its ability to use its stock for acquisitions and to attract,
retain or incentivize employees. We believe that the recapitalization
will benefit both Fedders and you as a stockholder of Fedders by,
among other things:
o eliminating potential investor confusion and additional
administrative expenses caused by having two classes of listed
stock, voting and non-voting;
o eliminating the perceived negative impact on the market price of
Fedders stock that results from dual listing; and
o potentially increasing Fedders' investor base and the liquidity,
trading volume, and trading efficiencies of Fedders' listed stock.
Q: What is the position of the board of directors regarding the
recapitalization, the amendments that will be made to Fedders'
certificate of incorporation, the election of directors and the
ratification of the appointment of ▇▇▇▇▇▇▇' independent auditors?
A: The board of directors has unanimously approved the recapitalization,
and recommends that you vote FOR (i) the proposed deletion of Section
VI of clause A of Article Second of the certificate of incorporation,
(ii) the recapitalization and (iii) each of the changes to the
certificate of incorporation that will be made as a result of the
recapitalization. The board of directors also recommends that you vote
FOR the nominees for directors indicated herein and the ratification
of Deloitte & Touche LLP as our independent auditors.
Q: How many votes are needed to approve the proposed deletion of Section
VI of clause A of Article Second of the certificate of incorporation,
the recapitalization and each of the changes to the certificate of
incorporation that will be made as a result of the recapitalization?
A: The proposed deletion of Section VI of clause A of Article Second of
the certificate of incorporation requires approval of at least a
majority of the voting power of the shares of Common Stock, Class A
Stock and Class B Stock, each voting separately as a class.
Assuming the amendment to the certificate of incorporation is
approved, the recapitalization and each of the changes to the
certificate of incorporation that will be made as a result of the
recapitalization will require the approval of at least a majority of
the voting power of the shares of Common Stock and Class B Stock,
voting together as a single class.
Approval of the proposed deletion of Section VI of clause A of
Article Second of the certificate of incorporation, the
recapitalization and each of the changes to be made to the
certificate of incorporation as a result of the merger is not
conditioned upon the favorable vote of a majority of Fedders'
unaffiliated stockholders.
Fedders' directors and executive officers have indicated that they
intend to vote the shares they hold, and the shares over which they
exercise voting control, FOR (i) the proposed deletion of Section VI
of clause A of Article Second of the certificate of incorporation,
(ii) the recapitalization and (iii) each of the changes to the
certificate of incorporation that will be made as a result of the
recapitalization. The board of directors of Fedders unanimously
approved the recapitalization at a meeting held on Tuesday, February
27, 2001. As of November 30, 2001, these directors and executive
officers were entitled to vote, or exercised voting power over shares
entitled to vote, approximately 4,368,235 shares of Class A Stock, or
29.3% of the outstanding Class A Stock, 393,836 shares of Common
Stock, or approximately 2.9% of the outstanding Common Stock and
2,262,566 shares of Class B Stock, or approximately 99.8% of the
outstanding Class B Stock, representing 16.7% of the aggregate
outstanding Common Stock and Class B Stock, voting together as a
single class.
Q: How many votes are needed to approve the election of the nominees for
director indicated herein and the ratification of our independent
auditors?
Under the terms of the certificate of incorporation, approval of the
election of directors requires a plurality of the votes of the shares
of Common Stock and Class B Stock, voting together as a single class,
present in person or represented by proxy at the annual meeting,
provided that such shares constitute a quorum. Approval of the
proposal for the ratification of the appointment of ▇▇▇▇▇▇▇'
independent auditors requires the affirmative vote of at least a
majority of the shares of Common Stock and Class B Stock, present in
person or represented by proxy at the annual meeting.
Q: What will I receive in the recapitalization if it is approved?
A: In exchange for each share of Common Stock that you own, you will
receive 1.1 shares of new Common Stock.
In exchange for each share of Class A Stock that you own, you will
receive one share of new Common Stock.
In exchange for each share of Class B Stock that you own, you will
receive 1.1 shares of new Class B Stock.
Q: Will I have any appraisal rights if I do not vote in favor of the
recapitalization?
A: Holders of Common Stock and Class A Stock are not entitled to
statutory appraisal rights.
Holders of Class B Stock will be entitled to statutory appraisal
rights if they do not vote in favor of the recapitalization, provided
that they demand such rights BEFORE the annual meeting of
stockholders, by following the procedures described in this document.
As of November 30, 2001, the ▇▇▇▇▇▇▇▇ Holding Corporation held
approximately 99.8% of the Class B Stock. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Fedders' Chairman Emeritus and a director, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.,
Fedders' Chairman and Chief Executive Officer and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a
director of Fedders, exercise all the voting power of ▇▇▇▇▇▇▇▇
Holding Corporation. They have unanimously indicated their intention
not to cause ▇▇▇▇▇▇▇▇ Holding Corporation to exercise its statutory
appraisal rights. See "The Recapitalization - Appraisal Rights"
beginning on page 41.
Q: What are my income tax consequences from the recapitalization?
A: Subject to the assumptions and qualifications set forth under the
heading "Material Federal Income Tax Consequences of the
Recapitalization" beginning on page 33, in the opinion of ▇▇▇▇▇▇▇,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, the exchange of your old Common
Stock and Class A Stock for new shares of Common Stock and the
exchange of your old Class B Stock for new shares of Class B Stock
should constitute a "recapitalization" under Section 368(a)(1)(E) of
the Internal Revenue Code. Accordingly, you should not recognize any
gain or loss upon the receipt of new Common Stock or new Class B
Stock in exchange for your old Common Stock, Class A Stock or Class B
Stock pursuant to the recapitalization (except with respect to cash
received in lieu of fractional shares).
We strongly encourage you to consult your tax advisor regarding the
material tax consequences of the recapitalization to you based on
your particular circumstances. See "Material Federal Income Tax
Consequences of the Recapitalization" beginning on page 33.
Q: How will my rights as a stockholder differ after the recapitalization?
A: After the recapitalization occurs, your rights as a holder of shares
of new Common Stock or shares of new Class B Stock will be governed
by the restated certificate of incorporation attached as Exhibit A to
the recapitalization agreement attached hereto as Annex A rather than
the current certificate of incorporation. The differences between the
current certificate of incorporation and the restated certificate of
incorporation that will govern Fedders following the recapitalization
are described beginning on page 52 of this document.
Generally, holders of new Common Stock and new Class B Stock will
have similar rights as they did before the recapitalization, although
they will hold 1.1 shares of new Common Stock and new Class B Stock,
respectively, for each share of Common Stock and Class B Stock they
held prior to the recapitalization. Class A stockholders will have
the right to one vote for each share of new Common Stock received.
The new Common Stock and the new Class B Stock will each have a par
value of $0.01. The Common Stock, Class A Stock and Class B Stock
currently each have a par value of $1.00. In addition, the new Common
Stock and the new Class B Stock will have alternating preferences
with respect to payments or distributions in the event of a
liquidation of Fedders. The new Common Stock will first have the
right to receive a payment of $0.25 per share before any payment or
distribution is made or set apart for the new Class B Stock. The new
Class B Stock will then have the right to receive a payment of $0.50
per share before any additional payment or distribution is set apart
for the new Common Stock. Finally, the new Common Stock will have the
right to receive an additional payment of $0.25 per share before any
additional payment or distribution is made or set apart for the new
Class B Stock. After payment of the liquidation preferences, holders
of the new Common Stock and the new Class B Stock will be entitled to
share in the remaining assets of Fedders on a pro rata basis.
Holders of the new Class B Stock will share equally in the payment of
dividends with holders of the new Common Stock. Currently, if a cash
dividend is paid on the Common Stock, a cash dividend of 90% of the
amount paid on each share of Common Stock is payable on each share of
Class B Stock. In addition, the new Class B Stock will automatically
convert into new Common Stock if the number of outstanding shares of
new Class B Stock falls below 2.5% of the aggregate number of
outstanding shares of new Common Stock and new Class B Stock.
Currently, the Class B Stock is convertible into Common Stock if the
number of outstanding shares of Class B Stock falls below 5% of the
aggregate number of outstanding shares of Common Stock and Class B
Stock.
The restated certificate of incorporation will provide that any
action required or permitted to be taken by stockholders must be
effected at a duly called annual or special meeting, and the ability
of stockholders of Fedders to consent in writing to the taking of any
action will be specifically denied. Fedders' current certificate of
incorporation does not currently provide for, or prohibit such
stockholder action by written consent. Under current Delaware law,
unless otherwise provided in the certificate of incorporation, any
action required or permitted to be taken by stockholders may be taken
without a meeting or notice to all stockholders and without a
stockholder vote if a written consent setting forth the action to be
taken is signed by the holders of shares of outstanding stock having
the requisite number of votes that would be necessary to authorize
such action if it were taken at a meeting of stockholders.
Q: What should I do now?
A: You should mail your signed and dated proxy card(s) in the enclosed
envelope as soon as possible so that your shares will be represented
and voted at the annual meeting. No postage is required if the proxy
is returned in the enclosed envelope and mailed in the United States.
If you prefer, you may cast your vote toll-free by telephone or online
over the Internet. Simply follow the instructions contained on the
enclosed proxy card(s).
Q: If I am not going to attend the annual meeting should I return my
proxy card(s)?
A: Yes. Returning your proxy card(s) ensures that your shares will be
represented at the annual meeting, even if you are unable to attend or
do not want to attend.
Q: Can I change my vote after I mail my proxy card(s)?
A: Yes. You can change your vote by:
o sending a written notice to ▇▇▇▇▇▇▇' Corporate Secretary that
is received prior to the annual meeting that states that you
are revoking your proxy. If your broker holds your shares,
contact your broker;
o submitting another proxy by telephone or via the Internet;
o signing a new, later dated proxy card and delivering it to Fedders'
proxy solicitor prior to the annual meeting; or
o attending the annual meeting, and voting in person.
Your presence at the annual meeting will not, in and of itself,
revoke your proxy.
Q: What if my shares are held in "street name" by my broker?
A: Your broker will vote your shares with respect to the
recapitalization only if you provide written instructions to your
broker on how to vote, so it is important that you provide your
broker with instructions. If you do not provide your broker with
instructions, your shares will not be voted with respect to the
recapitalization and will not count toward approval of the
recapitalization. To ensure that your broker receives your
instructions, we suggest that you send them in the envelope enclosed
with the instructions. If you wish to vote in person at the meeting,
and hold your shares in your broker's name, you must contact your
broker and request a document called a "legal proxy." You must bring
this legal proxy to the meeting in order to vote in person.
Q: What if I do not vote or do not instruct my broker to vote my shares?
A: Abstentions and broker non-votes will be counted as votes against the
recapitalization. Abstentions and broker non-votes will be included
in the calculation of those shares needed to constitute a quorum.
Abstentions and broker non-votes will not be considered a part of the
voting power present with respect to the election of directors and
the ratification of our independent auditors.
Q: Do I need to send in my share certificates?
A: No. After the recapitalization is completed, the transfer agent will
send Fedders stockholders written instructions for exchanging their
stock certificates.
Q: Who can answer my questions?
A: If you have questions regarding the annual meeting or need assistance
in voting your shares, please contact ▇▇▇▇▇▇▇' proxy solicitor:
▇.▇. ▇▇▇▇ & Co., Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
All other questions should be directed to:
Fedders Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
RISK FACTORS
The proposed recapitalization of Fedders involves significant risks.
In addition to reviewing other information in this proxy
statement/prospectus, you should carefully consider the following factors
before deciding to vote on the proposed recapitalization and related
matters.
The recapitalization may not benefit Fedders or our stockholders.
The combination of Fedders Common Stock and Class A Stock into a single
class of new voting Common Stock may not enhance stockholder value or
improve the liquidity and marketability of Fedders Common Stock. As of
November 30, 2001, there were 13,634,759 shares of Common Stock
outstanding. After the recapitalization, there will be approximately
29,888,620 shares of new Common Stock outstanding. This increase in the
outstanding shares of new Common Stock may result in an immediate decrease
in the market value of the new Common Stock compared with the Common Stock.
In addition, factors unrelated to our stock or our business, such as the
general perception of the recapitalization by the investment community, may
cause a decrease in the value of the new Common Stock and impair its
liquidity and marketability. Furthermore, securities markets worldwide have
recently experienced significant price and volume fluctuations. This market
volatility, as well as general economic, market or political conditions,
could cause a reduction in the market price and liquidity of new Common
Stock following the recapitalization, particularly if the recapitalization
is not viewed favorably by the investment community.
The recapitalization will not eliminate the special right of the Class B
Stock to ten votes per share on the election of directors.
The recapitalization will not eliminate the special rights of the Class B
Stock, and in particular, the right of the Class B Stock, to ten votes per
share in the election of directors if either:
o if more than 15% of the outstanding shares of Common Stock are
beneficially owned by a person or group of persons acting in
concert (unless such person or group is also the beneficial owner
of a majority of the shares of Class B Stock on such record date);
or
o if a nomination for the board of directors is made by a person or
group of persons acting in concert, other than the board of
directors (unless such nomination is made by one or more holders
of Class B Stock, acting in concert, who beneficially own more
than 15% of the outstanding shares of Class B Stock).
As of November 30, 2001, in any vote on the election of directors in which
the holders of the Class B Stock have ten votes per share, the holders of
Class B Stock controlled approximately 63.4% of the aggregate voting power.
After the recapitalization the holders of Class B Stock will control
approximately 54.2% of the aggregate voting power in any election of
directors in which the holders of the Class B Stock have ten votes per
share. Thus after the recapitalization the holders of new Class B Stock
will have the ability to elect the majority of our board of directors in
any election of directors in which the holders of the Class B Stock have
ten votes per share. As of November 30, 2001, 99.8% of the Class B Stock
was held by ▇▇▇▇▇▇▇▇ Holding Corporation, a holding company which also held
less than 1% of the Common Stock, and after the recapitalization will hold
2.5% of the new Common Stock. ▇▇▇▇▇▇▇▇ Holding Corporation's voting and
investment power is shared by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is the Chairman Emeritus of Fedders'
board, has been a director of Fedders since 1945, and has acted in a
variety of executive capacities for Fedders. ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. is the
Chairman and Chief Executive Officer of Fedders and has been a director
since 1965. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ has been a director of Fedders since 1961 and
has retired from executive responsibilities for the past five years.
▇▇▇▇▇▇▇▇ Holding Corporation thus has, and after the recapitalization will
continue to have, sufficient representation on our board of directors and
votes as a stockholder to influence decisions that may adversely affect the
market price of our new Common Stock or otherwise be detrimental to Fedders
or the holders of new Common Stock. This could cause our business to suffer
and the trading price of our new Common Stock to decline. In addition, the
general perception of the recapitalization may be less favorable because
the recapitalization will not eliminate the special rights of the holders
of Class B Stock.
There was no negotiation of the terms of the proposed recapitalization on
behalf of the holders of Common Stock and Class A Stock.
The terms of the proposed recapitalization were determined by our
board of directors, upon review of an oral and written fairness opinion
prepared by TM Capital and review of the substantive and procedural
fairness of the proposed transaction. Because no one negotiated the terms
of the proposed recapitalization on behalf of the holders of our Common
Stock and Class A Stock, the terms described in this proxy
statement/prospectus may not be as favorable as those which may have been
obtained if such stockholders were represented in negotiations over terms.
MARKET PRICES AND DIVIDENDS
Fedders' Common Stock and Class A Stock are currently listed on the
New York Stock Exchange under the symbols "FJC" and "FJA," respectively.
The Class B Stock is not listed. The following table sets forth the high
and low sales prices and dividend amounts paid for the Common Stock and
Class A Stock as reported by the New York Stock Exchange Composite Tape and
the dividends paid on the Class B Stock for each quarterly period during
Fedders' last two fiscal years.
Common Stock Class A Stock Class B Stock
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
High Low Dividends High Low Dividends Dividends
-------------------------------------------------------------------------------------------
2000
First Quarter $ 6 9/16 $ 5 1/4 $ 0.030 $ 5 3/4 $ 4 5/8 $ 0.030 $ 0.027
Second Quarter 6 5 1/16 0.030 5 1/4 4 5/8 0.030 0.027
Third Quarter 6 1/4 5 1/4 0.030 5 7/8 4 7/8 0.030 0.027
Fourth Quarter 6 3/16 4 3/4 0.030 5 15/16 41/2 0.030 0.027
2001
First Quarter $ 5 3/16 $ 3 3/8 $ 0.030 $ 4 7/8 $ 3 1/4 $ 0.030 $ 0.027
Second Quarter 5.51 4.5 0.030 4.63 4.13 0.030 0.027
Third Quarter 5.60 4.06 0.030 5.02 4.07 0.030 0.027
Fourth Quarter 5.24 4.45 0.030 4.80 3.90 0.030 0.027
The last reported sale price of shares of Common Stock as reported by
the New York Stock Exchange Composite Tape on Monday, February 26, 2001,
the last trading day immediately prior to the public announcement of the
recapitalization, was $5.15 per share. The last reported sale price of
shares of Class A Stock as reported by the New York Stock Exchange
Composite Tape on Monday, February 26, 2001, the last trading day
immediately prior to the public announcement of the proposed combination,
was $4.37 per share.
The last reported sale price of Common Stock as reported by the New
York Stock Exchange Composite Tape on December 19, 2001 was $3.12 per
share. The last reported sale price of Class A Stock as reported by the New
York Stock Exchange Composite Tape on December 19, 2001 was $2.75 per
share.
SELECTED CONSOLIDATED FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth selected consolidated financial data
of Fedders as of and for each of the periods indicated. Fedders derived the
consolidated financial data as of and for each of the annual periods
presented from Fedders' audited consolidated financial statements. This
information is only a summary and you should read it in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical consolidated financial statements, and the
related schedules and notes, contained in Fedders' annual report on Form
10-K, which is incorporated by reference herein, and other information that
Fedders has filed with the Securities and Exchange Commission. See "Where
You Can Find More Information" beginning on page 66.
Consolidated Statement of Operations Data
Fiscal Year Ended August 31,
-------------------------------------------------------------------
2001 2000 1999 1998 1997
------------------------------------------------------------------------------------------------ ---------------------
Net sales (1).................... $ 405,697 $ 416,181 $ 362,048 $ 327,912 $ 318,769
Gross profit..................... 68,700 104,828 84,591 69,770 70,076
Percent of net sales............ 16.9% 25.2% 23.4% 21.3% 22.0%
Operating income (loss).......... (15,045) 46,854 40,258 12,810 31,729
Percent of net sales............. (3.7%) 11.3% 11.1% 3.9% 10.0%
(Loss) income before income taxes (33,263) 30,474 30,986 4,603 28,867
Percent of net sales............. (8.2%) 7.3% 8.6% 1.4% 9.1%
Net (loss) income................ (22,453) 20,401 20,724 2,992 18,764
Net (loss) income attributable to
common stockholders.............. (22,453) 20,401 20,724 2,992 16,344
Earnings (loss) per share:
Basic....................... $ (0.71) $ 0.58 $ 0.56 $ 0.07 $ 0.42
Diluted..................... (0.71) 0.57 0.56 0.07 0.39
Dividends per share declared:
Convertible Preferred (2)... -- -- -- -- $ 0.318
Common/Class A.............. $ 0.120 $ 0.120 $ 0.105 $ 0.085 0.080
Class B..................... 0.108 0.108 0.095 0.077 0.072
Other Financial Data:
Adjusted earnings before interest, taxes, deprec
amortization (5)(6)....................iation24,746 58,786 54,613 41,757 42,232
Capital expenditures............................ 10,773 9,858 9,378 8,497 9,236
Depreciation and amortization................... 15,431 13,076 10,279 9,263 9,935
Cash flow provided by (used in):
Operating activities............................$ 5,919 $ 4,619 $ 51,989 $ 39,302 $ (8,826)
Investing activities............................ (30,327) (15,037) (48,778) (6,650) (8,808)
Financing activities............................ (11,593) (19,898) 23,312 (52,059) 37,732
Consolidated Balance Sheet Data
August 31,
------------ ------------------------------------------------------
2001 2000 1999 1998 1997
-------------------------------------------------------------- -------------------------------------------- ---------
Cash and cash equivalents........................ $ 51,192 $ 87,193 $ 117,509 $ 90,986 $ 110,393
Total assets..................................... 362,332 388,175 382,342 304,629 329,014
Long-term debt (including current portion) (3)... 168,455 166,434 161,363 111,013 115,380
Stockholders' equity (4)......................... 73,014 112,260 108,933 104,792 145,687
------------
(1) In accordance with Emerging Issues Task Force No. 00-10,
"Accounting for Shipping and Handling Fees and Costs," 2000, 1999,
1998 and 1997 shipping expenses have been reclassified from net
sales to cost of sales to conform to the current year
presentation.
(2) In September 1997, Fedders redeemed each share of its Convertible
Preferred Stock for 1.022 shares of Class A Stock.
(3) In August 1999, a subsidiary of Fedders issued $50,000 of 9 3/8%
Senior Subordinated Notes, proceeds of which were utilized in
part, to replenish cash used to acquire Trion, Inc. In August
1997, the same subsidiary issued $100,000 of 9 3/8% Senior
Subordinated Notes, proceeds of which were utilized, in part, to
fully redeem $22,100 of 8.5% Convertible Subordinated Debentures,
including accrued interest.
(4) During fiscal 2001, ▇▇▇▇▇▇▇ repurchased 2,998 shares of Common and
Class A Stock at an average price of $4.39 per share for a total
of $13,169, excluding commissions. During fiscal 2000, ▇▇▇▇▇▇▇
repurchased 2,768 shares of Common and Class A Stock at an average
price of $4.87 per share for a total of $13,484. During fiscal
1999, ▇▇▇▇▇▇▇ repurchased 2,601 shares of Common and Class A Stock
at an average price of $5.08 per share for a total of $13,215.
During fiscal 1998, ▇▇▇▇▇▇▇ repurchased 7,720 shares of Preferred,
Common and Class A Stock at an average price of $5.93 per share
for a total of $45,750. During fiscal 1997, ▇▇▇▇▇▇▇ repurchased
4,335 shares of Class A Stock at an average price of $5.78 per
share for a total of $25,041 and 705 shares of Convertible
Preferred Stock at $6.25 per share for a total of $4,408.
(5) In fiscal 2001, Adjusted EBITDA results exclude $8,947 of asset
impairment, employee severance and other restructuring charges,
$4,031 of one-time inventory charges, $7,583 of deferred
compensation charge relating to the retirement of an officer of
Fedders, an additional $2,283 of other non-recurring inventory
write-offs, $1,364 of operating losses incurred at the Tennessee
and Maryland facilities subsequent to the announcement that
production at these facilities would cease, $726 non-cash charge
for the re-pricing of a majority of unexercised stock options and
$716 of other one-time charges. In fiscal 1999, the amount shown
excludes a charge for the restructuring ($3,100). For fiscal 1998,
the amount shown excludes a charge for the 1998 restructuring
($16,750) and early retirement program ($2,891).
(6) Adjusted EBITDA represents income before income taxes plus net
interest expense, depreciation and amortization (excluding
amortization of debt discounts and deferred financing costs),
certain one-time charges, and a certain non-cash charge. Adjusted
EBITDA is presented because we believe it is an indicator of our
ability to incur and service debt and is used by our lenders in
determining compliance with financial covenants. However, Adjusted
EBITDA should not be considered as an alternative to cash flow
from operating activities, as a measure of liquidity or as an
alternative to net income as a measure of operating results in
accordance with generally accepted accounting principles. Our
definition of Adjusted EBITDA may differ from definitions of
Adjusted EBITDA used by other companies.
COMPARATIVE PER SHARE DATA
The following table sets forth book value per share, earnings per
share and dividends declared per share on a historical and pro forma basis
for the Fedders capital stock. Fedders derived the pro forma per share
information from the unaudited pro forma consolidated financial statements
presented elsewhere in this document. The table should be read in
conjunction with the selected consolidated financial data and historical
consolidated financial statements, and related schedules and notes thereto,
included, or incorporated by reference, in this document.
Fiscal Year
Ended
August 31,
2001
------------
Book value per common share:
Reported....................................................... $ 2.37
Pro forma...................................................... 2.25
Cash dividends declared per share:
Common and Class A
Reported.......................................... 0.12
Pro forma......................................... 0.12
Class B
Reported.......................................... 0.108
Pro forma......................................... 0.120
Loss per share - basic:
Reported ..................................................... (0.71)
Pro forma...................................................... (0.67)
Loss per share - diluted:
Reported....................................................... (0.71)
Pro forma...................................................... (0.67)
SELECTED UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL DATA
The unaudited pro forma consolidated condensed financial data is
derived from the application of pro forma adjustments to major categories of
Fedders' consolidated financial statements for the fiscal year ended August
31, 2001, to illustrate the effect of the transaction related to the
recapitalization of all of Fedders' outstanding shares of capital stock. The
pro forma adjustments are described in the accompanying notes and are based
upon available information that ▇▇▇▇▇▇▇ believes is reasonable. These tables
do not present all of Fedders' financial information.
The unaudited pro forma consolidated condensed financial data do
not purport to be indicative of what Fedders' operations would have been had
the recapitalization taken place on the dates indicated. This information
should be read together with ▇▇▇▇▇▇▇' consolidated financial statements and
the notes thereto which are incorporated by reference in this document, and
the information under "Selected Consolidated Financial Data" beginning on
page 12.
The unaudited pro forma consolidated recapitalization table
represents the effect on stockholders' equity due to the recapitalization of
capital stock as if the recapitalization had been completed on August 31,
2001. The unaudited recapitalization data is derived from the Consolidated
Balance Sheet of Fedders as of August 31, 2001. Information is presented to
reflect pro forma adjustments for the recapitalization of Fedders Common and
Class A Stock into a single class of new Common Stock and the exchange of
Class B Stock for new Class B Stock.
The pro forma earnings per share calculations reflect the effect of
the recapitalization. The information is derived from the audited
Consolidated Statements of Operations and Comprehensive Income for the
fiscal year ended August 31, 2001. The information is presented to reflect
the pro forma effect on earnings per share as a result of the change in the
weighted average number of shares outstanding due to the recapitalization.
Pro Forma Consolidated Condensed Unaudited Recapitalization Table
(As of August 31, 2001)
(dollars in thousands, except per share amounts)
As of Pro Forma
August 31, 2001 Adjustments As Adjusted
Stockholders' Equity:
Preferred Stock, $1.00 par value,
15,000,000 shares authorized; no shares issued
and outstanding, actual; no shares issued and
outstanding, as adjusted. - - -
Common Stock, $1.00 par value,
80,000,000 shares authorized; 16,135,459
shares issued and 13,634,759 shares
outstanding, actual; no shares issued and
outstanding, as adjusted. $ 16,135 $ (16,135)(a) -
New Common Stock, $0.01 par value,
70,000,000 shares authorized; no shares issued
and outstanding, actual; 38,046,620 shares
issued and 29,888,220 outstanding, as
adjusted. - 380(a) $ 380
Class A Stock, $1.00 par value,
60,000,000 shares authorized; 20,297,616
shares issued and 14,889,986 shares
outstanding, actual; no shares issued and
outstanding, as adjusted. 20,298 (20,298)(a) --
Class B Stock, $1.00 par value,
7,500,000 shares authorized; 2,266,406 shares
issued and outstanding, actual; no shares
issued and outstanding, as adjusted. 2,267 (2,267)(b) --
New Class B Stock, $0.01 par value,
5,000,000 shares authorized; no shares issued
and outstanding, actual; 2,493,047 shares
issued and outstanding, as adjusted. - 25(b) 25
Paid-in capital 31,146 38,295(c) 69,441
Retained earnings 43,313 - 43,313
Treasury stock, at cost, 7,908,330 shares
of Common and Class A Stock, actual;
8,158,400 shares of new Common Stock, as
adjusted. (37,322) - (37,322)
Deferred compensation (658) - (658)
Accumulated other comprehensive loss (2,165) - (2,165)
----------------- ------------- -------------
----------------- ------------- -------------
Total stockholders' equity $ 73,014 $ - $ 73,014
================= ============= =============
Notes to the Pro Forma Consolidated Condensed Unaudited Recapitalization Table
(a) Pro forma adjustments as of August 31, 2001 assume all outstanding
shares of Fedders' Common and Class A Stock are exchanged for new
Common Stock at an exchange ratio of 1.1 shares of new Common
Stock for each share of Common Stock exchanged and one share of
new Common Stock for each share of Class A Stock exchanged. On a
pro forma basis, 38,046,620 shares of the new Common Stock would
be issued after the merger. The Class A Stock ceases to exist
after the merger. The par value of the new Common Stock is $.01
per share.
(b) Pro forma adjustments reflect the Fedders Class B Stock exchanged
for new Class B Stock on a pro forma basis. 2,493,047 shares of
new Class B Stock are issued at a par value of $.01 per share.
(c) Reflects the net effect of the recapitalization on paid-in capital
as a result of the pro forma adjustments due to the exchange of
shares and the reduction in the par value to $.01 per share of
both the new classes of Common and Class B Stock.
Pro Forma Unaudited Comparative Condensed Consolidated Earnings Per Share
Fiscal Year Ended
August 31,
2001
Net income (loss) (a):
As reported $(22,453)
Pro forma $(22,453)
Earnings (loss) per share (b):
Basic as reported $(0.71)
Basic pro forma $(0.67)
Diluted as reported $(0.71)
Diluted pro forma $(0.67)
Weighted average shares (c):
Basic as reported 31,808
Basic pro forma 33,489
Diluted as reported 31,808
Diluted pro forma 33,489
Cash dividends per share (d):
As reported:
Common and Class A $0.120
Class B 0.108
Pro forma:
New Common and Class B 0.120
Notes to the Pro Forma Unaudited Comparative Condensed Consolidated
Earnings Per Share
(a) Pro forma net income remains unchanged for the period.
(b) Pro forma earnings per share reflect the recapitalization assuming
all outstanding shares are exchanged at the beginning of the
fiscal year for the years being reported. Basic and diluted
earnings per share are computed by dividing net income by the
respective weighted average shares outstanding for the periods
presented. Basic and diluted pro forma earnings per share are
adjusted to reflect the impact of the recapitalization on the
number of weighted average shares outstanding.
(c) Pro forma weighted average shares reflect an increase in the
number of shares outstanding due to the recapitalization and
exchange of all Common and Class A Stock into new Common Stock,
and Class B Stock into new Class B Stock.
(d) Pro forma cash dividends per share reflect the impact of the
recapitalization on the weighted average number of shares
outstanding and the result of both the new Common and new Class B
Stock sharing equally in the payment of dividends.
THE ANNUAL MEETING
The matters to be considered at the annual meeting are of great
importance to Fedders stockholders. Accordingly, stockholders are urged to
read carefully and consider the information presented in this proxy
statement/prospectus and its attachments. Stockholders are also urged to
give a proxy to be voted at the annual meeting either (i) over the
telephone by calling a toll-free number, (ii) electronically, using the
Internet, or (iii) by mailing in the enclosed proxy card.
Date, Place and Time
The annual meeting is scheduled to be held at 10:30 a.m., local
time on February 26, 2002, at the Somerset Hills Hotel, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
Purpose of the Annual Meeting
The purpose of the annual meeting is to consider and take action
upon (i) the proposed amendment to Fedders' certificate of incorporation
deleting Section VI of clause A of Article Second which provides that in
any merger or consolidation the holders of Class A Stock are entitled to
receive the same per share consideration as is received by the holders of
the Common Stock, (ii) the recapitalization agreement and plan of merger,
dated December 28, 2001, between Fedders Corporation and FC Merger Sub,
Inc., a wholly owned subsidiary of Fedders Corporation, (iii) each of the
changes to Fedders' certificate of incorporation that will be made as a
result of the recapitalization, (iv) the election of nine (9) directors,
and (v) the ratification of the appointment of our independent auditors.
Record Date; Stock Entitled to Vote; Vote Required; Quorum
Owners of record of shares of Fedders Common Stock, Class A Stock
and Class B Stock on the close of business on December 28, 2001, the record
date for the annual meeting, are entitled to receive notice of and vote at
the annual meeting. Such holders will be entitled to one vote per share of
Common Stock, Class A Stock or Class B Stock held as of the record date.
A quorum of stockholders is necessary for a valid meeting. The
required quorum for the transaction of business at the annual meeting, in
person or by proxy, is a majority of the total voting power of all the
outstanding shares of Common Stock and Class B Stock and a majority of the
total voting power of all the outstanding shares of Class A Stock entitled
to vote on the record date.
Under the terms of the certificate of incorporation, the proposed
deletion of Section VI of clause A of Article Second of the certificate of
incorporation requires approval of at least a majority of the voting power
of the shares of Common Stock, Class A Stock and Class B Stock, each voting
separately as a class.
Assuming the proposed deletion is approved, the recapitalization
and each of the changes to the certificate of incorporation that will be
made as a result of the merger will require the approval of at least a
majority of the voting power of the shares of Common Stock and Class B
Stock, voting together as a single class.
Abstentions and broker non-votes each will be included in
determining the number of shares present at the annual meeting for the
purpose of determining the presence of a quorum. Because Fedders is seeking
the affirmative vote of the holders of Common Stock, Class A Stock and
Class B Stock to approve the proposed deletion of Section VI of clause A of
Article Second of the certificate of incorporation and the affirmative vote
of the holders of Common Stock and Class B Stock to approve the
recapitalization and each of the changes to the certificate of
incorporation that will be made as a result of the recapitalization,
abstentions and broker non-votes will have the same effect as votes against
such matters. Abstentions and broker non-votes will not be considered a
part of the voting power present with respect to a vote on the election of
directors or the ratification of our independent auditors.
A broker non-vote occurs when a broker is not permitted to vote on
a matter without instructions from the beneficial owner of the shares and
no instruction is given. Under New York Stock Exchange rules, if your
broker holds your shares in its name, your broker may not vote your shares
on the recapitalization proposal absent instructions from you. Therefore,
without your voting instructions, a broker non-vote will occur.
Voting of Proxies
Stockholders of record can give a proxy to be voted at the annual
meeting either (i) over the telephone by calling a toll-free number, (ii)
electronically, using the Internet, or (iii) by mailing in the enclosed
proxy card. Stockholders who hold their shares in "street name" must vote
their shares in the manner prescribed by their brokers.
The telephone and Internet voting procedures have been set up for
your convenience and have been designed to authenticate your identity, to
allow you to give voting instructions, and to confirm that those
instructions have been recorded properly. If you are a stockholder of
record and you would like to vote by telephone or by using the Internet,
please refer to the specific instructions set forth on the enclosed proxy
card. If you wish to vote using a paper format and you return your signed
proxy to us before the annual meeting, we will vote your shares as you
direct.
If you do not specify on your proxy card (or when giving your
proxy by telephone or over the Internet) how you want to vote your shares,
▇▇▇▇▇▇▇ will vote them in favor of the recapitalization.
Revocation of Proxies
You can revoke your proxy at any time before it is exercised at
the annual meeting in any of four ways:
o sending a written notice to ▇▇▇▇▇▇▇' Corporate Secretary
that is received prior to the annual meeting that states
that you are revoking your proxy. If your broker holds
your shares, contact your broker;
o submitting another proxy by telephone or via the Internet;
o signing a new, later dated proxy card and delivering it to
Fedders' proxy solicitor prior to the annual meeting; or
o attending the annual meeting, and voting in person.
Your presence at the annual meeting will not, in and of itself, revoke your
proxy.
Matters to be Acted on at the Annual Meeting
Amendment of the certificate of incorporation, adoption of the
recapitalization agreement, approval of the changes to Fedders' certificate
of incorporation that will be made as a result of the recapitalization,
election of directors and ratification of the appointment of our
independent auditors are the only matters to be presented or acted upon at
the annual meeting. The actions proposed in this proxy statement/prospectus
are not matters that can be voted on by brokers holding shares for
beneficial owners without the owner's specific instructions. Accordingly,
all beneficial owners of Fedders stock are urged to return the enclosed
proxy card marked to indicate their votes or to contact their brokers to
determine how to vote.
How to Vote Your Proxy
Stockholders should NOT send any stock certificates with their
proxy cards. You should mail your signed and dated proxy card(s) in the
enclosed envelope as soon as possible so that your shares will be
represented and voted at the annual meeting. No postage is required if the
proxy is returned in the enclosed envelope and mailed in the United States.
Proxy Solicitation Information
▇▇▇▇▇▇▇ is furnishing this document to you in connection with the
solicitation by ▇▇▇▇▇▇▇' board of directors of the enclosed form of proxy
for the February 26, 2002 annual meeting. All costs of soliciting proxies,
including reimbursement of fees of certain brokers, fiduciaries and nominees
in obtaining voting instructions from beneficial owners, will be paid by
▇▇▇▇▇▇▇. In addition, Fedders has retained ▇.▇. ▇▇▇▇ & Co., Inc. to assist
in the distribution and solicitation of proxies and will pay ▇.▇. ▇▇▇▇ &
Co., Inc. a fee estimated not to exceed $7,500 plus $4.00 per completed
telephone call, plus reimbursement of reasonable expenses.
SPECIAL FACTORS
Background of the Proposed Recapitalization
Fedders authorized its Class A Stock in February 1992, adding it
to the existing Common Stock and Class B Stock. At the time the three class
capital structure was implemented, the board of directors considered
potential advantages and disadvantages of the structure and determined that
the structure would be in the best interests of Fedders and all of its
stockholders for numerous reasons including the following:
o Financing Flexibility and Employee Benefit Plans. The board of
directors believed that implementing the three class structure
would provide Fedders with increased flexibility in the future
to utilize the Class A Stock to fund employee benefit plans and
to raise equity capital or to issue convertible preferred stock
as a means to finance future growth without diluting the voting
power of Fedders' existing stockholders, including the ▇▇▇▇▇▇▇▇
family.
o Continuity. Because the three class structure would allow the
▇▇▇▇▇▇▇▇ family to maintain their voting power, the board of
directors believed that the three class structure might reduce
the risk of a disruption in the continuity of Fedders' long-term
plans and objectives that could otherwise result from the
issuance of Common Stock. The board also believed that this
reduced risk of disruption in Fedders' business might enhance
the ability of Fedders to attract and retain highly qualified
key employees. The board of directors thought that the three
class structure would allow employees to continue to concentrate
on their responsibilities without undue concern that the future
of Fedders could be affected by real or perceived succession
issues or an unwanted takeover that might be triggered by any
substantial divestiture by the ▇▇▇▇▇▇▇▇ family or their estates
of their Class B Stock. Furthermore, by reducing the risk of
succession issues or unwanted takeover, the board of directors
believed that the three class structure would strengthen
existing and potential business relationships, including banking
arrangements, with parties who may in the future become
concerned about changes in control of Fedders.
At various times since adoption of Fedders' capital structure with
three classes of stock, two classes of which were listed, the board of
directors has considered the possibility that, in practice, the
disadvantages of Fedders' capital structure outweighed its potential
advantages. The board noted that the Class A Stock has, since the time of
its listing, traded at a discount to the Common Stock. The board has also
noted that Fedders has not been able to use the Class A Stock in its
acquisition program or to raise equity capital to fund future growth. Given
that Fedders has not enjoyed the intended benefits of the Class A Stock, it
has felt the disadvantages of the its three-class capital structure more
strongly, especially in light of the prevalence of single class capital
structures among publicly held companies. The disadvantages of the capital
structure that have been noted by the board of directors include, among
others, the following:
o potential confusion due to the complicated nature of Fedders'
capital structure, which may diminish investor interest, analyst
coverage, and the size of Fedders' investor base;
o additional administrative expenses; and
o impaired liquidity, trading volume, and trading efficiencies.
The board of directors determined that its primary objective was
to increase stockholder value by simplifying Fedders' capital structure. In
May 2000, the board began informally discussing with TM Capital Corp. the
possibility of combining Fedders' three classes of stock into one class as
a means of increasing the trading price of the Common Stock and enhancing
stockholder value together with a number of possible reclassification or
restructuring transactions by which Fedders could enhance stockholder
value, including the possible repurchase of a significant number of shares
of Fedders' outstanding Class A Stock and/or the possible recapitalization
of the Common Stock and Class A Stock into one class of common shares. In
June 2000, the board of directors engaged TM Capital as its financial
advisor to analyze transactions that involved a recapitalization of
Fedders' Common Stock and Class A Stock. The board of directors reviewed
the available transaction alternatives and the relative economic benefits
of those alternatives to Fedders and its stockholders. The transaction
alternatives discussed by the board included the following:
o an increase in Fedders' existing open market share repurchase
program, which was implemented in August 1998;
o a self-tender offer for a significant percentage of the Class A
Stock;
o an exchange offer for a significant percentage of the Class A
Stock;
o a purchase of or exchange offer for the Class B Stock, which
would result in the exchange of the Class A Stock for Common
Stock;
o a recapitalization of the Common Stock and Class A Stock through
a merger of a newly formed, wholly owned subsidiary of Fedders
with and into Fedders, in which voting Common Stock and non-
voting Class A Stock would be exchanged for shares of a new
single class of voting Common Stock; and
o a combination of a self-tender or exchange offer and the
recapitalization transaction described in the previous bullet.
After reviewing the possible transaction alternatives, the board
decided that neither a self-tender offer, an exchange offer for Common
Stock, Class A Stock and/or Class B Stock, nor an increase in the existing
open market share repurchase program would meet its objectives in a
satisfactory way. The board's view was based on the fact that:
o none of those transactions, by itself, would eliminate Fedders'
dual class capital structure;
o a transaction with the holders of Class B Stock did not appear
likely to be structured on terms acceptable to such holders,
given the then current trading price of Fedders' stock; and
o a tender offer, exchange offer or increased open market
repurchase program, without a combination of the Common Stock
and Class A Stock into a single class, could adversely affect
the liquidity of the Common Stock and/or Class A Stock by
significantly decreasing the number of shares outstanding.
Additionally, it would be difficult to structure an exchange
offer in a way that would not have adverse tax consequences for
the holders of the Class A Stock.
During the summer of 2000, the board concentrated on structures
that involved exchanging the Class B Stock for Common Stock. Under the
Company's certificate of incorporation, when the number of outstanding
shares of Class B Stock falls below 5% of the aggregate number of the
issued and outstanding shares of Common Stock and Class B Stock, each share
of Class B Stock is automatically converted into one share of Common Stock
and each share of Class A Stock is automatically converted into one share
of Common Stock. Accordingly, under the Company's certificate of
incorporation, an exchange of the Class B Stock for Common Stock would
reduce the Company's three classes of stock to one. A conversion of the
Class B Stock into Common Stock would, however, deprive the Class B
stockholders of certain special rights, including super majority voting
power in certain circumstances. The voting power of the Class B Stock would
be further diluted by the conversion of the non-voting Class A Stock into
voting Common Stock. The holders of the Class B Stock believed, and the
board agreed, that the Class B stockholders should be compensated for the
loss of the Class B Stock's special rights and the dilution of its voting
power, principally through the issuance of a greater number of shares of
Common Stock to the holders of the Class B Stock than the one for one ratio
provided for in the certificate of incorporation. A proposal was presented
to the board for discussion regarding a ratio of 1.5 shares of Common Stock
for each share of Class B Stock. TM Capital prepared a preliminary analysis
of the transaction and the proposed ratio but was not requested to and did
not prepare a fairness opinion. TM Capital's analysis was reviewed with the
board and with the Class B stockholders, and following this review, the
Class B stockholders determined not to proceed with this proposal.
In February 2001, the board began to reconsider recapitalization
transactions, this time concentrating only on transactions that combined
the Class A Stock and the Common Stock. The board believed that combining
Fedders' two classes of listed stock into one would achieve most of its
objectives in simplifying its capital structure and, by leaving the Class B
Stock outstanding, could be structured in a way acceptable to the Class B
stockholders. In February 2001, a proposed transaction was again discussed
with TM Capital, which undertook an analysis of the proposal as to its
fairness to Fedders' stockholders. TM Capital and the board discussed
proposing to the Class B stockholders a recapitalization transaction in
which each share of Class A Stock would be converted into one share of a
new class of voting Common Stock, each share of Common Stock would be
converted into 1.1 shares of the new class of Common Stock and each share
of Class B Stock would be converted into 1.1 shares of a new class of Class
B Stock. The board made this proposal to the Class B stockholders who
indicated that they would support this transaction.
At the regular meeting of the board of directors held on February
27, 2001, the board, together with ▇▇▇▇▇▇▇' financial advisors, presented
for consideration the proposed recapitalization and combination of the
Common Stock and Class A Stock pursuant to a merger. At that meeting, TM
Capital delivered its oral opinion to the directors, which was subsequently
confirmed in writing, that the exchange of each share of Common Stock for
1.1 shares of new Common Stock, each share of Class A Stock for one share of
new Common Stock and each share of Class B Stock for 1.1 shares of new Class
B Stock was fair, from a financial point of view, to holders of the Common
Stock and Class A Stock. Based on the advice of TM Capital, the board of
directors determined that it was in the best interests of the stockholders
as a whole to complete the recapitalization.
At that meeting, the board determined that the proposed
recapitalization was in the best interests of Fedders and its stockholders
and formally approved the recapitalization and related merger by the
unanimous vote of the directors present at the meeting.
The board of directors determined that a recapitalization of the
Common Stock and Class A Stock through a merger would best meet its
objectives because the recapitalization, subject to approval of the
proposed deletion of Section VI of clause A of Article Second of the
certificate of incorporation, is a one-step transaction that would not
require Fedders to incur new indebtedness and could qualify as a tax-free
reorganization under the Internal Revenue Code. Furthermore, it would best
serve the objectives of the board to:
o enhance stockholder value; and
o improve liquidity and marketability of the Common Stock by
combining Fedders' two classes of listed stock into one class.
The directors at the February 27, 2001 meeting also approved the
ratios proposed by TM Capital upon which the Common Stock and Class A Stock
would be exchanged for new Common Stock and the Class B Stock exchanged for
new Class B Stock. After this decision, the board of directors unanimously
recommended that the recapitalization be submitted to a vote of the
stockholders. Thereafter, a preliminary version of this document was
prepared by the board of directors and filed with the Securities and
Exchange Commission.
Background of the Proposed Deletion of Section VI of Clause A of
Article Second of the Certificate of Incorporation
In deciding to pursue a recapitalization of Fedders through a
merger, the board of directors recognized that an amendment would be
required to the current certificate of incorporation as a condition to
consummation of the recapitalization. Under Article Second, clause A,
Section VI of the current certificate of incorporation of Fedders, in the
event of a merger or consolidation of Fedders with or into another entity,
the holders of the Class A Stock are entitled to the same per share
consideration in such transaction as is received by the holders of the
Common Stock. However, under the terms of the proposed recapitalization,
the holders of Common Stock will receive 1.1 shares of new Common Stock
while the holders of Class A Stock will only receive one share of Common
Stock. Thus, in order to proceed with the recapitalization as contemplated,
the provision in the current certificate of incorporation must be deleted
or amended. The board decided that the provision should be deleted in its
entirety.
In reviewing the fairness of the proposed deletion of Section VI
of clause A of Article Second of the certificate of incorporation and the
recapitalization, the board of directors looked at all of the consequences
of eliminating the right of holders of the Class A Stock to receive the
same per share consideration as holders of Common Stock in a merger or
consolidation of Fedders. Despite losing this right, as a result of the
recapitalization, the exchange of the non-voting Class A Stock for voting
new Common Stock will result in the holders of Class A Stock gaining the
right to vote their shares. Furthermore, the different exchange ratios for
the Common Stock and the Class A Stock compensate the holders of Common
Stock, who already enjoy voting rights, for the dilution in voting power
that will be caused as a result of the exchange of the non-voting Class A
Stock for voting new Common Stock. Based on these considerations, the board
of directors concluded that the proposed amendment deleting Section VI of
clause A of Article Second of the certificate of incorporation was fair to
all stockholders of Fedders and recommends that you vote FOR such
amendment.
Under the terms of the certificate of incorporation, the proposed
deletion of Section VI of clause A of Article Second of the certificate of
incorporation requires approval of at least a majority of the voting power
of the shares of Common Stock, Class A Stock and Class B Stock, each voting
separately as a class.
Board Review of the Recapitalization
The board of directors reviewed certain steps which it felt were
necessary to facilitate the proposed recapitalization.
The board decided to modify the par value of the new Common Stock
and the new Class B Stock to be issued in the recapitalization and to add an
alternating liquidation preference for the new Common Stock and the new
Class B Stock. See "Description of Fedders Capital Stock Before and After
the Recapitalization" beginning on page 52 for a more complete description
of these changes.
The board of directors believed it was necessary to make certain
changes to the new Class B Stock to take into account the impact the
recapitalization will have on the special rights enjoyed by the Class B
Stock, including the right of the Class B Stock to ten votes per share on
the election of directors. As of November 30, 2001, in any vote of
stockholders in which the holders of the Common Stock and the Class B Stock
vote together as a single class and the holders of Class B Stock have ten
votes per share, the directors and executive officers of Fedders control
approximately 63.4% of the aggregate voting power. The board of directors
estimates that after the recapitalization, in any such vote of
stockholders, the directors and executive officers will control
approximately 54.2% of the aggregate voting power. To compensate the
holders of new Class B Stock for this decrease, the board decided to modify
the dividend rights of the Class B Stock. Currently, if a cash dividend is
paid on the Common Stock a cash dividend of 90% of the amount paid on each
share of Common Stock is payable on each share of Class B Stock. After the
recapitalization, the new Class B Stock will share equally in the payment
of dividends with the new Common Stock. See "Description of Fedders Capital
Stock Before and After the Recapitalization" beginning on page 52 for a
more complete description of the special voting rights of the Class B Stock
and the changes to the dividends rights of the Class B Stock.
The board of directors considered, more generally, that the
recapitalization would reduce the relative voting power of holders of
Common Stock and Class B Stock as a result of the exchange of currently
non-voting Class A Stock for new Common Stock.
The board also took into account the fact that the recapitalization
will cause the number of outstanding shares of new Class B Stock to decrease
as a percentage of the aggregate number of outstanding shares of new Common
Stock and new Class B Stock. Because of this, the board of directors decided
to modify the automatic conversion rights of the Class B Stock. Currently,
the Class B Stock is automatically converted into Common Stock if the number
of outstanding shares of Class B Stock falls below 5% of the aggregate
number of outstanding shares of Common Stock and Class B Stock. The number
of shares of Class B Stock outstanding as of November 30, 2001, represent
approximately 14.3% of the aggregate number of outstanding shares of Class B
Stock and Common Stock. After the recapitalization, the number of shares of
Class B Stock outstanding will represent approximately 7.7% of the aggregate
number of shares of Class B Stock and Common Stock. To adjust for this
percentage reduction, the board of directors decided that the new Class B
Stock will automatically convert into new Common Stock if the number of
outstanding shares of new Class B Stock falls below 2.5% of the aggregate
number of outstanding shares of new Common Stock and new Class B Stock.
The board also determined that the restated certificate of
incorporation should specifically provide that any action required or
permitted to be taken by stockholders must be effected at a duly called
annual or special meeting of stockholders, and the ability of the
stockholders to consent in writing to the taking of any action would be
specifically denied. The current certificate of incorporation does not
currently provide for, or prohibit such stockholder action by written
consent. Under current Delaware law, unless otherwise provided in the
certificate of incorporation, any action required or permitted to be taken
by Fedders' stockholders may be taken without a meeting, without notice to
all stockholders and without a stockholder vote if a written consent
setting forth the action to be taken is signed by the holders of shares of
outstanding stock having the requisite number of votes that would be
necessary to authorize such action if it were taken at a meeting of
stockholders.
Proposals for stockholder action typically involve issues
important to all stockholders relating to Fedders and its future.
Consequently, the board of directors determined that such proposals should
be considered at an annual or special meeting of stockholders, following
notice to all stockholders, where the issues can be discussed by all
interested persons. The restated certificate of incorporation is designed
to achieve this result by requiring all actions that require the approval
of stockholders to be considered at a meeting of stockholders. The notice
provisions currently provided in Article I, Section 4 of Fedders' by-laws
together with the restated certificate of incorporation provide the board
of directors with the opportunity to inform stockholders of a proposed
action, together with the board's recommendation or position with respect
to a proposed stockholder action, thereby enabling stockholders to better
determine whether they desire to attend the stockholder meeting or grant a
proxy to the board of directors in connection with the disposition of any
such business.
The board of directors unanimously approved the restated
certificate of incorporation because it believes it is in the best
interests of all stockholders to be informed of any action to be taken by
the stockholders, including approval of a merger or sale of assets.
Transactions such as mergers or sales of assets that have not been
negotiated or approved by the board could seriously disrupt the business
and management of Fedders and result in terms which may be less favorable
to the stockholders as a whole than would be available in transactions
approved by the board. Board-approved transactions may be carefully planned
and undertaken at an opportune time in order to obtain maximum value for
all of Fedders' stockholders.
Conversely, the restated certificate of incorporation may be
disadvantageous to stockholders because it may limit their ability to amend
the by-laws or remove directors pursuant to a written consent. Any such
holder or group of holders would have to wait until the annual meeting of
stockholders to seek approval for such action. It may also be perceived to
be disadvantageous because it could discourage future attempts to acquire
control of Fedders even though a majority of stockholders may believe it is
in their best interests or that they might receive a substantial premium.
Recommendations of the Fedders Board; Reasons for the Recapitalization
Fedders' board of directors has determined that the benefits of
the recapitalization outweigh any disadvantages that may result from the
recapitalization, and recommends that you vote FOR the proposed
recapitalization and each of the changes to the certificate of
incorporation that will be made as a result of the recapitalization. The
recapitalization as currently contemplated cannot be completed unless at
least a majority of the voting power of the shares of Common Stock, Class A
Stock and Class B Stock, each voting separately as a class, approve the
proposed deletion of Section VI of clause A of Article Second of the
certificate of incorporation. Assuming the proposed deletion is approved,
the recapitalization and each of the changes to the certificate of
incorporation that will be made as a result of the recapitalization will
require the approval of at least a majority of the voting power of the
outstanding Common Stock and Class B Stock, voting together as a single
class. Approval of the recapitalization is not conditioned upon the
favorable vote of a majority of Fedders' unaffiliated stockholders.
The board of directors noted that directors and executive officers
controlling, as of November 30, 2001, approximately 2.9% of the outstanding
voting power of the Common Stock, 29.3% of the outstanding voting power of
the Class A Stock and 99.8% of the outstanding voting power of the Class B
Stock have committed to vote their shares in favor of the proposed deletion
of Section VI of clause A of Article Second of the certificate of
incorporation. The board further noted that directors and executive
officers beneficially owning, as of November 30, 2001, approximately 16.7%
of the outstanding voting power of the Common Stock and Class B Stock,
voting together as a single class, have committed to vote their shares in
favor of the recapitalization and each of the changes to the certificate of
incorporation that will be made as a result of the recapitalization.
The board of directors considered that approval of the
recapitalization is not conditioned upon the favorable vote of a majority
of the unaffiliated stockholders of Fedders. Notwithstanding the absence of
a requirement that unaffiliated stockholders separately approve the
recapitalization, the board of directors believes that the procedure that
was followed in determining to approve the recapitalization was fair to all
stockholders of Fedders. As described above, the entire board of directors
of Fedders, including the independent, non-employee directors of Fedders,
unanimously approved the recapitalization. Also, as discussed above, the
recapitalization is conditioned upon the amendment of the restated
certificate of incorporation to delete Article Second, clause A, Section
VI. This proposed deletion requires, among other things, the approval of at
least a majority of the voting power of the shares of Common Stock voting
separately as a class. As of November 30, 2001, the directors and executive
officers of ▇▇▇▇▇▇▇ controlled only 2.9% of the aggregate voting power of
the Common Stock. The agreement that governs the recapitalization contains
provisions which allow the board of directors to terminate the
recapitalization at any time before the merger becomes effective for any
reason, including if the recapitalization would not be in the best
interests of the stockholders. Thus, although the recapitalization is not
structured to require approval of a majority of the unaffiliated
stockholders, the board of directors nevertheless believes that the
recapitalization is procedurally and substantively fair to the unaffiliated
stockholders of Fedders. The non-employee directors of Fedders have not
retained an unaffiliated representative to act solely on behalf of
unaffiliated stockholders for purposes of negotiating the terms of the
recapitalization and/or preparing a report concerning the fairness of the
recapitalization. The board of directors did not believe it necessary to,
and it did not, form a special committee in connection with its
consideration of the recapitalization.
In determining whether to approve the recapitalization and related
merger, and in the process of determining that the recapitalization is
substantively fair to all Fedders stockholders, the board of directors
considered a number of factors, and came to believe the recapitalization
will:
o eliminate potential investor confusion caused by having two
classes of listed stock with similar characteristics except
voting rights;
o simplify Fedders' capital structure, which may generate
increased investor interest, expanded analyst coverage, and a
larger investor base;
o eliminate additional administrative expenses caused by Fedders'
capital structure;
o potentially increase the liquidity, trading volume, and trading
efficiencies of the new Common Stock;
o increase efficiency and flexibility in raising capital and
issuing additional shares if, when, and to the extent desired by
Fedders; and
o eliminate perceived negative impact on the market price of
Fedders' stock that results from having two classes of listed
stock with similar characteristics except voting rights.
In connection with its deliberations, the board of directors did
not consider, and did not request that TM Capital evaluate, Fedders' net
book value per share, going concern value, or liquidation value. The board
did not view these valuations to be relevant measures, because the
recapitalization does not contemplate either a sale of Fedders or an offer
to purchase Fedders stock. Instead, the recapitalization involves a
combination of Class A Stock and Common Stock into new Common Stock and
Class B Stock into new Class B Stock through a merger with FC Merger Sub,
Inc. As discussed above, the board considered the fairness of the ratios of
new Common Stock and new Class B Stock to holders of Class A Stock, Common
Stock and Class B Stock. However, the Fedders board did not believe that
evaluating Fedders' net book value per share, going concern value or
liquidation value would provide Fedders stockholders with material
information regarding the recapitalization.
After considering the foregoing, the board of directors determined
that the terms of the recapitalization are both procedurally and
substantively fair to the stockholders of Fedders, including the holders of
Class A Stock. In reaching its determination as to fairness, the board did
not assign specific weights to particular factors, but rather considered
all factors as a whole. This discussion of information and factors
considered by the board of directors is not intended to be exhaustive, but
includes all material factors considered by the board in approving the
proposed recapitalization. The board of directors also relied on the
experience and expertise of its financial advisor for quantitative analysis
of the exchange ratio for the recapitalization. See "Fairness Opinion of TM
Capital Corp." below.
The board of directors approved the recapitalization in principle
on February 27, 2001. TM Capital acted as financial advisor to Fedders in
connection with the recapitalization and assisted it in developing the
terms of the recapitalization. ▇▇▇▇▇▇▇ has agreed to pay TM Capital a fee
for its services and to indemnify it against certain liabilities, including
those under the federal securities laws. At a meeting held on February 27,
2001, the board of directors unanimously approved the detailed terms of the
recapitalization. At the February 27, 2001 meeting, the board of directors
received an oral opinion which was later confirmed in writing on March 1,
2001, from TM Capital that, as of that date and subject to the assumptions
and limitations set forth in such opinion, the consideration to be received
by the holders of Common Stock and Class A Stock in the recapitalization
was fair, from a financial point of view, to such holders. See "Fairness
Opinion of TM Capital Corp."
Review of the Recapitalization by Filing Parties
Each of FC Merger Sub, Inc., ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is (together with ▇▇▇▇▇▇▇) a filing party for the
recapitalization. Each such filing party has reviewed the terms and
conditions of the recapitalization, including the factors reviewed by
▇▇▇▇▇▇▇' board of directors and the fairness opinion of TM Capital Corp. and
has determined that the recapitalization is both procedurally and
substantively fair to the unaffiliated stockholders of Fedders. See
"Fairness Opinion of TM Capital Corp." below.
Fairness Opinion of TM Capital Corp.
TM Capital has acted as financial advisor to Fedders and its board
of directors in connection with their examination of the fairness, from a
financial point of view, to the holders of all outstanding shares of
Fedders Class A Stock and Common Stock of the exchange of each share of
Class A Stock for one share of new Fedders Common Stock and each share of
Common Stock for 1.1 shares of new Fedders Common Stock. As part of the
proposed recapitalization transaction, holders of outstanding Class B Stock
will receive 1.1 shares of new Class B Stock. In providing its opinion, TM
Capital necessarily included the Class B Stock in certain analyses, but its
opinion is intended solely for holders of Class A and Common Stock.
TM Capital was retained by the board of directors:
(1) to advise Fedders and its board of directors on the
recapitalization of the Class A and Common Stock into a new
class of Fedders Common Stock; and
(2) to render a written opinion as to the fairness, from a financial
point of view, to the holders of outstanding Fedders Class A and
Common Stock, of the ratio at which each share of Class A and
Common Stock is exchanged for a new class of Fedders Common
Stock.
Fedders hired TM Capital based on its qualifications and expertise
in providing financial advice to companies and its reputation as a
nationally recognized investment banking firm. TM Capital was paid a fee of
$175,000 for the issuance of its opinion upon delivery of the written
opinion to the board of directors. Payment of the fee was not conditional
on the conclusion reached by TM Capital in its opinion. ▇▇▇▇▇▇▇ has also
agreed to indemnify TM Capital against potential liabilities arising out of
its engagement.
At the request of ▇▇▇▇▇▇▇' board of directors, TM Capital
delivered to the board of directors an analysis of the proposed
recapitalization and its oral fairness opinion on February 27, 2001. The
fairness opinion was subsequently confirmed in writing on March 1, 2001.
The opinion stated that, based upon and subject to the matters set forth in
the opinion, the exchange of each share of Class A Stock for one share of
new Common Stock and each share of Common Stock into 1.1 shares of new
Common Stock was fair, from a financial point of view, to the holders of
all outstanding Fedders Class A and Common Stock. The full text of the
opinion is attached as Annex B to this document and describes the
assumptions made, matters considered, and limits on the scope of the review
undertaken by TM Capital. You are urged to read the opinion carefully and
in its entirety.
TM Capital's opinion addresses only the fairness, from a financial
point of view, to the holders of all outstanding Fedders Class A and Common
Stock of the exchange of each share of Class A Stock for one share of new
Fedders Common Stock and each share of Common Stock for 1.1 shares of new
Fedders Common Stock. The opinion does not address the merits of the
underlying decision by ▇▇▇▇▇▇▇ to approve the proposed recapitalization and
does not constitute a recommendation to any stockholder as to how he or she
should vote with respect to the proposed recapitalization.
In determining the appropriate analyses to conduct, and when
performing those analyses, TM Capital made numerous assumptions with
respect to industry performance, general business, financial, market and
economic conditions and other matters, many of which are beyond the control
of Fedders. The analyses which TM Capital performed are not necessarily
indicative of actual values or actual future results, which may be
significantly more or less favorable than suggested by the analyses. The
analyses were prepared solely as part of TM Capital's analysis of the
fairness, from a financial point of view, of the recapitalization to the
holders of the Class A and Common Stock.
TM Capital did not express any opinion as to the price at which
the Class A Stock, Common Stock, or the new Fedders Common Stock to be
issued in the recapitalization will trade at any future time. Those trading
prices may be affected by a number of factors, including:
(1) dispositions of shares of the new Fedders Common Stock within
a short period of time after the completion of the
recapitalization;
(2) changes in prevailing interest rates and other factors which
generally influence the price of securities;
(3) adverse changes in the capital markets;
(4) the occurrence of adverse changes in the financial condition,
business, assets, results of operations, or prospects of
Fedders or the markets in which it participates;
(5) any necessary actions by or restrictions of federal, state,
or other governmental agencies or regulatory authorities; and
(6) completion of the recapitalization on the terms and
conditions described in this document and the Annexes
attached hereto.
In connection with its review of the proposed recapitalization and
in the preparation of its opinion, TM Capital reviewed and analyzed:
(1) Fedders' Forms 10-K and related financial information for the
years ended August 31, 1996 to 2000 and Form 10-Q and the
related unaudited financial information for the three months
ended November 30, 2000;
(2) Fedders' Schedule 14A filed in connection with its Annual
Meeting held December 19, 2000 and subsequent Forms 4 and
Forms 13-F;
(3) The historical market prices and trading activity for the
Class A Stock and the Common Stock for the period from
January 2, 1998 to February 22, 2001;
(4) The historical market prices and trading activity for the
Class A Stock and the Common Stock compared to that of
certain publicly traded companies which TM Capital deemed to
be relevant;
(5) The financial position and results of operations of Fedders
compared to that of certain companies which TM Capital deemed
to be relevant;
(6) The terms of transactions in which public companies with two
classes of common stock were combined into a single class of
stock;
(7) The terms of transactions in which public companies with two
classes of common stock were acquired;
(8) Premiums paid in relevant transactions in which the purchaser
acquired a substantial share of the target company; and
(9) Other financial analyses and investigations as it deemed
necessary or appropriate in arriving at its opinion.
TM Capital performed the financial analyses described below, and
reviewed with Fedders' management and board of directors the assumptions
upon which its analyses were based, as well as other factors. The summary
set forth below is not a complete description of the analyses performed or
factors considered by TM Capital.
Summary of Analyses. In connection with its opinion, TM Capital
reviewed and analyzed:
(1) Similar historical recapitalization transactions;
(2) Dual class, publicly-traded companies;
(3) Historical acquisitions of dual class public companies;
(4) The historical trading activity of Fedders' Class A and
Common Stock;
(5) Premiums paid for significant ownership purchases; and
(6) The terms, control and voting rights of the Class A, Common
and Class B Stock before and after the proposed
recapitalization .
Analysis of Historical Recapitalization Transactions. TM Capital
identified and analyzed 16 recapitalization transactions occurring among
publicly-traded companies in 1998 to 2001. In each recapitalization
transaction, two publicly-traded classes of stock of a single company with
different voting rights were recapitalized as, and combined into, a single
class of common stock. For each of the companies identified for the
analysis, TM Capital examined the number of new shares received in the
recapitalization for each share of the stock that had more votes per share
(the "Control Voting Stock") and the number of new shares received in the
recapitalization for each share of the stock that had fewer (or no) votes
per share (the "Non-Control Stock").
Of the 16 transactions examined, 11 were transactions that used a
one-for-one exchange ratio for each share exchanged. The remaining five
transactions provided greater consideration for the Control Voting Stock
than for the Non-Control Stock. In three transactions this was accomplished
through an exchange ratio for the Control Voting Stock greater than 1.0. In
one case this was accomplished through an exchange ratio for the
Non-Control Stock of less than 1.0, and in another case this was
accomplished through the payment of additional cash consideration to the
holder of the Control Stock. For comparability, TM Capital calculated on a
pro forma basis the equivalent exchange ratio for each of these
transactions if they had achieved the same economic result through the
exchange ratio for the Control Voting Stock.
Based upon this methodology, the exchange ratio for the Control
Voting Stock in the five transactions ranged from 1.01 to 1.32, with an
average of 1.14, as compared to the ratio of 1.10 in the proposed Fedders
recapitalization. The dilution of the ownership interest of the Non-Control
Stock in these transactions ranged from 1.63% to 5.67%, with an average of
3.01%, as compared to the dilution of 5.04% in the proposed Fedders
recapitalization. TM Capital then calculated on a pro forma basis the
exchange ratio for each transaction if the dilution percentage from each
transaction were applied to the 46.88% ownership proportion represented by
Fedders' Non-Control Stock. These adjusted exchange ratios ranged from 1.03
to 1.11, with an average of 1.06, as compared to the ratio of 1.10 in the
proposed Fedders recapitalization.
TM Capital also calculated the ratio of the share prices of the
Control Voting Stock to the Non-Control Stock as of the day prior to the
announcement of each of these five transactions. These ratios ranged from
0.93 to 1.21, with an average of 1.02, as compared to a ratio of 1.13 for
Fedders. TM Capital then compared the exchange ratio in each transaction to
the prior trading ratio of the Control Voting Stock to the Non-Control
Stock. The difference in these ratios ranged from 0.32 higher than the
trading ratio to 0.20 lower than the trading ratio. On average the exchange
ratio in these five transactions was 0.12 higher than the trading ratio. In
the proposed Fedders recapitalization, the exchange ratio was calculated to
be 0.03 lower than the trading ratio of the Control Voting Stock to the
Non-Control Stock prior to the transaction.
Analysis of Dual Class Publicly Traded Companies. TM Capital
identified and analyzed a group of 52 publicly traded U.S. companies with a
minimum market capitalization of $50 million that had two classes of
publicly traded common stock with different voting rights. TM Capital
analyzed the discount or premium at which the lesser voting shares trade
relative to greater voting shares. As of the date of this analysis, the
trading spread between the dual class shares of those companies averaged a
discount of 4.11%, while the trading spread between Fedders Common Stock
and Fedders Class A Stock was a discount of 11.76%.
Analysis of Historical Acquisitions of Dual Class Public
Companies. TM Capital identified and analyzed 24 acquisitions occurring in
1998 to 2001 of companies with two classes of common stock with different
voting rights. Out of those 24 transactions, 21 used a one-for-one exchange
ratio and three had exchange ratios in which an additional premium was paid
to the control shareholders. For each of these three transactions the
consideration paid to the holders of each class of stock was examined to
determine the percentage by which the price per share paid to holders of
the higher voting shares exceeded the price per share paid to holders of
lower voting shares. In the three transactions, the additional premium paid
to the control shareholders ranged from 9.1% to 30.0% and averaged 16.4%.
TM Capital considered it useful to review such acquisition premiums as an
indication of the premium which control shareholders may forego if an
acquisition were to follow the recapitalization; however, as the proposed
recapitalization is not an acquisition, TM Capital did not consider it
meaningful to directly compare such premium to the premium paid in the
recapitalization.
Analysis of the Historical Trading Activity of Fedders' Class A
and Common Shares. TM Capital reviewed and analyzed the historical trading
activity of Fedders' Class A and Common Stock. This analysis included an
examination of the average trading discount at which the Class A Stock
traded as compared to the Common Stock. Based on daily closing prices from
January 2, 1998 to February 22, 2001, the discount between the Class A and
Common Stock averaged 6.9%. The discount for the period from January 2,
2001 to February 22, 2001 averaged 13.2%. For similar periods, the average
daily trading volumes of the shares of Class A Stock as a percentage of the
average daily trading volumes of the shares of Class A Stock and Common
Stock combined were 39.8% and 22.3% respectively.
Analysis of Premiums Paid for Significant Ownership Purchases. TM
Capital reviewed 98 transactions from 1998 to February 2001, and analyzed
the premiums paid in those transactions for significant positions of equity
ranging from 10% to 50%. The corresponding premiums ranged from less than
-51% to as much as 386% with an average premium of 40.9%. TM Capital
considered it useful to review such share purchase premiums as an
indication of the premium which control shareholders may forego if a share
purchase were to follow the recapitalization; however, as the proposed
recapitalization is not a share purchase, TM Capital did not consider it
meaningful to directly compare such premium to the premium paid in the
recapitalization.
Terms, Control and Voting Rights of Class A, Common and Class B
Shares Before and After the Proposed Recapitalization. TM Capital analyzed
the control and voting rights of each of the classes of stock as they were
on December 31, 2000 and as they would be if the proposed recapitalization
had occurred at such time. Under the capitalization as of December 31,
2000, Class A, Common and Class B shareholders have 46.88%, 46.02% and
7.09% of the economic ownership and 0.00%, 86.65% and 13.35% of the votes,
respectively. Additionally, under the capitalization as of December 31,
2000, in the event of a 15% share purchase or a proxy contest the Class B
shareholders have 60.65% of the votes, the Common shareholders have 39.35%
of the votes, while the Class A shareholders have no votes. Under the
proposed recapitalization, the former Class A, former Common and Class B
shareholders would have 44.52%, 48.07% and 7.41% of the economic ownership
and 44.52%, 48.07% and 7.41% of the votes, respectively. Additionally,
under the proposed recapitalization, in the event of a 15% share purchase
or a proxy contest the Class B shareholders would have 44.45% of the votes,
the former Common shareholders would have 28.84% of the votes, and the
former Class A shareholders would have 26.71%.
Conclusion. The foregoing description is only a summary of the
material aspects of the financial analyses used by TM Capital in connection
with rendering its opinion. The preparation of a fairness opinion is a
complex process and is not necessarily susceptible to partial analysis or
summary description. Selecting portions of the analyses or of the summary
set forth above, without considering the analyses as a whole, could create
an incomplete view of the processes underlying TM Capital's opinion.
In arriving at its opinion, TM Capital considered the results of
all these analyses. The analyses were prepared solely for the purposes of
TM Capital providing its opinion as to the fairness, from a financial point
of view, to the holders of all outstanding Fedders Class A and Common Stock
of the exchange of each share of Class A Stock for one share of new Common
Stock and each share of Common Stock for 1.1 shares of new Common Stock,
and do not purport to be appraisals or necessarily reflect the prices at
which securities actually may be sold. Any analysis of the fairness, from a
financial point of view, to the stockholders of Fedders, involves complex
considerations and judgments. TM Capital's opinion and the related
presentation to Fedders' board on February 27, 2001 was one of many factors
taken into consideration by ▇▇▇▇▇▇▇' board of directors in approving the
recapitalization.
TM Capital's opinion was for the use and benefit of Fedders' board
of directors in its consideration of the proposed recapitalization. TM
Capital was not requested to opine as to, and its opinion does not in any
manner address, ▇▇▇▇▇▇▇' underlying business decision to proceed with or
effect the recapitalization, or the relative merits of the recapitalization
as compared to any alternative business strategies which might exist for
Fedders or the effect of any other transaction in which Fedders might
engage.
TM Capital advised Fedders in its August 1999 acquisition of
Trion, Inc., for which TM Capital received a fee of $525,000, and TM
Capital advised Fedders in its March 2001 acquisition of ▇▇▇▇▇▇ GmbH, for
which TM Capital received a fee of $270,000.
Effect of the Recapitalization
Business and Operations; Officers and Directors. ▇▇▇▇▇▇▇ expects
that the recapitalization will have no impact on its operations. Following
the recapitalization, Fedders will continue its current businesses under the
Fedders Corporation name. The Fedders board of directors and executive
officers at the effective time of the recapitalization, will remain in
office following the recapitalization. Pro forma consolidated financial
statements are included elsewhere in this document to reflect the material
changes in the consolidated financial statements following completion of the
recapitalization.
Number of Outstanding Shares. After the recapitalization, ▇▇▇▇▇▇▇
will have only two classes of stock, both of which will be voting. The
recapitalization will increase the total number of shares of Common Stock
and Class B Stock. As of November 30, 2001, approximately 13,634,759 shares
of Common Stock, 14,890,386 shares of Class A Stock and 2,266,406 shares of
Class B Stock, or a total of approximately 30,791,551 shares, were
outstanding. Following the recapitalization, approximately 29,888,620 shares
of new Fedders Common Stock and approximately 2,493,047 shares of new
Fedders Class B Stock will be outstanding. Following the recapitalization,
Fedders Class A Stock will no longer be listed on the New York Stock
Exchange and will be eligible for termination of registration under the
Securities Exchange Act of 1934. The new Fedders Common Stock will be listed
on the New York Stock Exchange and registered under the Securities Exchange
Act of 1934.
Effect on Share Prices. No assurances can be given as to the market
price of new Common Stock after the recapitalization. It is expected that
the market price of new Common Stock after the recapitalization will reflect
both a greater number of shares of new Common Stock outstanding and the
cancellation of the Class A Stock. The post- recapitalization price of new
Common Stock may be lower than the pre-recapitalization price of Common
Stock.
Changes to be Made to the Certificate of Incorporation as a Result
of the Recapitalization. The changes that will be made to Fedders'
certificate of incorporation if the recapitalization is approved are as
follows:
o The Class A Stock will be eliminated;
o The par value of the new Common Stock and the new Class B
Stock will be $0.01, currently the par value of the Common
Stock and the Class B Stock is $1.00;
o The new Common Stock and the new Class B Stock will have
alternating preferences with respect to payments or
distributions in the event of any dissolution, liquidation or
winding up of Fedders, currently there is no such liquidation
preference;
o Each share of new Class B Stock will share equally with each
share of new Common Stock in the payment of dividends,
currently each share of Class B Stock receives 90% of the
dividends paid to each share of Common Stock;
o The new Class B Stock will automatically be converted into
shares of new Common Stock if the number of outstanding
shares of new Class B Stock falls below 2.5% of the aggregate
number of issued and outstanding shares of new Common Stock
and new Class B Stock, currently the Class B Stock will
automatically be converted into shares of Common Stock if the
number of outstanding shares of Class B Stock falls below 5%
of the aggregate number of issued and outstanding shares of
Common Stock and Class B Stock; and
o The restated certificate of incorporation will provide that
any action required or permitted to be taken by the
stockholders must be effected at a duly called annual or
special meeting of stockholders and the ability of the
stockholders to consent in writing to the taking of any
action will be specifically denied, currently Fedders'
certificate of incorporation does not contain any such
provision.
Stockholder Vote
Under the terms of the certificate of incorporation, the proposed
amendment to the certificate of incorporation to delete Section VI of
clause A of Article Second requires approval of at least a majority of the
voting power of the shares of Common Stock, Class A Stock and Class B
Stock, each voting separately as a class.
Assuming the proposed deletion of Section VI of clause A of
Article Second of the certificate of incorporation is approved, the
recapitalization and each of the changes to Fedders' certificate of
incorporation that will be made as a result of the recapitalization will
require the approval of at least a majority of the voting power of the
shares of Common Stock and Class B Stock, voting together as a single
class. Although the holders of Common Stock and Class B Stock will have a
separate vote on the recapitalization and each of the changes that will be
made to Fedders' certificate of incorporation as a result of the
recapitalization, approval of each of the items is conditional upon
approval of all of the items. Thus, a vote against the recapitalization or
any of the changes that will be made to the certificate of incorporation as
a result of the recapitalization will be deemed a vote against all such
proposals.
As of November 30, 2001, in any vote of stockholders in which the
holders of the Common Stock, Class A Stock and Class B Stock vote as
separate classes and the holders of Class B Stock have one vote per share,
the directors and executive officers of Fedders controlled approximately
2.9% of the aggregate voting power of the Common Stock, 29.3% of the
aggregate voting power of the Class A Stock and 99.8% of the aggregate
voting power of the Class B Stock. As of November 30, 2001, in any vote of
stockholders in which the holders of the Common Stock and the Class B Stock
vote together as a single class and the holders of Class B Stock have one
vote per share, the directors and executive officers of Fedders controlled
approximately 16.7% of the aggregate voting power.
Under the terms of the certificate of incorporation, certain
important transactions, including mergers (except where the other party to
the merger is a majority-owned subsidiary of Fedders), require a separate
vote of shares of the Class B Stock, voting separately as a class. However,
the recapitalization does not require a separate vote of the Class B Stock
because the merger is being completed with a wholly-owned subsidiary of
Fedders, FC Merger Sub, Inc. Fedders' certificate of incorporation provides
that the holders of Class A Stock are not entitled to vote at any meeting
of the stockholders or otherwise, except as may be specifically required by
applicable law. The DGCL requires the vote of the holders of the Class A
Stock, voting as a separate class, for the proposed deletion of Section VI
of clause A of Article Second of the certificate of incorporation but does
not require the vote of the holders of Class A Stock for the
recapitalization and each of the changes to the certificate of
incorporation that will be made as a result of the recapitalization. In
addition, approval of the recapitalization is not conditioned upon the
favorable vote of a majority of Fedders' unaffiliated stockholders.
Interests of Certain Persons in the Recapitalization
You should be aware of the interests that directors and executive
officers who are also stockholders of Fedders, including ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, the Chairman Emeritus and a director, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇., the
Chairman and Chief Executive Officer, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a director of
Fedders, have in the recapitalization. These interests may be different
than the interests of other stockholders.
Effect on Voting Power.
As of November 30, 2001, the directors and executive officers of
Fedders together controlled 393,836 shares of the Common Stock, or
approximately 2.9% of the Common Stock, 4,368,235 shares of Class A Stock,
or approximately 29.3% of the Class A Stock and 2,262,566 shares of the
Class B Stock, or approximately 99.8% of the Class B Stock.
As of November 30, 2001, in any vote of stockholders in which the
holders of the Common Stock and the Class B Stock vote together as a single
class and the holders of Class B Stock have one vote per share, the
directors and executive officers of Fedders controlled approximately 16.7%
of the aggregate voting power. The board of directors estimates that after
the recapitalization, in any such vote of stockholders, the directors and
executive officers will control approximately 19.2% of the aggregate voting
power.
As of November 30, 2001, in any vote of stockholders in which the
holders of the Common Stock and the Class B Stock vote together as a single
class and the holders of Class B Stock have ten votes per share, the
directors and executive officers of Fedders controlled approximately 63.4%
of the aggregate voting power. The board of directors estimates that after
the recapitalization, in any such vote of stockholders, the directors and
executive officers will control approximately 54.2% of the aggregate voting
power.
Effect on Beneficial Interest.
As of November 30, 2001, the directors and executive officers
beneficially owned approximately 2.9% of the Common Stock, 29.3% of the
Class A Stock and 99.8% of the Class B Stock. After the recapitalization,
the directors and executive officers will beneficially own approximately
16.1% of the new Common Stock and 99.8% of the new Class B Stock. As of
November 30, 2001, each director and executive officer owned beneficially
the number of shares of Common Stock, Class A Stock and Class B Stock set
forth in the following table. Shares subject to acquisition are included
and noted appropriately. Unless otherwise indicated, the owners listed have
sole voting and investment power.
Effect on Filing Parties' Interest in Net Book Value and
Net Earnings of Fedders.
As of November 30, 2001, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ beneficially owned, in
the aggregate, 3,496,897 shares of Common Stock, Class A Stock and Class B
Stock, including shares held by corporations with respect to which he
shares voting and investment power, or 11.4% of the total outstanding stock
of Fedders. As of November 30, 2001, 11.4% of the total outstanding capital
stock of Fedders represented an interest in (i) approximately $8,324,000 of
Fedders' net book value at August 31, 2001 and (ii) approximately
$2,559,642 of Fedders' net loss for the fiscal year ended August 31, 2001.
After the recapitalization, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ will beneficially own, in
the aggregate, 3,723,263 shares of Common Stock and Class B Stock, or 11.5%
of the capital stock of Fedders to be outstanding following the
recapitalization. Assuming the recapitalization had been consummated on
August 31, 2001, 11.5% of the total outstanding capital stock of Fedders
would have represented an interest in (i) approximately $8,397,000 of
Fedders' net book value at August 31, 2001 and (ii) approximately
$2,582,095 of Fedders' net loss for the fiscal year ended August 31, 2001.
As of November 30, 2001, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. beneficially owned, in
the aggregate, 4,250,498 shares of Common Stock, Class A Stock and Class B
Stock, including shares held by corporations with respect to which he
shares voting and investment power, or 13.8% of the total outstanding stock
of Fedders. As of November 30, 2001, 13.8% of the total outstanding capital
stock of Fedders represented an interest in (i) approximately $10,076,000
of Fedders' net book value at August 31, 2001 and (ii) approximately
$3,098,514 of Fedders' net loss for the fiscal year ended August 31, 2001.
After the recapitalization, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. will beneficially own, in the
aggregate, 4,476,864 shares of Common Stock and Class B Stock, or 13.8% of
the capital stock of Fedders to be outstanding following the
recapitalization. Assuming the recapitalization had been consummated on
August 31, 2001, 13.8% of the total outstanding capital stock of Fedders
would have represented an interest in (i) approximately $10,076,000 of
Fedders' net book value at August 31, 2001 and (ii) approximately
$3,098,514 of Fedders' net loss for the fiscal year ended August 31, 2001.
As of November 30, 2001, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ beneficially owned, in the
aggregate, 3,611,759 shares of Common Stock, Class A Stock and Class B
Stock, including shares held by corporations with respect to which he shares
voting and investment power, or 11.7% of the total outstanding stock of
Fedders. As of November 30, 2001, 11.7% of the total outstanding capital
stock of Fedders represented an interest in (i) approximately $8,543,000 of
Fedders' net book value at August 31, 2001 and (ii) approximately $2,627,001
of Fedders' net loss for the fiscal year ended August 31, 2001. After the
recapitalization, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ will beneficially own, in the aggregate,
3,839,406 shares of Common Stock and Class B Stock, or 11.9% of the capital
stock of Fedders to be outstanding following the recapitalization. Assuming
the recapitalization had been consummated on August 31, 2001, 11.9% of the
total outstanding capital stock of Fedders would have represented an
interest in (i) approximately $8,689,000 of Fedders' net book value at
August 31, 2001 and (ii) approximately $2,671,907 of Fedders' net loss for
the fiscal year ended August 31, 2001.
As of November 30, 2001, FC Merger Sub, Inc. beneficially owned no
Common Stock, Class A Stock or Class B Stock of Fedders and the
recapitalization will have no impact on its interest in the net book value
and net earnings of Fedders.
Prior to the Recapitalization (1)
Common Stock Class A Stock Class B Stock Total of All Classes
Beneficially Percent of Beneficially Percent of Beneficially Percent of Beneficially Percent of Total
Owned Class Owned Class Owned Class Owned Outstanding
Name of beneficial
owner
Directors
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,100(2) Less than 1% 1,233,231(4)(5) 8.3% 2,262,566(9) 99.8% 3,496,897 11.4%
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. 1,100(2) Less than 1% 1,986,832(4)(6) 13.3% 2,262,566(9) 99.8% 4,250,498 13.8%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 5,000 Less than 1% 81,207 Less than 1% __ 0.0% 86,207 Less than 1%
▇▇▇▇▇ ▇. ▇▇▇▇▇ __ 0.0% 15,230 Less than 1% __ 0.0% 15,230 Less than 1%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ __ 0.0% 5,322 Less than 1% __ 0.0% 5,322 Less than 1%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 13,910(2) Less than 1% 1,335,283(4)(7) 9.0% 2,262,566(9) 99.8% 3,611,759 11.7%
C.A. Keen __ 0.0% 89,973 Less than 1% __ 0.0% 89,973 Less than 1%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 256,800(3) 1.9% 407,062 (8) 2.7% __ 0.0% 663,862 2.2%
▇.▇. ▇▇▇▇▇▇▇▇▇▇ 55,000 Less than 1% 154,736 Less than 1% __ 0.0% 209,736 Less than 1%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 22,000 Less than 1% 42,707 Less than 1% __ 0.0% 64,707 Less than 1%
Officers
▇▇▇▇▇▇ ▇▇▇▇▇ __ 0.0% 5,000 Less than 1% __ 0.0% 5,000 Less than 1%
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ __ 0.0% 3,005 Less than 1% __ 0.0% 3,005 Less than 1%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ __ 0.0% __ 0.0% __ 0.0% __ Less than 1%
▇▇▇▇▇ ▇. ▇▇▇▇ __ 0.0% 30,769 Less than 1% __ 0.0% 30,769 Less than 1%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ __ 0.0% 25,000 Less than 1% __ 0.0% 25,000 Less than 1%
▇▇▇▇ ▇▇▇▇▇▇ __ 0.0% __ Less than 1% __ 0.0% __ Less than 1%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 16,000 Less than 1% 70,088 Less than 1% __ 0.0% 86,088 Less than 1%
▇▇▇ ▇▇▇▇▇▇▇▇ III 100 Less than 1% 3,719 Less than 1% __ 0.0% 3,819 Less than 1%
▇▇▇▇ ▇. ▇▇▇▇▇▇ __ 0.0% 3,500 Less than 1% __ 0.0% 3,500 Less than 1%
▇▇▇▇ ▇▇▇▇ 26 Less than 1% 3,474(10) Less than 1% __ 0.0% 3,500 Less than 1%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇ 20,000 Less than 1% 322,419 2.2% __ 0.0% 342,419 1.1%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ __ 0.0% __ 0.0% __ 0.0% __ 0.0%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 5,000 Less than 1% 36,296 Less than 1% __ 0.0% 41,296 Less than 1%
Total Officers and 393,836 2.9% 4,368,235 29.3% 2,262,566 99.8% 7,024,637 22.8%
Directors
(1) All amounts shown include shares which the named individuals have
the right to acquire beneficial ownership of within 60 days as a
result of the transactions described in Rule 13d-3(d) of the
Securities Exchange Act of 1934, as amended.
(2) The amount shown includes 1,100 shares which are held by a
corporation in which Messrs. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ are officers, directors and stockholders and
share voting and investment power over such shares.
(3) Shares owned by members of ▇▇. ▇▇▇▇▇▇'▇ family, as to which ▇▇.
▇▇▇▇▇▇ disclaims beneficial ownership.
(4) Includes 743,309 shares which are held by corporations in which
Messrs. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
are officers, directors and stockholders, and share voting and
investment power over such shares.
(5) Includes 204,292 shares held of record by ▇▇. ▇▇▇▇▇▇▇▇'▇ wife, and
78,861 shares held of record by ▇▇. ▇▇▇▇▇▇▇▇'▇ wife in trust for
their grandchildren, as to which ▇▇. ▇▇▇▇▇▇▇▇ disclaims beneficial
ownership.
(6) Includes 18,119 shares held of record by ▇▇. ▇▇▇▇▇▇▇▇'▇ wife,
264,659 shares held of record by ▇▇. ▇▇▇▇▇▇▇▇'▇ wife in trust for
their grandchildren, as to which ▇▇. ▇▇▇▇▇▇▇▇ disclaims beneficial
ownership, and 71,630 shares held by ▇▇. ▇▇▇▇▇▇▇▇ in trust as
trustee for himself.
(7) Includes 71,630 shares held by ▇▇. ▇▇▇▇▇▇▇▇ in trust as trustee for
himself and 192,769 shares held by ▇▇. ▇▇▇▇▇▇▇▇ in trust for his
grandchildren.
(8) Includes 392,062 shares owned by members of ▇▇. ▇▇▇▇▇▇'▇ family, as
to which ▇▇. ▇▇▇▇▇▇ disclaims beneficial ownership.
(9) Shares are owned by ▇▇▇▇▇▇▇▇ Holding Corporation, as to which
Messrs. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
share voting and investment power.
(10) Includes 474 shares held by ▇▇. ▇▇▇▇'▇ husband in trust for their
minor daughter, as to which ▇▇. ▇▇▇▇ disclaims beneficial
ownership.
If the recapitalization had occurred on November 30, 2001, each
director and executive officer would beneficially own the number of shares
of new Common Stock and new Class B Stock set forth on the following table.
After the Recapitalization (1)
Common Stock Class B Stock Total of All Classes
Beneficially Percent of Beneficially Percent of Beneficially Percent of Total
Owned Class Owned Class Owned Outstanding
Name of beneficial
owner
Directors
---------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,234,441(2)(4)(5) 4.1% 2,488,822(8) 99.8% 3,723,263 11.5%
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. 1,988,042(2)(4)(6) 6.7% 2,488,822(8) 99.8% 4,476,864 13.8%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 86,707 Less than 1% __ 0.0% 86,707 Less than 1%
▇▇▇▇▇ ▇. ▇▇▇▇▇ 15,230 Less than 1% __ 0.0% 15,230 Less than 1%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 5,322 Less than 1% __ 0.0% 5,322 0.0%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,350,584(2)(4)(7) 4.5% 2,488,822(8) 99.8% 3,839,406 11.9%
C.A. Keen 89,973 Less than 1% __ 0.0% 89,973 Less than 1%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 689,542(3) 2.3% __ 0.0% 689,542 2.1%
▇.▇. ▇▇▇▇▇▇▇▇▇▇ 215,236 Less than 1% __ 0.0% 215,236 Less than 1%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 66,907 Less than 1% __ 0.0% 66,907 Less than 1%
Officers
--------
▇▇▇▇▇▇ ▇▇▇▇▇ 5,000 Less than 1% __ 0.0% 5,000 Less than 1%
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 3,005 Less than 1% __ 0.0% 3,005 Less than 1%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ __ 0.0% __ 0.0% __ 0.0%
▇▇▇▇▇ ▇. ▇▇▇▇ 30,769 Less than 1% __ 0.0% 30,769 Less than 1%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 25,000 Less than 1% __ 0.0% 25,000 Less than 1%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 87,688 Less than 1% __ 0.0% 87,688 Less than 1%
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ 3,829 Less than 1% __ 0.0% 3,829 Less than 1%
▇▇▇▇ ▇. ▇▇▇▇▇▇ 3,500 Less than 1% __ 0.0% 3,500 Less than 1%
▇▇▇▇ ▇▇▇▇ 3,502(9) Less than 1% __ 0.0% 3,502 Less than 1%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. 344,419 1.2% __ 0.0% 344,419 1.1%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ __ 0.0% __ 0.0% __ 0.0%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 41,796 Less than 1% __ 0.0% 41,796 Less than 1%
Total Officers and 4,801,454 16.1% 2,488,822 99.8% 7,290,276 22.5%
Directors
(1) All amounts shown include shares which the named individuals have
the right to acquire beneficial ownership of within 60 days as a
result of the transactions described in Rule 13d-3(d) of the
Securities Exchange Act of 1934, as amended.
(2) The amount shown includes 1,100 shares held prior to the
recapitalization by a corporation in which Messrs. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ are officers,
directors and stockholders and share voting and investment power
over such shares.
(3) Includes 256,800 shares of Common Stock and 392,062 shares of Class
A Stock owned prior to the recapitalization by members of ▇▇.
▇▇▇▇▇▇'▇ family, as to which ▇▇. ▇▇▇▇▇▇ disclaims beneficial
ownership.
(4) Includes 743,309 shares of Class A Stock held prior to the
recapitalization by corporations in which Messrs. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ are officers,
directors and stockholders, and share voting and investment power
over such shares.
(5) Includes 204,292 shares of Class A Stock held of record prior to
the recapitalization by ▇▇. ▇▇▇▇▇▇▇▇'▇ wife, and 78,861 shares of
Class A Stock held of record by ▇▇. ▇▇▇▇▇▇▇▇'▇ wife in trust for
their grandchildren, as to which ▇▇. ▇▇▇▇▇▇▇▇ disclaims beneficial
ownership.
(6) Includes 18,119 shares of Class A Stock held of record prior to the
recapitalization by ▇▇. ▇▇▇▇▇▇▇▇'▇ wife, 264,659 shares of Class A
Stock held of record by ▇▇. ▇▇▇▇▇▇▇▇'▇ wife in trust for their
grandchildren, as to which ▇▇. ▇▇▇▇▇▇▇▇ disclaims beneficial
ownership, and 71,630 shares of Class A Stock held prior to the
recapitalization by ▇▇. ▇▇▇▇▇▇▇▇ in trust as trustee for himself.
(7) Includes 71,630 shares of Class A Stock held prior to the
recapitalization by ▇▇. ▇▇▇▇▇▇▇▇ in trust as trustee for himself
and 192,769 shares of Class A Stock held prior to the
recapitalization by ▇▇. ▇▇▇▇▇▇▇▇ in trust for his grandchildren.
(8) Includes 2,262,566 share of Class B Stocks owned prior to the
recapitalization by ▇▇▇▇▇▇▇▇ Holding Corporation, as to which
Messrs. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
share voting and investment power.
(9) Includes 474 shares of Common Stock held prior to the
recapitalization by ▇▇. ▇▇▇▇'▇ husband in trust for their minor
daughter, as to which ▇▇. ▇▇▇▇ disclaims beneficial ownership.
Financing the Recapitalization
No outside financing is required in order to complete the proposed
recapitalization. Fedders will use existing cash to make any cash payments
payable in lieu of fractional shares upon the exchange of the Common Stock
and Class A Stock for new Common Stock and the Class B Stock for new Class
B Stock.
Material Federal Income Tax Consequences of the Recapitalization
The following discussion summarizes the material U.S. federal
income tax consequences of the recapitalization to holders of Common Stock,
Class A Stock and Class B Stock. This discussion assumes that such shares
are held as capital assets and does not address all of the U.S. federal
income tax consequences that may be relevant to particular stockholders in
light of their individual circumstances or to stockholders that are subject
to special rules, such as:
o financial institutions,
o mutual funds,
o tax-exempt organizations,
o insurance companies,
o dealers in securities or foreign currencies,
o persons (including traders in securities) using a
mark-to-market method of accounting,
o stockholders who hold such shares as a hedge against currency
risk or as part of a straddle, constructive sale or conversion
transaction or
o stockholders who acquired their shares upon the exercise of
employee stock options or otherwise as compensation.
The following discussion is based upon the Internal Revenue Code,
laws, regulations, rulings and decisions in effect as of the date of this
proxy statement, all of which are subject to change, possibly with
retroactive effect. Tax consequences under state, local and foreign laws
are not addressed herein. No ruling has been or will be sought from the
Internal Revenue Service as to the U.S. federal income tax consequences of
the recapitalization and the following discussion is not binding on the
Internal Revenue Service. YOU ARE STRONGLY URGED TO CONSULT YOUR TAX
ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO YOU OF THE RECAPITALIZATION,
INCLUDING THE APPLICATION OF FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND
OTHER TAX LAWS BASED ON YOUR PARTICULAR FACTS AND CIRCUMSTANCES.
In the opinion of ▇▇▇▇▇▇▇, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, which
is based upon representations of Fedders, the recapitalization should
constitute a "recapitalization" within the meaning of Section 368(a)(1)(E)
of the Internal Revenue Code. Accordingly, you should not recognize any
gain or loss upon the receipt of new Common Stock or Class B Stock in
exchange for your old Common Stock, Class A Stock or Class B stock pursuant
to the recapitalization (except, as described below, with respect to cash
received in lieu of fractional shares).
A stockholder's aggregate adjusted tax basis in the new Common
Stock or new Class B Stock received in the recapitalization should be equal
to such stockholder's aggregate tax basis in its old Common Stock, Class A
Stock or Class B Stock surrendered in exchange therefor (adjusted with
respect to fractional shares). A stockholder's holding period for the new
Common Stock or new Class B Stock received in the recapitalization should
include such stockholder's holding period for its old Common Stock, Class A
Stock or Class B Stock surrendered in exchange therefor.
Stockholders that receive cash in lieu of fractional shares as a
result of the recapitalization will be treated as having received such
fractional shares as a result of the recapitalization and then as having
sold such fractional shares for cash. The amount of any capital gain or
loss attributable to such sale will be equal to the difference between the
cash received with respect to the fractional shares and the ratable portion
of such stockholder's tax basis of the Common Stock or Class B Stock
surrendered that is allocated to such fractional shares. Any such capital
gain or loss will be long-term capital gain or loss if such stockholder's
holding period for such Common Stock or Class B Stock exceeded 12 months
upon consummation of the recapitalization.
The preceding discussion is general in nature and does not
consider any particular stockholder's individual facts and circumstances.
Since the tax consequences of the recapitalization to you will depend on
your particular facts and circumstances, you are strongly urged to consult
your tax advisor as to the tax consequences to you of the recapitalization.
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS
OF FEDDERS AND FC MERGER SUB
The following people are the current executive officers and
directors of Fedders and FC Merger Sub. After the combination, the current
directors and executive officers of Fedders will remain in office.
Furthermore, with respect to the directors and executive officers of
Fedders and FC Merger Sub:
o all are citizens of the United States;
o none have been convicted in a criminal proceeding during the
past five years (excluding traffic violations or similar
misdemeanors); and
o none have been a party to any judicial or administrative
proceeding during the past five years (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.
Unless otherwise noted, the principal business address of each
person listed below is the address of Fedders and ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇. Neither Fedders nor FC Merger Sub has
been convicted in a criminal proceeding during the past five years
(excluding traffic violations or similar misdemeanors). Neither Fedders nor
FC Merger Sub has been a party to any judicial or administrative proceeding
during the past five years (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
Only one of the current ten members of Fedders' board of directors
holds a position with ▇▇▇▇▇▇▇ and the remaining nine individuals are
independent, non-employee directors.
Fedders Corporation
Information regarding each of the directors of Fedders is included
in the section entitled "Election of Directors" beginning on page 56.
The following individuals are the other current executive officers
of Fedders:
▇▇▇▇▇▇ ▇▇▇▇▇, age 50, was elected Vice President, Taxes of Fedders
in December 2000. Previously, ▇▇. ▇▇▇▇▇ was an appointed officer of Fedders
from 1999 to December 2000 and prior thereto, Director of Taxes since 1995.
▇▇. ▇▇▇▇▇ has been employed by Fedders since September 1991.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, age 49, was elected Treasurer of Fedders in
October 1998. Prior to her election, she served as Assistant Treasurer of
Fedders since 1989.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, age 55, was elected Vice President and General
Counsel of Fedders in June 2000. ▇▇. ▇▇▇▇▇▇▇ has been General Counsel of
Fedders since 1995. ▇▇ ▇▇▇▇▇▇▇ has been employed by Fedders since November
1992.
▇▇▇▇▇ ▇. ▇▇▇▇, age 43, has been Senior Vice President,
International since March 2001. Previously he was Senior Vice President,
Technology and Vice President, Technology of Fedders since August 1999.
Prior to joining Fedders in February 1999, ▇▇. ▇▇▇▇ worked for Carrier
Corporation for many years, serving in a variety of engineering management
positions.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, age 46, was elected President and Chief Operating
Officer in June 2000. Previously, ▇▇. ▇▇▇▇▇ was Senior Vice President of
Fedders and Chairman and Chief Executive Officer of Fedders Air Conditioning
since May 1, 1999. ▇▇. ▇▇▇▇▇ served as Vice President of Materials
Management and Global Purchasing for Fedders from December 1997 to May 1999
and, prior thereto, Vice President, Materials Management since 1995. ▇▇.
▇▇▇▇▇ has been employed by Fedders since May 1977.
▇▇▇▇ ▇▇▇▇▇▇, age 47, was elected Vice President in April 2001.
Previously, he was President of ▇▇▇▇▇▇ Manufacturing Enterprises, Inc., a
subsidiary of Fedders, for more than five years.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, age 37, was elected Executive Vice President,
Finance and Administration and Chief Financial Officer in June 2000.
Previously, ▇▇. ▇▇▇▇▇▇▇▇ was Vice President, Finance and Chief Financial
Officer of Fedders since July 1, 1999. ▇▇. ▇▇▇▇▇▇▇▇ also served as Senior
Vice President of Fedders International, Inc. from 1998 until being elected
to his current position and, prior thereto, Managing Director of the
Singapore office of Fedders International since 1995. ▇▇. ▇▇▇▇▇▇▇▇ has been
employed by Fedders since June 1990. ▇▇ ▇▇▇▇▇▇▇▇ is a grandson of ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, age 42, was elected Group Vice President,
Engineered Products in December 1999. ▇▇. ▇▇▇▇▇▇▇▇ was a Vice President of
Fedders since August 1996 and President of Melcor Corporation from 1995. ▇▇.
▇▇▇▇▇▇▇▇ has been employed by Fedders since February 1983. ▇▇. ▇▇▇▇▇▇▇▇ is a
grandson of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇▇, age 54, was elected Executive Vice President and
Secretary in June 2000. Previously, ▇▇. ▇▇▇▇▇▇ was Senior Vice President and
Secretary from August 1996 and, prior thereto, Vice President, Finance and
General Counsel of NYCOR, Inc.
▇▇▇▇ ▇. ▇▇▇▇, age 49, was elected Vice President, Strategic
Planning in June 2000. Previously, ▇▇. ▇▇▇▇ held the position of Vice
President, Communications and Planning since August 1998 and, prior thereto,
Director, Strategic Support since September 1995. ▇▇. ▇▇▇▇ has been employed
by Fedders since September 1990.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., age 46, is the Executive Vice President,
Acquisitions and Alliances of Fedders since January 1999. From 1995 to
January 1999, ▇▇. ▇▇▇▇▇▇▇ was the Executive Vice President, Finance and
Administration and Chief Financial Officers of Fedders. ▇▇. ▇▇▇▇▇▇▇ has been
employed by Fedders since August 1980.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, age 45, was elected Corporate Controller in June
2000. Previously, ▇▇. ▇▇▇▇▇▇▇ was with ▇▇▇▇▇▇▇▇▇-▇▇▇▇ Co. from 1980 to 2000,
most recently as Vice President and Controller of its production equipment
group.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, age 65, was elected Vice President, Human
Resources in June 2000. Previously, ▇▇. ▇▇▇▇▇ was Vice President,
Recruitment and Leadership Development since 1995. She has been employed by
Fedders since October 1971.
FC Merger Sub, Inc.
The board of directors of FC Merger Sub is currently made up of
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. Information
regarding these individuals can be found above in "Information Concerning
the Directors and Executive Officers of Fedders and FC Merger Sub --
Fedders Corporation" beginning on page 35 as well as under "Election of
Directors" beginning on page 56.
FC Merger Sub's executive officers are ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.,
President, ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President and Secretary, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Vice President, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Treasurer, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Assistant Secretary. Information regarding these individuals can be found
above in "Information Concerning the Directors and Executive Officers of
Fedders and FC Merger Sub -- Fedders Corporation" beginning on page 35 as
well as under "Election of Directors" beginning on page 56.
INFORMATION ABOUT FEDDERS AND CERTAIN AFFILIATES
Fedders Corporation
Fedders Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fedders, a Delaware corporation, is a leading global manufacturer
of air treatment products, including air conditioners, air cleaners,
dehumidifiers and humidifiers, and thermal technology products. Fedders was
established more than 100 years ago and has been in the air treatment
business for more than 50 years. Fedders has been expanding into a broad
variety of air treatment businesses. Fedders is a filing person for the
recapitalization.
FC Merger Sub, Inc.
FC Merger Sub, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FC Merger Sub, Inc., a wholly owned subsidiary of Fedders, is a
newly formed Delaware corporation created for the sole purpose of
implementing the recapitalization. It has not conducted any business since
its formation. At the time of the recapitalization, FC Merger Sub, Inc. will
merge into Fedders and cease to exist. FC Merger Sub, Inc. is a filing
person for the recapitalization.
▇▇▇▇▇▇▇▇ Holding Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
P.O. Box 850
Liberty Corner, New Jersey 07938
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ Holding Corporation is a holding company as to which
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ share voting and
investment power. ▇▇▇▇▇▇▇▇ Holding Corporation was created solely for the
purpose of holding certain investments, including Fedders stock.
▇▇▇▇▇▇▇▇ Holding Corporation has not been convicted in a criminal
proceeding since its creation, nor has it been a party to any judicial or
administrative proceeding since its creation that resulted in a judgment,
decree, or final order enjoining it 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.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
c/o Fedders Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is the Chairman Emeritus of Fedders' board and
has been a director of Fedders since 1945. ▇▇. ▇▇▇▇▇▇▇▇ had been associated
with Fedders in an executive capacity for more than five years. He is
currently a member of the Executive Committee of Fedders.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
c/o Fedders Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. is the Chairman and Chief Executive Officer of
Fedders and has been a director since 1965. ▇▇. ▇▇▇▇▇▇▇▇ has been associated
with Fedders in an executive capacity for more than five years. He is also
currently the Chairman of the Nominating Committee and a member of the
Executive Committee of Fedders. ▇▇. ▇▇▇▇▇▇▇▇ is the son of ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
c/o Fedders Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ has been a director of Fedders since 1961. ▇▇.
▇▇▇▇▇▇▇▇ has been retired for the past five years. He was a Senior Vice
President of Fedders until his retirement on August 31, 1992, and President
of NYCOR, Inc. until its merger into Fedders on August 13, 1996. ▇▇.
▇▇▇▇▇▇▇▇ is currently a member of the Executive and Finance Committees. ▇▇.
▇▇▇▇▇▇▇▇ is the son of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
THE RECAPITALIZATION
(ITEMS 1-8 ON COMMON STOCK AND CLASS B PROXY;
ITEM 1 ON CLASS A PROXY)
If you are a holder of record of Fedders Common Stock or Class B
Stock and you return a signed proxy or proxies in the enclosed form(s), the
shares represented by your proxy or proxies will be voted for approval of
the recapitalization and for the adoption of the recapitalization agreement
described in this document, unless you instruct otherwise. ▇▇▇▇▇▇▇' board
of directors has unanimously approved and adopted the recapitalization
agreement, a copy of which is attached as Annex A and incorporated in this
document by reference. The following discussion highlights the material
information about the proposed recapitalization of the Fedders Common
Stock, Class A Stock and Class B Stock, but may not include all of the
information that you, as a stockholder, would like to know. The board of
directors urges you to read the agreement attached to this document as
Annex A in its entirety.
General
Subject to the satisfaction of the conditions to completion of the
recapitalization, including the approval of the proposed deletion of
Section VI of clause A of Article Second of the certificate of
incorporation and the recapitalization and each of the changes to the
certificate of incorporation that will be made as a result of the
recapitalization and adoption of the merger agreement by the stockholders
of Fedders, FC Merger Sub, Inc. will be merged with and into Fedders at the
effective time. The "effective time" is the time at which the merger will
become effective under Delaware law. ▇▇▇▇▇▇▇ will be the surviving
corporation and will continue to do business under the name "Fedders
Corporation."
What Fedders Stockholders Will Receive
In the recapitalization, Fedders Common Stock and Class A Stock
will be exchanged for new Common Stock and Fedders Class B Stock will be
exchanged for new Class B Stock. As a result of this recapitalization:
o Each share of Common Stock will be exchanged for 1.1 shares
of new Common Stock;
o Each share of Class A Stock will be exchanged for one share
of new Common Stock; and
o Each share of Class B Stock will be exchanged for 1.1 shares
of new Class B Stock.
Any stockholder who would in the aggregate hold less than one
share of new Common Stock or new Class B Stock after the exchange will not
receive fractional shares. In lieu of any such fractional shares, each
holder of Common Stock or Class B Stock who would otherwise have been
entitled to a fraction of a share of new Common Stock or new Class B Stock,
as the case may be, upon surrender of their Common Stock or Class B Stock
will be paid cash upon such surrender in an amount equal to the product of
such fraction multiplied by the closing sale price of the new Common Stock
on the New York Stock Exchange on the date upon which the merger becomes
effective, or, if the new Common Stock is not so traded on such day, the
closing sale price on the next day on which such stock is traded on the New
York Stock Exchange.
As of November 30, 2001, there were 13,634,759 shares of Common
Stock outstanding, 14,890,386 shares of Class A Stock outstanding and
2,266,406 shares of Class B Stock outstanding.
Conditions to Completion of the Recapitalization
Completion of the recapitalization is subject to various
conditions that must be satisfied or waived prior to the recapitalization.
These conditions include that:
o Fedders receives the required stockholder approval for the
proposed amendment to delete Section VI of clause A of
Article Second of the certificate of incorporation;
o Fedders receives the required stockholder approval for the
recapitalization;
o Fedders receives the required stockholder approval for each
of the changes to its certificate of incorporation that will
be made as a result of the recapitalization;
o the registration statement filed with the Securities and
Exchange Commission in connection with the issuance of the
new Common Stock and new Class B Stock becomes effective;
o the New York Stock Exchange approves the listing of the new
Fedders Common Stock;
o if a filing becomes necessary under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act, all waiting periods have expired
or terminated;
o Fedders receives all necessary material licenses, permits,
consents, approvals, authorizations, qualifications and
orders of governmental authorities and parties to contracts
with Fedders and its subsidiaries; and
o Fedders files a certificate of merger with the Secretary of
State of Delaware.
The only material United States regulatory approvals that may be
required are certain filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and its associated rules. Under this
act, certain existing holders of Fedders Common Stock, Class A Stock and/or
Class B Stock may be required to furnish certain information to the
Antitrust Division of the United States Department of Justice and the
Federal Trade Commission. Based on the reported sale price of shares of
Common Stock and Class A Stock as of November 30, 2001, no filings will be
required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act. If
circumstances change, the existing holders of Fedders Common Stock, Class A
Stock and/or Class B Stock will make any necessary filings. If such filings
become necessary, a condition to the completion of the recapitalization
will be that the required waiting periods under such act must have expired
or terminated.
▇▇▇▇▇▇▇ does not anticipate that any of the conditions to the
recapitalization will be waived. ▇▇▇▇▇▇▇ expects that the recapitalization
will be completed as soon as practicable after the conditions to the
completion are satisfied, or at such later date as is, in the judgment of
▇▇▇▇▇▇▇' board of directors, in the best interests of the stockholders of
Fedders.
Under the terms of the certificate of incorporation, the proposed
amendment to the certificate of incorporation to delete Section VI of
clause A of Article Second requires approval of at least a majority of the
voting power of the shares of Common Stock, Class A Stock and Class B
Stock, each voting separately as a class.
Assuming the proposed deletion of Section VI of clause A of
Article Second of the certificate of incorporation is approved, the
recapitalization and each of the changes to Fedders' certificate of
incorporation that will be made as a result of the recapitalization will
require the approval of at least a majority of the voting power of the
shares of Common Stock and Class B Stock, voting together as a single
class.
Fedders' directors and executive officers have indicated that they
intend to vote FOR (i) the proposed deletion of Section VI of clause A of
Article Second of the certificate of incorporation, (ii) the
recapitalization and (iii) each of the changes to the certificate of
incorporation that will be made as a result of the recapitalization. As of
November 30, 2001, these directors and executive officers were entitled to
vote approximately: (i) 393,836 shares of Common Stock, representing
approximately 2.9% of the voting power of the Common Stock; (ii) 4,368,235
shares of Class A Stock, or approximately 29.3% of the outstanding Class A
Stock; (iii) 2,262,566 shares of Class B Stock, or approximately 99.8% of
the outstanding Class B Stock; and (iv) 2,399,602 shares of Common Stock
and Class B Stock representing approximately 16.7% of the voting power of
the Common Stock and Class B Stock, voting together as a single class.
Approval of the recapitalization will also constitute approval of:
o the restated certificate of incorporation attached as Exhibit
A to the recapitalization agreement attached hereto as Annex
A, which will be in effect upon consummation of the
recapitalization; and
o the conversion of outstanding stock options and rights for
Common Stock or Class A Stock into options or rights to
receive shares of new Common Stock.
Fedders would re-solicit the approval of its stockholders if (i)
the information contained in this proxy statement/prospectus contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements made in this proxy statement/prospectus
not misleading or (ii) Fedders desired to materially alter the terms of the
recapitalization.
Amendment of the Recapitalization Agreement
The agreement governing the transaction provides that the boards
of directors of Fedders and FC Merger Sub, Inc., by mutual written
agreement, may amend, modify, or supplement the agreement, at any time
prior to the effective time of the merger, notwithstanding any approval of
this Agreement by the stockholders of either or both of Fedders and FC
Merger Sub, Inc.
Abandonment of the Recapitalization
The agreement governing the transaction provides that the board of
directors may terminate the agreement or abandon the recapitalization in
its sole discretion, notwithstanding adoption and approval of the agreement
by the stockholders of either or both of Fedders and FC Merger Sub, Inc.
Estimated Fees and Expenses of the Recapitalization
The following table sets forth the estimated expenses incurred and
to be incurred by Fedders in connection with the combination. These fees
will be paid by ▇▇▇▇▇▇▇.
Filing/registration fees......................................... $ 40,000
NYSE listing fees................................................ $ 6,000
Printing and engraving costs.....................................
Legal fees and expenses.......................................... $ 450,000
Accounting fees and expenses.....................................
Financial advisory fees and expenses.............................
Depositary fees and expenses.....................................
Proxy solicitation fees and expenses............................. $ 10,000
Public relations fees and expenses...............................
Miscellaneous....................................................
---------
Total............................................................ $
=========
Effective Time of the Recapitalization
The recapitalization will become effective upon the date that the
certificate of merger is filed with the Secretary of State of the State of
Delaware. This is expected to occur on or around February 26, 2002
following the annual meeting.
Regulatory Matters
To complete the recapitalization:
o Fedders must file a certificate of merger with the Secretary
of State of Delaware; and
o if a filing becomes necessary under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act, all waiting periods must have
expired or terminated.
Fedders does not need to comply with any other federal or state regulatory
requirements or obtain any other regulatory approvals in order to effect
the combination.
Appraisal Rights
If the recapitalization is completed, the Class B stockholders
will be entitled to seek an appraisal of, and be paid in cash the "fair
value" of, their shares instead of receiving the stock or cash that they
would otherwise be entitled to under the recapitalization agreement. These
rights are commonly referred to as "appraisal rights." Section 262 of the
Delaware General Corporation Law sets forth the requirements that must be
satisfied and the procedures that must be followed to exercise appraisal
rights. Section 262 is reproduced in Annex C to this proxy
statement/prospectus. Because Fedders Common Stock and Class A Stock is
listed on the New York Stock Exchange, holders of Common Stock and Class A
Stock are not entitled to appraisal rights under Section 262.
▇▇▇▇▇▇▇▇ Holding Corporation holds approximately 99.8% of the Class
B Stock. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇' Chairman Emeritus, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.,
▇▇▇▇▇▇▇' Chairman and Chief Executive Officer, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a
director of Fedders, collectively hold all of the voting power of ▇▇▇▇▇▇▇▇
Holding Corporation. They have unanimously indicated their intention not to
cause the ▇▇▇▇▇▇▇▇ Holding Corporation to exercise its statutory appraisal
rights.
Any Class B stockholders who are entitled to appraisal rights
must, in order to exercise such rights, demand such rights BEFORE the vote
on the recapitalization at the annual meeting of stockholders. Failure to
satisfy the requirements and follow the procedures set forth in Section 262
may result in a loss of appraisal rights. If a Class B stockholder demands
appraisal but is determined not to be entitled to such rights or otherwise
loses such rights, the Class B stockholder will be entitled to receive the
consideration that such stockholder would have been entitled to under the
terms of the recapitalization agreement as if such stockholder had not
sought to exercise appraisal rights. Appraisal rights are available only to
record holders of shares.
Section 262 requires Fedders to notify the Class B stockholders,
at least 20 days before the annual meeting, as to the availability of
appraisal rights and to provide the Class B stockholders with a copy of
Section 262. This proxy statement/prospectus, including Annex C, serves as
the required notice.
To exercise statutory appraisal rights, a Class B stockholder
must:
o deliver to Fedders before the vote on the recapitalization a
written demand for an appraisal of the shares of Class B
Stock;
o continuously hold shares of Class B Stock from the date the
Class B stockholder delivers a written demand for an
appraisal through the effective date of the recapitalization;
and
o not vote in favor of the recapitalization agreement.
In addition, if neither any Class B stockholder who has demanded
appraisal rights nor ▇▇▇▇▇▇▇ has filed a petition in the Delaware Court of
Chancery demanding a determination of the fair value of the shares for
which appraisal is sought within 120 days after the effective date of the
recapitalization, then all appraisal rights will be lost. Fedders has no
obligation and does not intend to file such an appraisal petition.
Accordingly, it is the obligation of the Class B stockholders seeking
appraisal to file an appropriate appraisal petition with the Court of
Chancery within the 120-day time period prescribed by Section 262 of the
DGCL.
Any demand for an appraisal must be in writing, signed and mailed
or delivered to:
Fedders Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Corporate Secretary
A written demand must reasonably inform ▇▇▇▇▇▇▇ of the identity of
the Class B stockholder and of the Class B stockholder's intent to demand
appraisal of his, her or its shares of Class B Stock. Voting against the
recapitalization or otherwise failing to vote for the recapitalization will
not by itself constitute a demand for an appraisal or sufficient notice of
an election to exercise appraisal rights. If a Class B stockholder sells or
otherwise transfers or disposes of the shares of Class B Stock before the
effective time of the recapitalization, such stockholder will lose the
appraisal rights with respect to those shares.
A demand for appraisal should be signed by or on behalf of the
Class B stockholder exactly as the Class B stockholder's name appears on
the Class B stockholder's stock certificates. If the shares are owned of
record in a fiduciary capacity, such as by a trustee, guardian or
custodian, the demand should be executed in that capacity, and if the
shares are owned of record by more than one person, as in a joint tenancy
or tenancy in common, the demand should be executed by or on behalf of all
joint owners. An authorized agent, including one or more joint owners, may
execute a demand for appraisal on behalf of a record holder; however, in
the demand the agent must identify the record owner or owners and expressly
disclose that the agent is executing the demand as an agent for the record
owner or owners. A record holder such as a broker who holds shares as
nominee for several beneficial owners may exercise appraisal rights for the
shares held for one or more beneficial owners and not exercise appraisal
rights for the shares held for other beneficial owners. In this case, the
written demand should state the number of shares for which appraisal rights
are being demanded. When no number of shares is stated, the demand will be
presumed to cover all shares held of record by the broker or nominee.
If the recapitalization is completed, Fedders will send, within 10
days after the effective date of the recapitalization, notice of the
effective date of the recapitalization to each Class B stockholder who has
properly demanded appraisal rights under Section 262 and has not voted in
favor of the recapitalization agreement.
If a Class B stockholder has complied with the requirements for
exercising appraisal rights, then during the 120 days following the
effective date of the recapitalization, such stockholder may request from
Fedders a statement as to the aggregate number of shares not voted in favor
of the recapitalization agreement and with respect to which demands for
appraisal have been received and the number of holders of those shares.
Upon receiving any such request, which must be made in writing, ▇▇▇▇▇▇▇
will mail a statement of that information to such Class B stockholder
within 10 days.
If a petition for an appraisal is filed within the 120 day period
prescribed by Section 262, the Delaware Court of Chancery will hold a
hearing on the petition to determine the stockholders entitled to appraisal
rights and the "fair value" of their shares as of the effective date of the
recapitalization. The determination of fair value will not include any
element of value arising from the accomplishment or expectation of the
recapitalization. The court will also determine a fair rate of interest, if
any, to be paid upon the amount determined to be the fair value of the
shares. The court may determine that the fair value of the shares is more
than, the same as or less than the value of the consideration that you
otherwise would have been entitled to receive under the recapitalization
agreement. The Delaware Supreme Court has stated that "proof of value by
any techniques or methods that are generally considered acceptable in the
financial community and otherwise admissible in court" should be considered
in the appraisal proceedings.
The costs of the action may be determined by the Delaware Court of
Chancery and taxed upon the parties as the court deems equitable in the
circumstances. Upon application of a stockholder, the court may order that
all or a portion of the expenses incurred by any stockholder in an
appraisal proceeding, including, without limitation, reasonable attorneys'
fees and the fees and expenses of experts utilized in the appraisal
proceeding, be charged pro rata against the value of all of the shares
entitled to appraisal.
If a Class B stockholder has duly demanded an appraisal of shares
of Class B Stock, such stockholder will not, after the effective date of
the recapitalization, be entitled to vote those shares for any purpose, nor
will such stockholder be entitled to the payment of dividends or other
distributions on those shares, except for dividends or other distributions
payable to stockholders as of a record date before the effective date of
the recapitalization.
A Class B stockholder may withdraw demand for appraisal within 60
days after the effective date of the recapitalization. Any attempt to
withdraw a demand more than 60 days after the effective date of the
recapitalization will require Fedders' written approval. Once a petition
for appraisal is filed with the Delaware Court of Chancery, the appraisal
proceeding may not be dismissed without court approval. If a demand for
appraisal rights has been effectively withdrawn, the Class B stockholder
will receive the consideration in the recapitalization which the Class B
stockholder would otherwise be entitled to under the terms of the
recapitalization agreement as if such stockholder had not sought to
exercise appraisal rights.
If a Class B stockholder is entitled to appraisal rights and
properly demands appraisal, but fails to perfect the appraisal rights,
otherwise loses the appraisal rights or effectively withdraws the demand
for an appraisal, the shares of Class B Stock will be converted into the
right to receive the consideration that the Class B stockholder would have
been entitled to under the terms of the recapitalization agreement if such
stockholder had not sought to exercise appraisal rights.
Employee Benefit Plans
Except as described below with respect to stock benefits, all of
Fedders' employee benefit and welfare plans, such as medical plans and
pension plans, are expected to continue substantially unchanged and
benefits under these plans are not expected to be substantially affected by
the recapitalization. Fedders expects that substantially all plans
providing stock benefits will continue in effect after the
recapitalization, adjusted to reflect shares of new Common Stock instead of
Common Stock or Class A Stock. ▇▇▇▇▇▇▇, however, reserves the right to
modify any employee benefit or welfare plan.
Employee Stock Options
Each of the outstanding employee options to purchase shares of
Fedders Common Stock will be converted into options to purchase that number
of shares of new Common Stock determined by multiplying the number of
shares of Common Stock currently subject to such options by 1.1. Each of
the outstanding employee options to purchase shares of Fedders Class A
Stock will be converted into options to purchase that number of shares of
new Common Stock equal to the number of shares of Class A Stock currently
subject to such option.
New York Stock Exchange Listing
Fedders is in the process of obtaining the necessary approval from
the New York Stock Exchange in order to effect the recapitalization.
Fedders Common Stock is currently listed on the New York Stock Exchange
under the symbol "FJC". Following the recapitalization, the new Fedders
Common Stock will continue to be listed on the New York Stock Exchange
under the symbol "FJC". Fedders Class A Stock, which is currently listed on
the New York Stock Exchange under the symbol "FJA", will no longer be
listed after the recapitalization and will cease to exist. The new Class B
Stock will continue to be unlisted.
RECENT TRANSACTIONS IN SECURITIES
The following table indicates, with respect to any purchases of
Common Stock and/or Class A Stock made by Fedders or affiliates of Fedders
since August 1999, the range of prices paid for the shares, the amount of
shares purchased, and the average purchase price for the shares for each
quarterly period since August 1999:
SECURITIES AVERAGE
FISCAL YEAR PURCHASED RANGE OF PRICES PAID PURCHASE PRICE
---------------------------- ---------------------------- ---------------------------------------- ---------------------------
Common Class A Common Class A Common Class A
----------- ----------- ------------------ ------------------ ------------ -----------
1999
----------- ----------- ------------------ ------------------ ------------ -----------
First Quarter.......... 206,400 727,600 $ 3.94 to $ 5.00 $ 3.94 to $ 4.94 $ 4.96 $ 4.84
Second Quarter......... 419,300 674,000 4.75 to 4.94 4.50 to 4.94 4.89 4.62
Third Quarter.......... 91,200 285,700 5.56 to 6.00 4.79 to 5.75 5.88 5.00
Fourth Quarter......... 186,500 75,300 5.31 to 6.24 5.25 to 5.94 5.86 5.88
2000
First Quarter.......... -- 456,300 -- $ 4.62 to $ 4.9375 -- $ 4.77
Second Quarter......... -- 526,100 - 4.68 to 4.93 -- 4.85
Third Quarter.......... -- 40,900 - 4.9314 to 4.9375 - 4.93
Fourth Quarter......... 567,900 1,176,800 $ 4.93 to 5.00 4.50 to 4.93 $ 4.97 4.80
2001
First Quarter.......... 742,800 579,600 $ 3.50 to $ 4.9375 $ 3.4375 to $ 4.9375 $ 4.17 $3.62
Second Quarter......... 293,000 235,500 4.6755 to 4.9657 4.05 to 4.625 4.84 4.41
Third Quarter.......... 521,200 69,100 4.4902 to 4.9900 4.08 to 4.790 4.98 4.52
Fourth Quarter......... 375,800 181,400 4.500 to 4.990 4.0231 to 4.600 4.97 4.40
FINANCIAL STATEMENTS
Fedders' Annual Report on Form 10-K for the fiscal year ended
August 31, 2001 contains the Consolidated Balance Sheets of Fedders and its
subsidiaries at August 31, 2001 and 2000, and the Consolidated Statements
of Operations and Comprehensive Income, Consolidated Statements of
Stockholders' Equity, and Consolidated Statements of Cash Flows of Fedders
and its subsidiaries for the fiscal years ended August 31, 2001, 2000 and
1999, the financial statement schedule, and the related notes thereto.
These financial statements, the financial statement schedule, and the
related notes thereto, are incorporated in this document by reference.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL DATA
The unaudited pro forma consolidated condensed financial data is
derived from the application of pro forma adjustments to major categories
of Fedders' consolidated financial statements for the fiscal year ended
August 31, 2001 to illustrate the effect of the transaction related to the
recapitalization of all of Fedders' outstanding shares of capital stock.
The pro forma adjustments are described in the accompanying notes and are
based upon available information that ▇▇▇▇▇▇▇ believes is reasonable. These
tables do not present all of Fedders' financial information.
The unaudited pro forma consolidated condensed financial data do
not purport to be indicative of what Fedders' operations would have been
had the recapitalization taken place on the dates indicated. This
information should be read together with ▇▇▇▇▇▇▇' consolidated financial
statements and the notes thereto which are incorporated by reference in
this document, and the information under "Selected Consolidated Financial
Data" beginning on page 12.
The unaudited pro forma consolidated recapitalization table
represents the effect on stockholders' equity due to the recapitalization
of capital stock as if the recapitalization had been completed on August
31, 2001. The unaudited recapitalization data is derived from the
Consolidated Balance Sheet of Fedders for the fiscal year ended August 31,
2001. Information is presented to reflect pro forma adjustments for the
recapitalization of Fedders Common and Class A Stock into a single class of
new Common Stock and the exchange of Class B Stock for new Class B Stock.
The pro forma earnings per share calculations reflect the effect
of the recapitalization. The information is derived from the audited
Consolidated Statements of Operations and Comprehensive Income for the
fiscal year ended August 31, 2001. The information is presented to reflect
the pro forma effect on earnings per share as a result of the change in the
weighted average number of shares outstanding due to the recapitalization.
Pro Forma Consolidated Condensed Unaudited Recapitalization Table
(As of August 31, 2001)
(dollars in thousands, except per share amounts)
As of Pro Forma
August 31, 2001 Adjustments As Adjusted
Stockholders' Equity:
Preferred Stock, $1.00 par value,
15,000,000 shares authorized; no shares issued
outstanding, actual; no shares issued and
outstanding, as adjusted. - - -
Common Stock, $1.00 par value,
80,000,000 shares authorized; 16,135,459 share
issued and 13,634,759 shares outstanding, actus
no shares issued and outstanding, as adjusted. $ 16,135 $ (16,135)(a) -
New Common Stock, $0.01 par value,
70,000,000 shares authorized; no shares issued and
outstanding, actual; 38,046,620 shares issued and
29,888,220 outstanding, as adjusted. - 380 (a) $ 380
Class A Stock, $1.00 par value,
60,000,000 shares authorized; 20,297,616 shares
issued and 14,889,986 shares outstanding, actual;
no shares issued and outstanding, as adjusted. 20,298 (20,298)(a) --
Class B Stock, $1.00 par value,
7,500,000 shares authorized; 2,266,406 shares
issued and outstanding, actual; no shares issued and
outstanding, as adjusted. 2,267 (2,267)(b) --
New Class B Stock, $0.01 par value,
5,000,000 shares authorized; no shares issued and
outstanding, actual; 2,493,047 shares issued and
outstanding, as adjusted. - 25 (b) 25
Paid-in capital 31,146 38,295(c) 69,441
Retained earnings 43,313 - 43,313
Treasury stock, at cost, 7,908,330 shares
of Common and Class A Stock, actual; 8,158,400
shares of new Common Stock, as adjusted. (37,322) - (37,322)
Deferred compensation (658) - (658)
Accumulated other comprehensive loss (2,165) - (2,165)
------------ ------------- -------------
Total stockholders' equity $ 73,014 $ - $ 73,014
============ ============= =============
Notes to the Pro Forma Consolidated Condensed Unaudited Recapitalization Table
(a) Pro forma adjustments as of August 31, 2001 assume all outstanding
shares of Fedders' Common and Class A Stock are exchanged for new
Common Stock at an exchange ratio of 1.1 shares of new Common
Stock for each share of Common Stock exchanged and one share of
new Common Stock for each share of Class A Stock exchanged. On a
pro forma basis, 38,046,620 shares of the new Common Stock would
be issued after the merger. The Class A Stock ceases to exist
after the merger. The par value of the new Common Stock is $.01
per share.
(b) Pro forma adjustments reflect the Fedders Class B Stock exchanged
for new Class B Stock on a pro forma basis. 2,493,047 shares of
new Class B Stock are issued at a par value of $.01 per share.
(c) Reflects the net effect of the recapitalization on paid-in capital
as a result of the pro forma adjustments due to the exchange of
shares and the reduction in the par value to $.01 per share of
both the new class of Common and Class B Stock.
Pro Forma Unaudited Comparative Condensed Consolidated Earnings Per Share
Fiscal Year Ended
August 31,
2001
Net income loss) (a):
As reported $(22,453)
Pro forma $(22,453)
Earnings (loss) per share (b):
Basic as reported $(0.71)
Basic pro forma $(0.67)
Diluted as reported $(0.71)
Diluted pro forma $(0.67)
Weighted average shares (c):
Basic as reported 31,808
Basic pro forma 33,489
Diluted as reported 31,808
Diluted pro forma 33,489
Cash dividends per share (d):
As reported:
Common and Class A $0.120
Class B 0.108
Pro forma:
New Common and Class B 0.120
Notes to the Pro Forma Unaudited Comparative Condensed
Consolidated Earnings Per Share
(a) Pro forma net income remains unchanged for the period.
(b) Pro forma earnings per share reflect the recapitalization assuming
all outstanding shares are exchanged at the beginning of the
fiscal year for the years being reported. Basic and diluted
earnings per share are computed by dividing net income by the
respective weighted average shares outstanding for the periods
presented. Basic and diluted pro forma earnings per share are
adjusted to reflect the impact of the recapitalization on the
number of weighted average shares outstanding.
(c) Pro forma weighted average shares reflect an increase in the
number of shares outstanding due to the recapitalization and
exchange of all Common and Class A Stock into new Common Stock,
and Class B Stock into new Class B Stock.
(d) Pro forma cash dividends per share reflect the impact of the
recapitalization on the weighted average number of shares
outstanding and the result of both the new Common and new Class B
Stock sharing equally in the payment of dividends.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed
charges for each of last two fiscal periods.
Year ended Year ended
August 31, 2001 August 31, 2000
-------------------------------------
Ratio of earnings to fixed charges -- 2.6x
The ratio of earnings to fixed charges equals earnings before fixed charges
divided by fixed charges. For purposes of calculating the ratio of earnings
to fixed charges, earnings before fixed charges reduced by capitalized
interest consist of income from continuing operations before income taxes
and cumulative effect of changes in accounting principles plus fixed
charges reduced by capitalized interest. Fixed charges consist of interest
expense, capitalized interest, amortization of debt issue costs and that
portion of rental expense representative of the interest factor. For the
year ended August 31, 2001, earnings were insufficient to cover fixed
charges by approximately $33,493.
THE RECAPITALIZATION AGREEMENT
The following is a summary of the material terms of the
recapitalization agreement and plan of merger, dated __________________.
This summary does not purport to describe all the terms of the
recapitalization agreement and is qualified by the complete
recapitalization agreement which is attached as Annex A to this proxy
statement/prospectus and incorporated herein by reference. All stockholders
are urged to read carefully the recapitalization agreement in its entirety.
General
Under the recapitalization agreement, FC Merger Sub, Inc. will
merge with and into Fedders, with Fedders continuing as the surviving
corporation.
Effect on Capital Stock
Under the terms of the recapitalization agreement, Fedders Common
Stock, par value $1.00 per share, and Class A Stock, par value $1.00 per
share, will be exchanged for new Common Stock, par value $0.01 per share
and Fedders Class B Stock, par value $1.00 per share, will be exchanged for
new Class B Stock, par value $0.01 per share. As a result of the
recapitalization, each share of Common Stock, Class A Stock and Class B
Stock will be exchanged as follows:
o Each share of Common Stock will be exchanged for 1.1 shares
of new Common Stock;
o Each share of Class A Stock will be exchanged for one share
of new Common Stock; and
o Each share of Class B Stock will be exchanged for 1.1 shares
of new Class B Stock.
For a more complete description of the effect of the recapitalization on
the capital stock of Fedders, see "Description of Fedders Capital Stock
Before and After the Recapitalization" herein.
Fractional Shares
No fractional shares will be issued in the recapitalization to any
stockholder who would in the aggregate hold less than one share of new
Common Stock or new Class B Stock. In lieu of any such fractional shares,
each holder of Common Stock or Class B Stock who would otherwise have been
entitled to a fraction of a share of new Common Stock or new Class B Stock,
as the case may be, upon surrender of their Common Stock or Class B Stock
will be paid cash upon such surrender in an amount equal to the product of
such fraction multiplied by the closing sale price of the new Common Stock
on the New York Stock Exchange on the date upon which the merger becomes
effective, or, if the new Common Stock is not so traded on such day, the
closing sale price on the next day on which such stock is traded on the New
York Stock Exchange.
Closing
Subject to the satisfaction or waiver of the conditions set forth
in the recapitalization agreement, the closing of the recapitalization will
take place at such place as Fedders shall determine, at such time as is, in
the judgment of ▇▇▇▇▇▇▇, as soon as reasonably practicable following the
annual meeting of stockholders; unless another time or place is established
by ▇▇▇▇▇▇▇.
Restated Certificate of Incorporation
If the recapitalization and each of the changes to Fedders'
certificate of incorporation that will be made as a result of the
recapitalization are approved, the restated certificate of incorporation,
in substantially the form attached as Exhibit A to the recapitalization
agreement attached hereto as Annex A, will govern Fedders.
By-Laws
If the recapitalization is approved, at the effective time of the
recapitalization, the by-laws of Fedders will be the by-laws of the
surviving corporation.
Directors and Officers
The directors and officers of Fedders at the effective time of the
recapitalization will continue to be the directors and officers of Fedders
after the effective time of the recapitalization.
Termination
To the extent permitted by law, the board of directors may decide
to terminate the recapitalization agreement and abandon the
recapitalization at any time before the effective time in its sole
discretion, including by reason of the number of shares seeking appraisal
rights. If the recapitalization agreement is terminated, it shall become
void and of no effect without any liability on the part of any party to the
agreement.
Amendments and Waiver
The recapitalization agreement may be amended by mutual consent of
the boards of directors of Fedders and FC Merger Sub, Inc. at any time
before the effective time of the recapitalization, even if the
recapitalization proposal has received stockholder approval. To the fullest
extent permitted by law, any provision of the recapitalization agreement
may be waived prior to the effective time of the recapitalization.
DESCRIPTION OF FEDDERS CAPITAL STOCK
BEFORE AND AFTER THE RECAPITALIZATION
General
This section contains a description of Fedders' capital stock.
This description includes terms of the Common Stock, Class A Stock and
Class B Stock, and the new Common Stock and new Class B Stock. The express
terms of the new Common Stock and new Class B Stock are set forth in full
in the restated certificate of incorporation attached as Exhibit A to the
recapitalization agreement attached hereto as Annex A and incorporated in
this document by reference, which will be the restated certificate of
incorporation of Fedders following the recapitalization. You should read
the following summary in conjunction with, and it is qualified in its
entirety by reference to, Exhibit A to the recapitalization agreement
attached hereto as Annex ▇ .
▇▇▇▇▇▇▇' authorized capital stock currently consists of 80,000,000
shares of Common Stock, 60,000,000 shares of Class A Stock, 7,500,000
shares of Class B Stock, and 15,000,000 shares of Preferred Stock.
Following the recapitalization, Fedders will have authorized 70,000,000
shares of Common Stock, 5,000,000 shares of Class B Stock and 15,000,000
shares of Preferred Stock. The Class A Stock will cease to exist. As of
November 30, 2001, ▇▇▇▇▇▇▇ had outstanding 13,634,759 shares of Common
Stock, 14,890,386 shares of Class A Stock, 2,266,406 shares of Class B
Stock and no shares of Preferred Stock.
The Common Stock, Class A Stock and Class B Stock each have a par
value of $1.00. The new Common Stock and new Class B Stock will each have a
par value of $0.01.
The restated certificate of incorporation will provide that any
action required or permitted to be taken by the stockholders must be
effected at a duly called annual or special meeting of stockholders, and
the ability of the stockholders to consent in writing to the taking of any
action will be specifically denied. The current certificate of
incorporation does not currently provide for, or prohibit such stockholder
action by written consent. Under current Delaware law, unless otherwise
provided in the certificate of incorporation, any action required or
permitted to be taken by the stockholders may be taken without a meeting,
without notice to all stockholders and without a stockholder vote if a
written consent setting forth the action to be taken is signed by the
holders of shares of outstanding stock having the requisite number of votes
that would be necessary to authorize such action if it were taken at a
meeting of stockholders.
FEDDERS COMMON STOCK
Dividend Rights
Prior to the recapitalization, subject to the prior rights of the
holders of the Preferred Stock, holders of Common Stock, Class A Stock and
Class B Stock are entitled to receive such dividends and other
distributions in cash, stock or property of Fedders as may be declared
thereon by the board of directors of Fedders from time to time out of
assets or funds of Fedders legally available therefor, provided, that in
the case of cash dividends, if at any time a cash dividend is paid on the
Common Stock, a cash dividend of equal amount must be paid on the Class A
Stock and a cash dividend must also be paid on the Class B Stock in an
amount per share of Class B Stock equal to 90% of the amount of the cash
dividend paid on each share of Common Stock. In the case of a dividend or
other distribution payable in stock of Fedders other than Preferred Stock,
unless the dividend or distribution is solely of shares of Class A Stock,
in which case a dividend or distribution payable solely in shares of Class
A Stock may be made with respect to shares of Common Stock, only shares of
Common Stock may be distributed with respect to Common Stock.
After the recapitalization, the dividend rights of the holders of
new Common Stock will generally be similar, except that if at any time a
cash dividend is paid on the new Common Stock, a cash dividend of equal
amount will be paid on the new Class B Stock.
Voting Rights
Prior to the recapitalization, each share of Common Stock is
entitled to one vote per share on all matters submitted to the stockholders
of Fedders, including election of directors. The holders of the Common Stock
generally vote together with the holders of Class B Stock as a single class.
However, any amendment to the certificate of incorporation, any merger or
consolidation of Fedders or any sale or disposition of all or substantially
all of the assets of Fedders (except where the other party to such
transaction is a majority-owned subsidiary of Fedders) or the dissolution of
Fedders, requires the approval of a majority of the shares of Common Stock
and Class B Stock voting as separate classes.
After the recapitalization, the voting rights of the new Common
Stock will be the same as the voting rights of the Common Stock.
Liquidation Rights
Prior to the recapitalization, in the event of any dissolution,
liquidation or winding up of the affairs of Fedders, after payment or
provision of payment of the debts and other liabilities of Fedders and any
amounts to which the holders of the Preferred Stock are entitled, the
remaining assets and funds of Fedders are divided among and paid ratably to
the holders of the Common Stock and Class A Stock (including those persons
who become holders of Common Stock by reason of converting their shares of
Class B Stock).
After the recapitalization, in the event of any dissolution,
liquidation or winding up of the affairs of Fedders, after payment or
provision of payment of the debts and other liabilities of Fedders and any
amounts to which the holders of the Preferred Stock are entitled, the
remaining assets and funds of Fedders will be divided among the holders of
the new Common Stock and new Class B Stock as follows:
(i) first, before any payment or distribution of the assets of
Fedders is made to or set apart for the holders of new Class B Stock, the
holders of the shares of new Common Stock (including those persons who will
become holders of new Common Stock by reason of converting their shares of
new Class B Stock) will be entitled to receive $0.25 per share;
(ii) second, before any additional payment or distribution of the
assets of Fedders is made to or set apart for the holders of new Common
Stock following the initial $0.25 per share payment to the new Common
stockholders, the holders of new Class B Stock will be entitled to receive
$0.50 per share;
(iii) third, before any additional payment or distribution of the
assets of Fedders is made to or set apart for the holders of new Class B
Stock following the $0.25 per share payment to the holders of new Common
Stock and the $0.50 per share payment to the holders of new Class B Stock,
the holders of new Common Stock (including those persons who shall become
holders of new Common Stock by reason of converting their shares of new
Class B Stock) will be entitled to receive an additional $0.25 per share;
and
(iv) fourth, following the payment or setting apart for payment of
the amounts in items (i) through (iii) above, the holders of new Common
Stock and new Class B Stock will participate pari passu and be entitled to
receive, on a pro rata basis, the remaining assets of Fedders or proceeds
therefrom available for distribution to the holders of new Common Stock and
new Class B Stock.
Listing and Transfer Agent
The Fedders Common Stock is listed on the New York Stock Exchange
under the symbol "FJC".
American Stock Transfer and Trust, is the transfer agent and
registrar for the Fedders Common Stock.
FEDDERS CLASS A STOCK
Dividend Rights
Prior to the recapitalization, subject to the prior rights of the
holders of the Preferred Stock, holders of Common Stock, Class A Stock and
Class B Stock are entitled to receive such dividends and other
distributions in cash, stock or property of Fedders as may be declared
thereon by the board of directors of Fedders from time to time out of
assets or funds of Fedders legally available therefor. In the case of a
dividend or other distribution payable in stock of Fedders other than
Preferred Stock, only shares of Class A Stock may be distributed with
respect to Class A Stock.
Voting Rights
Prior to the recapitalization, the holders of Class A Stock have
no voting rights other than as required under the DGCL.
Liquidation Rights
Prior to the recapitalization, in the event of any dissolution,
liquidation or winding up of the affairs of Fedders, after payment or
provision of payment of the debts and other liabilities of Fedders and any
amounts to which the holders of the Preferred Stock are entitled, the
remaining assets and funds of Fedders are divided among and paid ratably to
the holders of the Common Stock and Class A Stock (including those persons
who become holders of Common Stock by reason of converting their shares of
Class B Stock).
Conversion
Prior to the recapitalization, all outstanding shares of Class A
Stock are convertible into fully paid and nonassessable shares of Common
Stock, immediately and without any action on the part of the holders
thereof, in the event the Class B Stock is converted into Common Stock in
accordance with the provisions of the certificate of incorporation.
Change of Control
Prior to (i) the proposed deletion of Section VI of clause A of
Article Second of the certificate of incorporation and (ii) the
recapitalization, in any merger or consolidation, the holders of Class A
Stock are entitled to receive the same per share consideration as is
received by the holders of the Common Stock.
Listing and Transfer Agent
The Fedders Class A Stock is listed on the New York Stock Exchange
under the symbol "FJA".
American Stock Transfer and Trust, is the transfer agent and
registrar for Fedders Class A Stock.
Post Recapitalization Rights
After the recapitalization, the Class A Stock will cease to exist
and have no rights, preferences or privileges under the restated
certificate of incorporation. It will no longer be listed on the New York
Stock Exchange and will be eligible for termination of registration under
the Securities Exchange Act of 1934.
FEDDERS CLASS B STOCK
Dividend Rights
Prior to the recapitalization, subject to the prior rights of the
holders of the Preferred Stock, holders of Common Stock, Class A Stock and
Class B Stock are entitled to receive such dividends and other
distributions in cash, stock or property of Fedders as may be declared
thereon by the board of directors of Fedders from time to time out of
assets or funds of Fedders legally available therefor, provided, that in
the case of cash dividends, if at any time a cash dividend is paid on the
Common Stock, a cash dividend of equal amount must be paid on the Class A
Stock and a cash dividend must also be paid on the Class B Stock in an
amount per share of Class B Stock equal to 90% of the amount of the cash
dividend paid on each share of Common Stock. In the case of a dividend or
other distribution payable in stock of Fedders other than Preferred Stock,
unless the dividend or distribution is solely of shares of Class A Stock,
in which case a dividend or distribution payable solely in shares of Class
A Stock may be made with respect to shares of Class B Stock, only shares of
Class B Stock may be distributed with respect to Class B Stock.
After the recapitalization, the dividend rights of the holders of
new Class B Stock will generally be similar, except that if at any time a
cash dividend is paid on the new Common Stock, a cash dividend of equal
amount will be paid on the new Class B Stock.
Voting Rights
Prior to the recapitalization, each share of Class B Stock is
entitled to one vote on all matters submitted to the stockholders of
Fedders, provided that each share of Class B Stock is entitled to ten votes
per share in any election of directors if either:
o if more than 15% of the shares of Common Stock outstanding on
the record date for such meeting are beneficially owned by a
person or group of persons acting in concert (unless such
person or group is also the beneficial owner of a majority of
the shares of Class B Stock on such record date); or
o if a nomination for the board of directors is made by a
person or group of persons acting in concert, other than the
board of directors (unless such nomination is made by one or
more holders of Class B Stock, acting in concert, who
beneficially own more than 15% of the shares of Class B Stock
outstanding on such record date).
In addition, under the certificate of incorporation, the holders
of the Class B Stock have the right to vote separately as a class on
certain matters. These matters include any amendment to the certificate of
incorporation, any merger or consolidation of Fedders or any sale or
disposition of all or substantially all of the assets of Fedders (except
where the other party to such transaction is a majority-owned subsidiary of
Fedders), any dissolution of Fedders and any additional issuance of Class B
Stock (except in connection with stock splits and stock dividends). The
holders of the Class B Stock do not have the right to vote separately as a
class on the recapitalization because the merger contemplated by the
recapitalization is with a wholly-owned subsidiary of Fedders, FC Merger
Sub, Inc.
After the recapitalization, the voting rights of the new Class B
Stock under the restated certificate of incorporation will be the same as
the voting rights of the Class B Stock.
Liquidation Rights
Prior to the recapitalization, in the event of any liquidation or
winding up of Fedders, the holders of Class B Stock are not entitled to
receive any distribution; provided, that, if Fedders Class B Stock is
converted into Fedders Common Stock, the holder of Fedders Common Stock so
issued would have the rights described herein under "Fedders Common Stock -
Liquidation Rights."
After the recapitalization, the new Class B Stock will have the
liquidation rights described herein under "Fedders Common Stock -
Liquidation Rights."
Restrictions on Transfer
Prior to the recapitalization, under the provisions of the
certificate of incorporation, the ability of a holder of Class B Stock to
transfer such stock whether by sale, assignment, gift, bequest, appointment
or otherwise, can only be made to a permitted transferee (as defined in the
certificate of incorporation).
After the recapitalization, the new Class B Stock will be subject
to the same transfer restrictions.
Conversion Rights
Prior to the recapitalization, each share of Class B Stock is
convertible at any time by the holder thereof into one share of Common
Stock, with no payment or adjustment on account of dividends accrued or in
arrears on Class B Stock surrendered for conversion or on account of any
dividends on the Common Stock issuable on such conversion. Any conversion
of Class B Stock is deemed to occur on the date the certificate therefor is
surrendered, and the person or persons entitled to receive Common Stock
issuable upon conversion of Class B Stock are treated for all purposes as
the record holder or holders of such Common Stock on such date. In
addition, at any time when the number of outstanding shares of Class B
Stock falls below 5% of the aggregate number of the issued and outstanding
shares of Common Stock and Class B Stock, or the board of directors of
Fedders and the holders of a majority of the outstanding shares of Class B
Stock approve the conversion of all of the Class B Stock into Common Stock,
then, immediately upon the occurrence of either such event, the outstanding
shares of Fedders Class B Stock are converted into shares of Fedders Common
Stock.
After the recapitalization, the conversion rights of the new Class
B Stock will be the same as the Class B stock, except that the outstanding
shares of new Class B Stock will be converted into shares of new Common
Stock if the number of outstanding shares of new Class B Stock falls below
2.5% of the aggregate number of the issued and outstanding shares of new
Common Stock and new Class B Stock.
Listing and Transfer Agent
Fedders Class B Stock is not actively traded. ▇▇▇▇▇▇▇ acts as the
transfer agent and registrar for the Class B Stock.
ELECTION OF DIRECTORS
(ITEM 9 ON COMMON STOCK AND CLASS B PROXY)
The nominees for election as directors are Messrs. ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
C. A. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇. Set forth opposite the name of each director/nominee is his age,
principal occupation for the past five years, the name and principal
business of any corporation or other organization in which such employment
is carried on and other business directorships held by the nominee or
director. The Company is not presently aware of any circumstance which would
prevent any nominee from fulfilling his duties as a director of the Company.
NOMINEES
DIRECTOR
NAME PRINCIPAL OCCUPATION AND AGE SINCE
--------------------------------------- ---------------------------------------------------- -----------
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. ..................... Chairman and Chief Executive Officer of the 1965
Company (1) (2); 63
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇..................... Financial Consultant (3); 73 1980
▇▇▇▇▇ ▇. ▇▇▇▇▇......................... President, Polytechnic University (4), 60 1998
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇...................... Executive Vice President, International, Federal 2000
Express Corporation (5); 48
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇........................ Retired (1) (6); 69 1961
C. A. Keen............................. Retired (7); 76 1996
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇....................... President, ▇▇▇▇▇▇▇ Celler ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.(8); 70 1977
▇. ▇. ▇▇▇▇▇▇▇▇▇▇....................... Retired (1) (9); 60 1982
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇....................... President, ▇▇▇▇▇ Tree Co. (10); 66 1994
---------------
(1) ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is the brother, and ▇▇. ▇▇▇▇▇▇▇▇▇▇ is the cousin,
of ▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
(2) ▇▇. ▇▇▇▇▇▇▇▇, ▇▇. has been associated with Fedders in an executive
capacity for more than five years. He is also currently the Chairman
of the Nominating Committee and a member of the Executive Committee
of Fedders.
(3) ▇▇. ▇▇▇▇▇▇▇ has been a financial consultant since 1989. He previously
served as a director of Fedders from 1980 to 1987, and was again
elected as a director in 1989. ▇▇. ▇▇▇▇▇▇▇ is also currently the
Chairman of the Audit Committee of Fedders.
(4) For the past five years, ▇▇. ▇▇▇▇▇ has been the President of
Polytechnic University located at Six Metrotech Center, Brooklyn, New
York 11201. Prior to that, ▇▇. ▇▇▇▇▇ was the ▇▇▇▇ of the College of
Engineering and Applied Sciences at Arizona State University. ▇▇.
▇▇▇▇▇ is currently a member of the Compensation, Finance and
Nominating Committees of Fedders.
(5) From 1999 to present, ▇▇. ▇▇▇▇▇▇ has been Executive Vice President,
International of Federal Express Corporation located at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Previously, he was President
and Division Head, Asia Pacific Region from 1998 and Senior Vice
President of that division from 1995. He has been with Federal
Express Corporation since 1975. ▇▇. ▇▇▇▇▇▇ is a member of the Audit
and Compensation Committees of Fedders.
(6) ▇▇. ▇▇▇▇▇▇▇▇ has been retired for the past five years. He was a
Senior Vice President of Fedders until his retirement on August 31,
1992, and President of NYCOR, Inc. until its merger into Fedders on
August 13, 1996. ▇▇. ▇▇▇▇▇▇▇▇ is currently a member of the Executive
and Finance Committees. ▇▇. ▇▇▇▇▇▇▇▇ was a Senior Vice President of
the Company until his retirement on August 31, 1992, and President of
NYCOR, Inc. until its merger into the Company on August 13, 1996. ▇▇.
▇▇▇▇▇▇▇▇ is a member of the Executive and Finance Committees.
(7) ▇▇. ▇▇▇▇ has been retired for the past five years. He was a Vice
President of Fedders for more than 20 years until his retirement in
August, 1992. He was also a director of NYCOR, Inc. until its merger
into Fedders on August 13, 1996. ▇▇. ▇▇▇▇ is currently a member of
the Finance and Nominating Committees of Fedders.
(8) For the past five years, ▇▇. ▇▇▇▇▇▇ has been the President of the law
firm of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C. located at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. His law firm renders legal services
to Fedders from time to time. ▇▇. ▇▇▇▇▇▇ is also a director of
General DataComm Industries, Inc. and Trans-Lux Corporation. ▇▇.
▇▇▇▇▇▇ is currently Chairman of the Compensation Committee and a
member of the Executive and Audit Committees of Fedders.
(9) ▇▇. ▇▇▇▇▇▇▇▇▇▇ has been retired for the past five years. He was
Senior Vice President and Secretary of Fedders prior to his
retirement on August 31, 1996. ▇▇. ▇▇▇▇▇▇▇▇▇▇ served in various
capacities with Fedders over 39 years, including human resources and
legal. ▇▇. ▇▇▇▇▇▇▇▇▇▇ is currently Chairman of the Finance Committee
and a member of the Audit Committee of Fedders.
(10) For the past two and one-half years ▇▇. ▇▇▇▇▇ has been the President
of ▇▇▇▇▇ Tree Co. located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇. ▇▇▇▇▇ Tree Co. is an importer of Christmas items. Prior
to that ▇▇. ▇▇▇▇▇ was President of Boulderwood Corporation. ▇▇. ▇▇▇▇▇
is currently a member of the Compensation and Nominating Committees.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended August 31, 2001, the Board of
Directors of the Company held six (6) meetings. All of the present
directors attended 75% or more of such meetings and of meetings of
committees of which they were members. Directors who are not employees
receive an annual fee of $48,000, payable one-half in cash and one-half in
shares of the Company's Class A Stock. After the recapitalization,
directors who are not employees will receive an annual fee of $48,000,
payable one-half in cash and one-half in shares of the Company's Common
Stock.
The board or directors has five standing committees. Committee
memberships are indicated in the preceding biographical information.
The audit committee consists of four directors, none of whom is an
employee of Fedders. The audit committee reviews significant matters
relating to our audit and internal controls, reviews the results of audits
by our independent auditors, reviews the activities of the internal audit
staff, and recommends selection of our independent auditors for approval by
the board, subject to ratification by the stockholders. The audit committee
reviews and transmits to the board Fedders' audited financial statements
after the close of each fiscal year. The chairman of the board and other
members of the audit committee receive a fee of $1,000 and $500,
respectively, for each meeting they attend. During the fiscal year ended
August 31, 2001, the audit committee held four (4) meetings. There is a
written charter for the audit committee which has been adopted by the board
and is attached hereto as Annex D. All of the members of the audit
committee are independent directors.
The compensation committee consists of four directors and develops
compensation plans for Fedders' executive officers, subject to the approval
of the full board of directors. During the fiscal year ended August 31,
2001, the compensation committee held two (2) meetings.
The executive committee consists of four directors and has the
authority to act on most matters concerning Fedders during intervals
between board meetings. During the fiscal year ended August 31, 2001, the
executive committee did not hold any meetings.
The finance committee consists of four directors. This committee
reviews Fedders' financial policies, keeps informed of its operations and
financial condition, including requirements for funds, advises the board of
directors concerning sources and disposition of Fedders' funds, evaluates
investment programs, and reviews Fedders' continuing financial arrangements
and methods of external financing. During the fiscal year ended August 31,
2001, the finance committee did not hold any meetings.
The nominating committee consists of four directors, three of whom
are non-employee directors. This committee reviews possible director
candidates and makes recommendations to the board of directors concerning
nominees to serve on the board. During the fiscal year ended August 31,
2001, the nominating committee did not meet.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS OF FEDDERS
As of November 30, 2001, each director and executive officer of
Fedders named in the summary compensation table under "Election of
Directors - Executive Compensation" below and all directors and executive
officers of Fedders as a group, owned beneficially the number of shares of
the Company's equity securities set forth in the table on page 32. Shares
subject to acquisition within 60 days pursuant to stock options are shown
separately.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Due to an internal administrative oversight, Form 5s for three
executive officers were not filed on a timely basis. No transaction was
involved as the filings related to repricing of options.
PRINCIPAL STOCKHOLDERS OF FEDDERS
The following table sets forth information at December 12, 2001
with respect to the beneficial ownership of our voting securities by all
persons known by the us to own more than 5% of Fedders' outstanding voting
securities. Unless otherwise indicated, the owners listed have sole voting
and investment power.
AMOUNT
NAME AND ADDRESS OF BENEFICIALLY PERCENT
TITLE OF CLASS BENEFICIAL OWNER (1) OWNED OF CLASS
------------------------- --------------------------------------- ----------------------- ----------------------
Class B Stock ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 2,262,566 99.82%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
▇/▇ ▇▇▇▇▇▇▇ Corporation
Liberty Corner, NJ 07938
(1) See footnotes 4, 5, 6 and 7 to the table on page 32 for more detailed
information with respect to the security ownership of the named
individuals.
EXECUTIVE COMPENSATION
The following information is furnished as to all cash compensation
paid by ▇▇▇▇▇▇▇' and its subsidiaries during the fiscal year ended August
31, 2001 to each of the five highest paid executive officers of Fedders
whose aggregate direct compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------------------------- -----------------------------
FISCAL SALARY BONUS STOCK OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) (2)($) AWARDS (#) ($)
------------------------------------------ ---------- ----------- ---------- ---------- ------------ -----------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (1) ................... 2001 399,866 178,095 - 120,000(3) 67,502
Chairman of the Board of Directors 2000 533,154 577,860 -- 120,000 74,994
1999 522,701 536,130 -- -- 44,010
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.......................... 2001 591,345 237,460 - 300,000(3) 690,546
Vice Chairman and Chief Executive Officer 2000 591,345 577,860 -- 120,000 610,027
1999 579,750 536,130 -- - 689,770
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.......................... 2001 290,000 89,047 - 140,000(3) 32,355
President and Chief Operating Officer 2000 217,000 127,553 -- 130,000 15,097
1999 166,667 67,016 -- -- 6,424
▇▇▇▇ ▇. ▇▇▇▇▇▇............................ 2001 210,000 44,524 - 100,000(3) 24,185
Executive Vice President and Secretary 2000 192,676 108,349 -- 80,000 22,994
1999 185,509 100,524 -- -- 18,836
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇..................... 2001 255,000 118,730 - 150,000(3) 41,415
Executive Vice President, Acquisitions 2000 255,000 288,930 -- 60,000 30,759
and Alliances 1999 250,000 268,065 -- -- 17,010
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.......................... 2001 200,000 44,524 - 75,000(3) 19,493
Executive Vice President, Finance and 2000 159,833 72,233 -- 70,000 41,387
Administration and Chief Financial Officer 1999 142,911 26,769 -- -- 6,776
(1) Does not include ▇▇. ▇▇▇▇▇▇▇▇'▇ retirement payments for the 2001
fiscal year in the amount of $276,882. ▇▇. ▇▇▇▇▇▇▇▇ retired effective
June 1, 2001.
(2) Bonus payments are for those accrued in the 2001 fiscal year but not
paid until the 2002 fiscal year.
(3) Options represent options previously granted and repriced during
fiscal year 2001.
OPTIONS/SAR GRANTS TABLE
During the fiscal year ended August 31, 2001, ▇▇▇▇▇▇▇ did not
grant any stock options nor stock appreciation rights (SARs) to any
executive officer.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
The following table sets forth the number of shares of Class A
Stock exercised during the fiscal year ended August 31, 2001, the value
realized upon exercise, the number of unexercised Class A Stock options at
the end of this period and the value of unexercised in-the-money options at
the end of this period.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
VALUE OF
NUMBER OF UNEXERCISED IN-
UNEXERCISED THE-MONEY
OPTIONS AT OPTIONS AT
FY-END (#) FY-END ($)
---------------------- ----------------------
SHARES VALUE
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
-------------------------------- ----------------- ---------------- ---------------------- ----------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.............. -- -- E -- E --
U 120,000 U 44,400
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. .............. 60,000 56,250 E 120,000 E 44,400
U 120,000 U 44,400
▇▇▇▇▇▇▇ ▇▇▇▇▇................... -- -- E 10,000 E 3,700
U 130,000 U 48,100
▇▇▇▇ ▇. ▇▇▇▇▇▇.................. 20,000 18,400 E -- E --
U 80,000 U 29,600
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. ......... 30,000 19,686 E 60,000 E 22,200
U 60,000 U 22,200
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ............... - -- E 5,000 E 1,850
U 70,000 U 25,900
TEN YEAR OPTION/SAR REPRICINGS
The following table sets forth information concerning repricing
during the last ten fiscal years of stock options held by any person who
was an executive officer of the Company at the time of repricing:
Number of Length of Original
Securities Option Term
Underlying Market Price of Exercise Price Remaining at Date
Options/SAR's Stock at Time at Time of New or Repricing or
Repriced or of Repricing or Repricing or Exercise Amendment
Name Date Amended (#) Amendment ($) Amendment ($) Price($) (months)
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 10/24/00 120,000 3.625 4.94 3.625 50
7/28/92 60,000 4.375 8.125 4.375 17
7/28/92 60,000 4.375 8.125 4.375 32
7/28/92 30,000 4.375 8.125 4.375 44
1/2/92 60,000 8.125 13.00 8.125 24
1/2/92 60,000 8.125 15.125 8.125 39
1/2/92 30,000 8.125 8.75 8.125 51
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. 10/24/00 60,000 3.625 4.50 3.625 2
10/24/00 120,000 3.625 4.75 3.625 14
10/24/00 120,000 3.625 4.94 3.625 50
7/28/92 60,000 4.375 8.125 4.375 17
7/28/92 60,000 4.375 8.125 4.375 32
7/28/92 30,000 4.375 8.125 4.375 44
1/2/92 60,000 8.125 13.00 8.125 24
1/2/92 60,000 8.125 15.125 8.125 39
1/2/92 30,000 8.125 8.75 8.125 51
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 7/28/92 10,000 4.375 8.125 4.375 38
7/28/92 5,000 4.375 8.125 4.375 45
1/2/92 10,000 8.125 15.125 8.125 45
1/2/92 5,000 8.125 8.75 8.125 52
▇▇▇▇▇▇ ▇▇▇▇▇ 10/24/00 5,000 3.625 4.75 3.625 14
10/24/00 20,000 3.625 4.94 3.625 50
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 7/28/92 7,500 4.375 8.125 4.375 45
1/2/92 7,500 8.125 8.75 52
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 10/24/00 4,000 3.625 4.75 3.625 14
10/24/00 20,000 3.625 4.94 3.625 50
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 10/24/00 15,000 3.625 4.88 3.625 10
10/24/00 10,000 3.625 4.94 3.625 50
10/24/00 10,000 3.625 4.81 3.625 56
▇▇▇▇▇ ▇. ▇▇▇▇ 10/24/00 30,769 3.625 4.88 3.625 30
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 10/24/00 10,000 3.625 4.75 3.625 14
10/24/00 80,000 3.625 4.94 3.625 50
10/24/00 50,000 3.625 4.81 3.625 56
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 7/28/92 30,000 4.375 8.125 4.375 17
7/28/92 30,000 4.375 8.125 4.375 32
7/28/92 15,000 4.375 8.125 4.375 44
1/2/92 30,000 8.125 13.00 8.125 24
1/2/92 30,000 8.125 15.125 8.125 39
1/2/92 15,000 8.125 8.75 8.125 51
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 10/24/00 5,000 3.625 4.75 3.625 14
10/24/00 45,000 3.625 4.94 3.625 50
10/24/00 25,000 3.625 4.81 3.625 56
▇▇▇ ▇▇▇▇▇▇▇▇, III 10/24/00 50,000 3.625 4.94 3.625 50
▇▇▇▇ ▇. ▇▇▇▇▇▇ 10/24/00 20,000 3.625 4.75 3.625 14
10/24/00 55,000 3.625 4.94 3.625 50
10/24/00 25,000 3.625 4.81 3.625 56
▇▇▇▇ ▇. ▇▇▇▇ 10/24/00 4,000 3.625 4.75 3.625 14
10/24/00 15,000 3.625 4.94 3.625 50
10/24/00 10,000 3.625 4.81 3.625 56
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. 10/24/00 30,000 3.625 4.50 3.625 2
10/24/00 60,000 3.625 4.75 3.625 14
10/24/00 60,000 3.625 4.94 3.625 50
7/28/00 20,000 4.375 8.125 4.375 6
7/28/00 10,000 4.375 8.125 4.375 11
7/28/00 30,000 4.375 8.125 4.375 20
7/28/00 30,000 4.375 8.125 4.375 33
7/28/00 15,000 4.375 8.125 4.375 45
1/2/92 20,000 8.125 12.75 8.125 13
1/2/92 10,000 8.125 10.25 8.125 18
1/2/92 30,000 8.125 13.00 8.125 27
1/2/92 30,000 8.125 15.125 8.125 40
1/2/92 15,000 8.125 8.75 8.125 52
▇. ▇. ▇▇▇▇▇▇▇▇▇▇ 7/28/92 30,000 4.375 8.125 4.375 17
7/28/92 30,000 4.375 8.125 4.375 32
7/28/92 15,000 4.375 8.125 4.375 44
1/2/92 30,000 8.125 13.00 8.125 24
1/2/92 30,000 8.125 15.125 8.125 39
1/2/92 15,000 8.125 8.75 8.125 51
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 10/24/00 25,000 3.625 4.81 3.625 56
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 7/28/92 5,000 4.375 8.125 4.375 15
7/28/92 3,500 4.375 8.125 4.375 18
7/28/92 5,000 4.375 8.125 4.375 33
7/28/92 5,000 4.375 8.125 4.375 45
1/2/92 5,000 8.125 10.625 8.125 22
1/2/92 3,500 8.125 13.00 8.125 25
1/2/92 5,000 8.125 15.125 8.125 40
1/2/92 5,000 8.125 8.75 9.125 52
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 10/24/00 10,000 3.625 4.75 3.625 14
10/24/00 10,000 3.625 4.94 3.625 50
10/24/00 10,000 3.625 4.81 3.625 56
The grant of stock options is considered an important element of total
compensation in order to attract and retain highly qualified employees and
to provide an incentive to increase the value of Fedders' stock. Fedders has
granted stock options to many employees as part of their compensation
package. Outstanding options held by all employees were repriced during the
fiscal year to reflect the market price of Fedders' stock on the date of the
repricing so that such options would continue to be considered by employees
as an important element of their overall compensation package and provide
the intended incentive.
Compensation Committee:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chair
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
C. A. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
REPORT OF AUDIT COMMITTEE
The Audit Committee is comprised of four directors who are not
officers or employees of the Company (▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇.▇. ▇▇▇▇▇▇▇▇▇▇). The Audit Committee has
reviewed and discussed the audited financial statements for the Fiscal Year
with management of the Company. The Audit Committee has discussed with the
Company's independent auditors, Deloitte & Touche LLP, the matters required
to be discussed by SAS 61 (the Codification of Statements on Auditing
Standards, AU 380), as may be modified or supplemented from time-to-time.
The Audit Committee has reviewed the written disclosures and the letter
from the Company's independent auditors required by Independence Standards
Board Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees), as may be modified or
supplemented from time-to-time, and has discussed with the independent
auditors of the Company the independent auditor's independence and based
upon the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements
for the Fiscal Year be included in the Company's Annual Report on Form 10-K
for the Fiscal Year for filing with the Securities and Exchange Commission.
Respectfully submitted,
AUDIT COMMITTEE
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ -- Chairman
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇. ▇. ▇▇▇▇▇▇▇▇▇▇
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee is comprised of four directors who are
not officers or employees of ▇▇▇▇▇▇▇ (▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
C.A. ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇). The committee submitted a plan to the board
of directors for the fiscal year ended August 31, 2001 which was approved by
the Board on December 19, 2000. ▇▇. ▇▇▇▇ was formerly an officer of the
Company.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
In determining the total compensation package for the chief
executive officer and all other executive officers for the fiscal year
ended August 31, 2001, the Committee considered several factors including:
the performance of the Company; the individual contribution of each
executive officer; the need to attract and retain highly qualified
executives necessary to build long-term stockholder value; and the need to
link a portion of each executive officer's long-term capital accumulation
to the growth in the market value of the Company's stock. Executive
compensation was broken down into three major components (i) cash
compensation, (ii) incentive bonuses, and (iii) stock options. ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇. has an employment contract with the Company.
Cash compensation for the fiscal year ended August 31, 2001 is
shown on the Summary Compensation Table. For the fiscal year ended August
31, 2001, the Committee recommended and the Board adopted the same plan as
the last fiscal year which applied percentages against the EBITDA of the
Company minus $1,000,000 and, with respect to certain officers, against
EBITDA of the operations for which they are responsible and certain
additional goals. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇ also receive incentive compensation based
upon successful completion of acquisitions during the fiscal year ended
August 31, 2001. The awards under the plan are based heavily upon the
performance of the Company. The amount of the awards for the fiscal year
ended August 31, 2001 range from 0.19% to 1.00%of EBITDA. With respect to
the individuals named in the Summary Compensation Table, the following
percentages of EBITDA or potential bonus amount were designated: ▇▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1.00%; ▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. 1.00%; ▇▇. ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇. 0.5%, ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, 0.375%, ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇ 0.1875%
and Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, 0.1875%.
Respectfully submitted,
COMPENSATION COMMITTEE
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ -- Chairman
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
C. A. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
EMPLOYMENT CONTRACTS
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ had an agreement with
Fedders, which became effective on March 23, 1993. The agreement has a
stated expiration date of March 23, 2003, but the term of the agreement
automatically extends and has a remaining term of ten years from any point
in time, until the term is finally fixed at a period of ten years from an
intervening event, as provided in the agreement, such as retirement,
permanent disability or death. ▇▇. ▇▇▇▇▇▇▇▇ retired effective June 1, 2001.
Annual payments under the agreement total $1,107,530.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. ▇▇. ▇▇▇▇▇▇▇▇ has an employment agreement with
Fedders which expires on September 30, 2006. The material provisions of the
agreement include: (1) an annual base salary of at least $591,345, which is
reviewable annually and subject to increase and (2) eligibility to receive
an annual bonus of not less than 1% of Fedders' earnings before income
taxes, plus net interest expense and depreciation and amortization (EBITDA)
in excess of $1 million.
PERFORMANCE GRAPH
The following graph provides a comparison of the cumulative total
stockholder return on Fedders Common Stock with returns on the New York
Stock Exchange Composite Index, and stocks included in the "Home Appliance"
category by The Value Line Investment Survey.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG FEDDERS CORPORATION,
NYSE MARKET INDEX AND PEER GROUP
[Line graph comparing the five-year total return between Fedders
Corporation, the Peer Group Index and the NYSE Market Index.]
CUSTOMER
FEDDERS SELECTED NYSE MARKET
CORPORATION STOCK LIST INDEX
--------------- ---------------- ---------------
1997 112.62 127.85 159.96
1998 93.7 144.81 155.22
1999 120.97 202.46 215.91
2000 98.69 131.15 241.5
2001 93.20 137.52 180.96
ASSUMES $100 INVESTED ON SEPTEMBER 1, 1996
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDED AUGUST 31, 2001.
FISCAL YEAR ENDING
Company/Index/Market August 30, August 29, August 31, August 31, August 31, August 31,
1996 1997 1998 1999 2000 2001
Fedders Corporation 100.00 113.36 94.31 121.76 99.34 93.20
Customer Selected Stock 100.00 116.32 130.72 182.42 118.42 137.52
List
NYSE Market Index 100.00 135.83 141.15 183.34 205.07 180.96
The Customer Selected Stock List is made up of the following securities:
Black & ▇▇▇▇▇▇ Corporation, Fedders Corporation, Maytag Corporation,
National Presto Industrial, Toro Co. and Whirlpool Corporation.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(ITEM 10 ON COMMON STOCK AND CLASS B STOCK PROXY)
Pursuant to the recommendations of its Audit Committee, the Board
of Directors selected the firm of BDO ▇▇▇▇▇▇▇, LLP ("BDO") independent
auditors, to audit the consolidated financial statements of the Company for
the year ended August 31, 1999. The Company's stockholders ratified that
selection at their Annual Meeting on December 21, 1999. On June 20, 2000,
the Company engaged Deloitte & Touche LLP ("D&T") as its independent
auditors, replacing BDO as independent auditors. The Company's Board of
Directors approved the decision to change independent auditors upon the
recommendation of its Audit Committee. The reports of BDO on the Company's
financial statements for the years ended August 31, 1999 and 1998 did not
contain an adverse opinion or disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope or accounting principle. During
the last two fiscal years, the Company has not had any disagreement with
BDO on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure that would require
disclosure in this Proxy Statement. There have been no reportable events
(as defined in Regulation S-K Item 304(a)(1)(v)). At the Company's request,
BDO furnished a letter addressed to the Securities and Exchange Commission
as required by Item 304 (a) of Regulation S-K. A copy of such letter was
attached to the Company's report to the Commission on Form 8-K, dated June
14, 2000 and is incorporated herein in its entirety by reference.
D&T served as the Company's independent auditors for the fiscal
year ended August 31, 2001. On recommendation of the Audit Committee, the
Board of Directors appointed D&T, independent auditors, to audit the
consolidated financial statements of the Company and its subsidiaries for
the fiscal year ending August 31, 2002, subject to ratification by the
Company's stockholders at the Annual Meeting. D&T does not have any direct
financial interest in the Company.
Representatives of D&T are expected to be at the Annual Meeting
and will be available to respond to any appropriate questions by
stockholders and may make a statement, if they so choose.
AUDIT FEES
The aggregate fees billed by D&T and its respective affiliates for
professional services rendered for the audit of Fedders' annual financial
statements for the fiscal year ended August 31, 2001 and for the reviews of
the financial statements included in Fedders' Quarterly Reports on Form
10-Q for that fiscal year were $278,748.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
No professional services described in Paragraph (c)(4)(ii) of Rule
20-01 of Regulation S-X were rendered by D&T for fiscal 2001 and,
accordingly, Fedders was billed no fees for such services.
ALL OTHER FEES
The aggregate fees billed by D&T for services rendered to the
Company, other than services described above under "Audit Fees", for the
fiscal year ended August 31, 2001 were $108,269. These other fees were
substantially related to fees incurred in connection with due diligence for
acquisitions, audit of the 401(k) plan and the proposed recapitalization.
The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the independence of D&T from Fedders.
LEGAL MATTERS
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the Vice President and General Counsel of
Fedders, c/o Fedders Corporation, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, will pass upon the validity of the new Fedders Common
Stock and the new Fedders Class B Stock to be issued under this proxy
statement/prospectus.
EXPERTS
The consolidated financial statements and the related financial
statement schedule as of and for the fiscal years ended August 31, 2001 and
2000 incorporated in this prospectus by reference from the Fedders' Annual
Report on Form 10-K for the fiscal year ended August 31, 2001 have been
audited by ▇▇▇▇▇▇▇▇ & Touche LLP, independent auditors, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The financial statements incorporated by reference in this
registration statement for the fiscal year ended August 31, 1999 have been
audited by ▇▇▇ ▇▇▇▇▇▇▇, LLP, independent certified public accountants, to
the extent and for the periods set forth in their reports incorporated
herein by reference, and are incorporated herein in reliance upon such
reports given upon the authority of said firm as experts in auditing and
accounting.
ANNUAL REPORT
The annual report of Fedders for the fiscal year ended August 31,
2001, was mailed to each stockholder on or about January __, 2002.
STOCKHOLDER PROPOSALS -- NEXT ANNUAL MEETING
If any stockholder desires to submit a proposal for action at the
next regular annual meeting, it must be received by ▇▇▇▇▇▇▇, P.O. Box 813,
Liberty Corner, NJ 07938 on or before July 25, 2002.
OTHER MATTERS
As of the date of this proxy statement/prospectus, ▇▇▇▇▇▇▇' board
of directors knows of no matters that will be presented for consideration
at the annual meeting other than as described in this proxy
statement/prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the
Securities and Exchange Commission. You may read and copy any reports,
statements or other information filed by us at the Commission's Public
Reference Room located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇.
Please call the Commission at 1-800- SEC-0330 for further information on
the public reference rooms. Fedders Common Stock and Class A Stock is
listed on the NYSE under the symbols "FJC" and "FJA," respectively, and
such material relating to Fedders may also be inspected at the offices of
the NYSE, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇. Certain of such reports,
statements and other information filed by ▇▇▇▇▇▇▇ are also available on the
Internet at the SEC's World Wide Web site at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇.
We have filed a Form S-4 with the SEC to register the new Common
Stock and new Class B Stock to be issued in the recapitalization. This
document is part of the Form S-4 and constitutes part of a prospectus in
addition to being a proxy statement of Fedders for the annual meeting. As
allowed by SEC rules, this document does not contain all the information
you can find in the Form S-4 or the exhibits to the Form S-4.
The SEC allows us to "incorporate by reference" information into
this document, which means that we can disclose important information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this
document, except for any information superseded by information in this
document. This document incorporates by reference the documents set forth
below that we have previously filed with the SEC. These documents contain
important information about Fedders and its finances.
Fedders SEC Filings (File No. 1-8831) Period/as of Date
-------------------------------------- ---------------------------------
Annual Report on Form 10-K Year ended August 31, 2001
Current Report on Form 8-K June 20, 2000
We are also incorporating by reference additional documents that
we file with the SEC after the date of this document and before the date of
the annual meeting.
If you are a stockholder, we may have sent you some of the
documents incorporated by reference, but you can obtain any of them through
us or the SEC. Documents incorporated by reference are available from us
without charge, excluding all exhibits unless we have specifically
incorporated by reference an exhibit in the document. Stockholders may
obtain documents incorporated by reference in this document by requesting
them in writing or by telephone from Fedders at the following address:
Mail: Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fedders Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Liberty Corner, NJ 07938-0813
E-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
If you would like to request documents from us, please do so by
February 15, 2002 to receive them before the annual meeting.
We have not authorized anyone to give any information or make any
representation about the recapitalization of Fedders that differs from, or
adds to, the information in this document or in Fedders' documents that are
publicly filed with the SEC. Therefore, if anyone does give you different
or additional information, you should not rely on it.
The information contained in this document speaks only as to its
date unless the information specifically indicates that another date
applies. Information in this document about ▇▇▇▇▇▇▇ has been supplied by
▇▇▇▇▇▇▇.
FORWARD-LOOKING STATEMENTS
Statements included or incorporated by reference herein may
constitute forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially,
including the uncertainties relating to the actual liquidity of Fedders'
shares, Fedders' operating performance and other factors affecting share
prices generally. Actual results may differ materially from those stated
depending on a number of factors, including, without limitation:
o greater price competition resulting from industry
overcapacity or other factors;
o a significant decline in industry sales resulting from
slowing economic growth;
o seasonal fluctuations in sales of air conditioning units and
other climate-related products;
o climatic conditions, particularly cool summer conditions; and
o varying costs of electricity.
Fedders undertakes no obligation to update or revise forward-looking
statements to reflect changes in assumptions, the occurrence of
unanticipated events, or changes in future operating results over time. For
more information as to various risks relevant to Fedders' business and
results of operations see ▇▇▇▇▇▇▇' other filings with the Securities and
Exchange Commission. See "Where You Can Find More Information."
ANNEX A
RECAPITALIZATION AGREEMENT AND PLAN OF MERGER
Dated as of , 2002
between
FEDDERS CORPORATION
and
FC MERGER SUB, INC.
RECAPITALIZATION AGREEMENT AND PLAN OF MERGER, dated as of
________________ (this "Agreement"), between Fedders Corporation, a
Delaware corporation (the "Company") and FC Merger Sub, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Company ("Merger Sub").
WHEREAS, the total number of shares of all classes of stock that
the Company has authority to issue is 162,500,000, consisting of 80,000,000
shares of Common Stock, par value $1.00 per share (the "Common Stock"), of
which 13,634,759 are outstanding, 60,000,000 shares of Class A Stock, par
value $1.00 per share (the "Class A Stock"), of which 14,890,386 are
outstanding, 7,500,000 shares of Class B Stock, par value $1.00 per share
(the "Class B Stock"), of which 2,266,406 are outstanding, and 15,000,000
shares of Preferred Stock, par value of $1.00 per share (the "Preferred
Stock") none of which are outstanding; and the total number of shares of
all classes of stock that Merger Sub has authority to issue is 100 shares
of common stock, par value $.01 per share (the "Merger Sub Common Stock"),
of which 10 are issued and outstanding;
WHEREAS, the Company desires that Merger Sub merge with and into
the Company (hereinafter, in such capacity, sometimes referred to as the
"Surviving Corporation"), upon the terms and subject to the conditions set
forth in this Agreement (the "Merger"), in accordance with the General
Corporation Law of the State of Delaware (the "DGCL");
WHEREAS, pursuant to this Agreement and as a result of the Merger:
(i) each share of Common Stock issued and outstanding immediately prior to
the effective time of the Merger will, upon the terms and subject to the
conditions and limitations set forth herein, be converted into the right to
receive 1.1 shares of a new class of common stock, par value $0.01 per
share, of the Surviving Corporation ("New Common Stock"); (ii) each share
of Class A Stock issued and outstanding immediately prior to the effective
time of the Merger, will, upon the terms and subject to the conditions and
limitations set forth herein, be converted into the right to receive one
share of New Common Stock; and (iii) each share of Class B Stock issued and
outstanding immediately prior to the effective time of the Merger, other
than any Dissenting Shares (as such term is defined in Section 1.5 hereof),
will, upon the terms and subject to the conditions and limitations set
forth herein, be converted into the right to receive 1.1 shares of a new
class of Class B Stock, par value $0.01 per share, of the Surviving
Corporation ("New Class B Stock").
WHEREAS, the Boards of Directors of the Company and Merger Sub by
resolutions duly adopted have approved the terms of this Agreement and of
the Merger, have declared the advisability of this Agreement and of the
Merger and determined them to be fair to and in the best interests of the
Company and Merger Sub, and have directed the submission of this Agreement
to their respective stock holders for approval; and
WHEREAS, the Merger is intended to constitute a reorganization of
the Company within the meaning of Section 368(a)(1)(E) of the Internal
Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE in consideration of the premises and the mutual
agreements and provisions herein contained, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. (a) Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as defined below),
Merger Sub shall be merged with and into the Company in accordance with the
DGCL, the separate corporate existence of Merger Sub shall cease, and the
Company shall be the Surviving Corporation of the Merger.
(b) Following satisfaction or waiver of all conditions to the
Merger, the Company and Merger Sub shall file a certificate of merger with
the Secretary of State of the State of Delaware and make all other filings
or recordings required by the DGCL in connection with the Merger. The
Merger shall 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 time as is specified in the certificate of merger (the "Effective
Time").
(c) At and after the Effective Time, the Merger shall have the
effects set forth in the DGCL. Without limiting the foregoing and subject
thereto, from and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to
all of the restrictions, disabilities and duties of the Company and Merger
Sub, all as provided under the DGCL.
SECTION 1.2 Effect on Capital Stock. At the Effective Time:
(a) Each share of Merger Sub Common Stock outstanding immediately
prior to the Effective Time shall, by virtue of the Merger, be cancelled
and retired and cease to exist, without any conversion thereof.
(b) Except as otherwise provided in this Agreement, each share of
Common Stock, each share of Class A Stock and each share of Class B Stock
issued and outstanding immediately prior to the Effective Time (other than
Dissenting Shares (as defined in Section 1.5(a) hereof)) shall, by virtue
of the Merger, be converted into and become exchangeable for the right to
receive the following (the "Exchange Consideration"):
(i) for each share of Common Stock, 1.1 shares of
New Common Stock;
(ii) for each share of Class A Stock, one share of
New Common Stock; and
(iii) for each share of Class B Stock, 1.1 shares of
New Class B Stock.
(c) Each share of Common Stock and Class B Stock, if any, held in
the treasury of the Company or by any wholly owned subsidiary of the
Company shall be converted into and exchanged for 1.1 shares of New Common
Stock or New Class B Stock, as the case may be, by virtue of the Merger.
(d) Each share of Class A Stock, if any, held in the treasury of
the Company or by any wholly owned subsidiary of the Company shall be
converted into and exchanged for one share of New Common Stock by virtue of
the Merger.
(e) All shares of Common Stock, Class A Stock and Class B Stock to
be converted into the Exchange Consideration pursuant to this Section 1.2
shall, by virtue of the Merger and without any action on the part of the
holders thereof, cease to be outstanding, be cancelled and retired and
cease to exist; and each holder of a certificate representing prior to the
Effective Time any such shares of Common Stock, Class A Stock or Class B
Stock shall thereafter cease to have any rights with respect to such
shares, except the right to receive (i) the Exchange Consideration and (ii)
any dividends and other distributions in accordance with Section 1.3(c)
hereof.
SECTION 1.3 Exchange of Certificates.
(a) As of the Effective Time, the Company shall deposit, or cause
to be deposited with American Stock Transfer and Trust or another bank,
trust company, Person or Persons designated by the Company to act as
exchange agent (the "Exchange Agent) for the benefit of the holders of
shares of Common Stock, Class A Stock and Class B Stock, a certificate or
certificates representing the Exchange Consideration such that the Exchange
Agent may issue: (i) shares of New Common Stock in the form of certificates
to holders of Common Stock and Class A Stock that receive shares of New
Common Stock in the Merger; and (ii) shares of New Class B Stock in the
form of certificates to holders of Class B Stock that receive shares of New
Class B Stock in the Merger. For purposes of this Agreement, "Person" means
any natural person, firm, individual, corporation, limited liability
company, partnership, association, joint venture, company, business trust,
trust or any other entity or organization whether incorporated or
unincorporated, including a government or political subdivision or any
agency or instrumentality thereof.
(b) As of or promptly following the Effective Time, the Company
shall cause the Exchange Agent to mail (and to make available for
collection by hand) to (A) each holder of record of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding shares of Common Stock, Class A Stock or Class B Stock (the
"Certificates") (i) a letter of transmittal or similar transmittal form
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and which shall be in the form and have
such other provisions as the Company may specify) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for (A)
certificates representing that number of shares of New Common Stock into
which the number of shares of Common Stock or Class A Stock, as the case
may be, previously represented by such Certificate shall have been
converted pursuant to this Agreement, and (B) certificates representing
that number of shares of New Class B Common Stock into which the number of
shares of Class B Stock shall have been converted pursuant to this
Agreement. Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with a letter of transmittal or similar transmittal form
duly completed and validly executed in accordance with the instructions
thereto, and such other documents as may be required pursuant to such
instructions, the holder of such Certificate shall, subject to consummation
of the Merger, be entitled to receive in exchange therefor the Exchange
Consideration for each share of Common Stock, Class A Stock or Class B
Stock formerly represented by such Certificate, and the Certificate so
surrendered shall be forthwith cancelled. The Exchange Agent shall accept
such Certificates upon compliance with such reasonable terms and conditions
as the Exchange Agent may impose to effect an orderly exchange therefor in
accordance with normal exchange practices. No interest on the cash payable
pursuant to subsection (c) below upon the surrender of the Certificates
shall be paid or accrued for the benefit of holders of the Certificates.
(c) No dividends or other distributions with respect to shares of
New Common Stock or New Class B Stock with a record date on or after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of New Common Stock or New Class B Stock
represented thereby by reason of the conversion of shares of Common Stock,
Class A Stock and Class B Stock pursuant to Sections 1.2(b) and 1.3 hereof
until such Certificate is surrendered in accordance with this Article I.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid, without interest, to the Person in whose
name the shares of New Common Stock or New Class B Stock representing such
securities are registered (i) at the time of such surrender, the
proportionate amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to shares of New
Common Stock or New Class B Stock issued upon conversion of the Common
Stock, Class A Stock and Class B Stock and (ii) at the appropriate payment
date or as promptly as practicable thereafter, the proportionate amount of
dividends or other distributions with a record date after the Effective
Time but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such shares of New Common Stock and New
Class B Stock.
(d) Any portion of the Exchange Consideration deposited with the
Exchange Agent pursuant to this Section 1.3 (the "Exchange Fund") which
remains undistributed to the holders of Certificates for six months after
the Effective Time shall be delivered to the Company, upon demand, and any
holders of shares of Common Stock, Class A Stock or Class B Stock prior to
the Merger who have not theretofore complied with this Article I shall
thereafter look for payment of their claim, as general creditors thereof,
only to the Company for their claim for (1) shares of New Common Stock, if
any, (2) shares of New Class B Stock, if any and (3) any dividends or other
distributions with respect to shares of New Common Stock or New Class B
Stock to which such holders may be entitled.
(e) None of the Company, Merger Sub or the Exchange Agent shall be
liable to any Person in respect of any shares of New Common Stock or New
Class B Stock held in the Exchange Fund (and any dividends and other
distributions payable in respect thereof) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(f) The Exchange Agent shall invest any cash included in the
Exchange Fund, as directed by the Company on a daily basis. Any interest
and other income resulting from such investments shall be paid to the
Company.
(g) No certificate representing fractional shares of New Common
Stock or New Class B stock shall be issued or book entry credit shall be
made upon the surrender for exchange of Certificates pursuant to this
Section 1.3 and no dividend, stock split-up or other change in the capital
structure of the Company shall relate to any fractional security, and such
fractional interests shall not entitle the owner thereof to vote or to any
rights of a security holder. In lieu of any such fractional securities,
each holder of Common Stock, Class A Stock or Class B Stock who would
otherwise have been entitled to a fraction of a share of New Common Stock
or New Class B Stock, as the case may be, upon surrender of the
Certificates pursuant to this Section 1.3 will be paid cash upon such
surrender in an amount equal to the product of such fraction multiplied by
(i) in the case of New Common Stock, the closing sale price of the New
Common Stock on the New York Stock Exchange on the day of the Effective
Time, or, if the New Common Stock is not so traded on such day, the closing
sale price on the next day on which such stock is traded on the New York
Stock Exchange; or (ii) in the case of the New Class B Stock, the closing
sale price of the New Common Stock on the New York Stock Exchange on the
day of the Effective Time, or, if the New Common Stock is not so traded on
such day, the closing sale price on the next day on which such stock is
traded on the New York Stock Exchange.
(h) If between the date hereof and the Effective Time, the
outstanding shares of Common Stock, Class A Stock or Class B Stock shall be
changed into a different number of shares by reason of reclassification,
recapitalization, split-up, combination or exchange of shares, or any
dividend payable in stock or other securities shall be declared thereon
with a record date within such period, the Exchange Consideration shall be
adjusted accordingly to provide the holders of the Common Stock, Class A
Stock or Class B Stock, as the case may be, the same economic effect as
contemplated by this Agreement prior to such reclassification,
recapitalization, split-up, combination, exchange or dividend.
SECTION 1.4 Stock Options; Other Equity Benefit Plans and Awards.
(a) At the Effective Time, each of the then outstanding Options
(as defined below) shall be converted into (i) in the case of an Option to
purchase Common Stock, that number of shares of New Common Stock determined
by multiplying the number of shares of Common Stock subject to such Option
at the Effective Time by 1.1; and (ii) in the case of an Option to purchase
Class A Stock, that number of shares of New Common Stock equal to the
number of shares of Class A Stock subject to such Option at the Effective
Time.
"Options" means any option granted, and not exercised, expired or
terminated, to a current or former employee, director or independent
contractor of the Company or any of its subsidiaries or any predecessor
thereof to purchase shares of Common Stock or Class A Stock pursuant to the
Company's Stock Option Plans I through VIII or any other stock option, stock
bonus, stock award, or stock purchase plan, program, or arrangement of the
Company or any of its subsidiaries or any predecessor thereof or any other
contract or agreement entered into by the Company or any of its
subsidiaries.
(b) Each phantom stock or similar award (whether denominated in
shares of Common Stock, Class A Stock, phantom units in a Company Common
Stock fund or a Company Class A Stock fund or otherwise) which is
outstanding immediately prior to the Effective Time under any deferred
compensation, incentive compensation or similar plan, program or
arrangement of the Company or any of its subsidiaries shall be adjusted by
the committee or other entity responsible for the administration of such
plan, program or arrangement so that the number of shares or units to which
such awards relate is treated in a manner consistent with the treatment of
shares of Common Stock and Class A Stock held by a stockholder at the
Effective Time.
SECTION 1.5 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary,
each share of Class B Stock issued and outstanding immediately prior to the
Effective Time and held by a person (a "Dissenting Stockholder") who is
entitled to seek an appraisal of such shares under Delaware law and who
complies with all the requirements of Delaware law to exercise and perfect
appraisal rights ("Dissenting Shares") shall not be converted into the
right to receive the Exchange Consideration but shall instead become the
right to receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to Section 262 of the DGCL. If, after the
Effective Time, such Dissenting Stockholder withdraws his or her demand for
appraisal or fails to perfect or otherwise loses his or her right of
appraisal, in any case pursuant to the DGCL, the shares of such Dissenting
Stockholder shall be deemed to be converted as of the Effective Time into
the right to receive the Exchange Consideration (without any interest
thereon).
(b) Nothing contained in this Agreement, including Section 1.5(a)
hereof shall limit the right of the Company to take the position at any
time, including in any litigation or appraisal or other proceeding, and in
any manner (including in its sole discretion by filing a declaratory
judgment action), that stockholders, or that particular groups of
stockholders, are not entitled to appraisal rights under Section 262 of the
DGCL.
SECTION 1.6 Closing. Subject to the satisfaction or waiver of the
conditions set forth in Article III hereof, the closing of the Merger ("the
Closing") shall take place at such place as the Company shall determine, at
such time as is, in the judgment of the Company, as soon as reasonably
practicable following the Annual Meeting of Stockholders; unless another
time, or place is established by the Company (the actual time and date of
the Closing being referred to herein as the "Closing Date").
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.1 Certificate of Incorporation. The Certificate of
Incorporation of the Company will, upon the Effective Time and as a result
of the Merger, be amended and restated in substantially the form attached
hereto as Exhibit A (the "Restated Certificate"). Upon the Effective Time,
the Restated Certificate of the Company will become the certificate of
incorporation of the Surviving Corporation.
SECTION 2.2 By-Laws. At the Effective Time, the By-Laws of the
Company as in effect immediately prior to the Effective Time will be the
By-Laws of the Surviving Corporation.
SECTION 2.3 Directors and Officers. From and after the Effective
Time, the directors and officers of the Company at the Effective Time shall
be the directors and officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed and
qualified in accordance with applicable law.
ARTICLE III
CONDITIONS TO THE MERGER
SECTION 3.1 Conditions to the Obligations of the Company and Merger
Sub. The respective obligations of the Company and Merger Sub to consummate
the Merger are subject to the satisfaction of, or to the extent permitted by
applicable law, the waiver by the Company on or prior to the Effective Time
of each of the following conditions:
(a) a proposal to delete Section VI of clause A of Article Second
of the certificate of incorporation of Fedders has been approved by the
holders of the shares of Common Stock, Class A Stock and Class B stock
representing a majority of the votes entitled to be cast thereon, each
voting separately as a class.
(b) a proposal to adopt this Agreement has been approved by the
holders of the shares of Common Stock and Class B Stock representing a
majority of the votes entitled to be cast thereon, voting together as a
single class.
(c) proposals to adopt each of the changes to Fedders' certificate
of incorporation that will be made as a result of the recapitalization have
been approved by the holders of the shares of Common Stock and Class B Stock
representing a majority of the votes entitled to be cast thereon, voting
together as a single class.
(d) no laws shall have been adopted or promulgated, and no
temporary restraining order, preliminary or permanent injunction or other
order issued by a court or other supranational, national, state, municipal,
local or foreign government, any instrumentality, subdivision,
administrative agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing,
importing or other governmental or quasi-governmental authority (a
"Governmental Entity") of competent jurisdiction shall be in effect having
the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger and no proceeding challenging this Agreement or
the transactions contemplated hereby or seeking to prohibit, alter, prevent
or materially delay the Merger shall have been instituted by any or before
any court, arbitrator or governmental body, agency or official and be
pending which would cause the Board of Directors of the Company to
determine that the consummation of the Merger is no longer advisable;
(e) (i) all waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, applicable to the Merger shall have
expired or been terminated and (ii) all actions by or in respect of or
filings with any Governmental Entity required to permit the consummation of
the Merger shall have been obtained, except those that would not reasonably
be expected to have a material adverse affect on the Company or its ability
to consummate the transactions contemplated by this Agreement;
(f) the New Common Stock to be issued pursuant to the Merger and
upon exercise of Options and other equity based awards shall have been
approved for listing on the New York Stock Exchange, subject to official
notice of issuance;
(g) the registration statement on Form S-4 to be filed in
connection with the issuance of shares in the Merger (the "Form S-4") shall
have been declared effective by the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933. No stop order suspending the
effectiveness of the Form S-4 shall have been issued by the SEC and no
proceedings for that purpose shall have been initiated or threatened by the
SEC; and
(h) the Company shall have received evidence in form and substance
reasonably satisfactory to it, that all material licenses, permits,
consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts with the Company and its
subsidiaries as are necessary for consummation of the transactions
contemplated by this Agreement have been obtained and are in full force and
effect, other than those which, if not obtained, would not have a material
adverse effect on the Company.
ARTICLE IV
TERMINATION
SECTION 4.1 Termination. To the fullest extent permitted by
Delaware law, this Agreement may be terminated, and the Merger and other
actions herein provided for may be abandoned, by the Board of Directors of
the Company in its sole discretion at any time prior to the Effective Time,
notwithstanding any approval of this Agreement by the stockholders of
either or both of the Company or Merger Sub.
SECTION 4.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 4.1, this Agreement shall become void and of no effect
with no liability on the part of any party hereto.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Notices. All notices and other communications
hereunder shall be in writing and hand delivered or mailed by registered or
certified mail (return receipt requested) or sent by any means of
electronic message transmission with delivery confirmed (by voice or
otherwise) to the parties at the following addresses (or at such other
addresses for a party as shall be specified by like notice) and will be
deemed given on the date on which such notice is received:
To the Company or Merger Sub:
Fedders Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
SECTION 5.2 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns; provided that no party
may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the consent of the other party hereto.
SECTION 5.3 Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware.
SECTION 5.4 Amendment and Waiver. To the fullest extent permitted
by Delaware law, this Agreement may be amended by mutual consent of the
Boards of Directors of the Company and Merger Sub, and any provision hereof
may be waived, at any time prior to the Effective Time, notwithstanding any
approval of this Agreement by the stockholders of either or both of the
Company and Merger Sub.
SECTION 5.5 Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by the other party
hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day
and year first above written.
FEDDERS CORPORATION
By:
-----------------------
Name:
Title:
FC MERGER SUB, INC.
By:
-----------------------
Name:
Title:
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
OF FEDDERS CORPORATION
The undersigned, ▇▇▇▇ ▇. ▇▇▇▇▇▇, certifies that he is the
Executive Vice President and Secretary of Fedders Corporation, a
corporation organized and existing under the laws of the State of Delaware
(the "Corpora tion"), and does hereby further certify as follows:
(1) The name of the Corporation is Fedders Corporation.
(2) The name under which the Corporation was originally
incorporated was Fedders Corporation and the original Certificate
of Incorporation of the Corporation was filed with the Secretary of
State of the State of Delaware on April 4, 1984.
(3) This Restated Certificate of Incorporation was duly
adopted by in accordance with the provisions of Sections 242 and
245 of the General Corporation Law of the State of ▇▇▇▇ ▇▇▇▇.
(4) The text of the Restated Certificate of Incorporation
of the Corporation as amended hereby is restated to read in its
entirety, as follows:
FIRST: The name of the corporation shall be FEDDERS CORPORATION.
SECOND: The purposes for which the Corporation is formed are as follows:
(a) To design, manufacture, buy, sell, distribute, at wholesale or
retail, import and export, rent and lease, repair and maintain, dispose of,
and generally deal in all kinds of air-conditioning apparatus, equipment
and appliances; refrigeration apparatus, equipment and appliances; heating
apparatus, equipment and appliances; gas and electric stoves and ranges;
automatic clothes-washing machines and clothes-drying machines of all kinds
and for all purposes; automobile radiators and other components of all
kinds; sheetmetal specialties; and all other devices of any kind or nature
used in conjunction therewith, or incidental or accessory thereto.
(b) To design, create, manufacture, produce, export, import,
purchase, acquire, sell, dispose of, and generally deal in and with
materials, articles, machinery, apparatus, equipment, appliances, supplies,
goods and other personal property of every kind and description, tangible
or intangible, and to engage in any mercantile, commercial manufacturing or
trading business of any character.
(c) To acquire, by purchase or otherwise, own, hold, lease,
mortgage, sell, or otherwise dispose of, and generally deal in and with
rights and interests in real and personal property of every kind and
description.
(d) To acquire, sell or otherwise dispose of, deal in and with,
and grant and obtain licenses for all kinds of intangible property,
including patent rights, improvements thereon, inventions, discoveries,
formulas and processes, copyrights, trademarks, trade names and designs.
(e) To the extent permitted by law, to promote, finance,
underwrite and assist, financially or otherwise, and to assume and
guarantee the obligations of any individual, corporation or other entity,
and to purchase or otherwise acquire, hold, own, sell or otherwise dispose
of securities and obligations of every nature and kind of any issuer,
whether or not incorporated.
(f) To do all and everything necessary, suitable or proper for the
accomplishment of any of the purposes or the attainment of any of the
objectives hereinbefore set forth, either alone or in association with
other corporations, firms or individuals, and to do every other act or
acts, thing or things, incidental or appurtenant to or arising out of or
connected with the aforesaid businesses or any part or parts thereof.
(g) To engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
THIRD: The aggregate number of shares of stock of all classes which the
Corporation shall have authority to issue is 90,000,000, consisting of
70,000,000 shares of Common Stock having a par value of $0.01 per share,
5,000,000 shares of Class B Stock having a par value of $0.01 per share and
15,000,000 shares of Preferred Stock having a par value of $0.01 per share.
The powers, preferences and the relative, participating, optional and other
rights and the qualifications, limitations and restrictions thereof, of
each class of stock, and the express grant of authority to the Board of
Directors to fix by resolution the designations and the powers, preferences
and rights of each share of Preferred Stock and the qualifications,
limitations and restrictions thereof which are not fixed by this
Certificate of Incorporation, are as follows:
A. COMMON STOCK AND CLASS B STOCK.
I. Dividends, etc.
Subject to the rights of the holders of Preferred Stock, and subject to any
other provisions of this Certificate of Incorporation, as amended from time
to time, holders of Common Stock and Class B Stock shall be entitled to
receive such dividends and other distributions in cash, stock or property
of the Corporation as may be declared thereon by the Board of Directors
from time to time out of assets or funds of the Corporation legally
available therefor; provided, that in the case of cash dividends, if at any
time a cash dividend is paid on the Common Stock, a cash dividend of equal
amount shall be paid on the Class B Stock; and provided, further, that in
the case of dividends or other distributions payable in stock of the
Corporation other than Preferred Stock, including distributions pursuant to
stock splits or divisions of stock of the Corporation other than Preferred
Stock, which occur after the initial issuance of shares of Class B Stock by
the Corporation, only shares of Common Stock shall be distributed with
respect to Common Stock and only shares of Class B Stock shall be
distributed with respect to Class B Stock, in each case, in an amount per
share equal to the amount per share paid with respect to the Common Stock,
and that, in the case of any combination, reclassification or subdivision
of the Common Stock, the shares of Class B Stock shall also be combined,
reclassified or subdivided so that the number of shares of Class B Stock
outstanding immediately following such combination, reclassification or
subdivision shall bear the same relationship to the number of shares
outstanding immediately prior to such combination, reclassification or
subdivision as the number of shares of Common Stock outstanding immediately
following such combination, reclassification or subdivision bears to the
number of shares of Common Stock outstanding immediately prior to such
combination, reclassification or subdivision.
II. Voting.
(a) At every meeting of the stockholders, every holder of Common
Stock shall be entitled to one (1) vote in person or by proxy for each
share of Common Stock standing in his name on the transfer books of the
Corporation and every holder of Class B Stock shall be entitled to one (1)
vote in person or by proxy for each share of Class B Stock standing in his
name on the transfer books of the Corporation, except that each holder of
Class B Stock shall be entitled to ten (10) votes per share on the election
of any directors at any stockholders' meeting (i) if more than 15% of the
shares of Common Stock outstanding on the record date for such meeting are
beneficially owned by a person or group of persons acting in concert
(unless such person or group is also the beneficial owner of a majority of
the shares of Class B Stock on such record date), or (ii) if a nomination
for the Board of Directors is made by a person or group of persons acting
in concert, other than the Board of Directors (unless such nomination is
made by one or more holders of Class B Stock, acting in concert, who
beneficially own more than 15% of the shares of Class B Stock outstanding
on such record date).
(b) The provisions of this Certificate of Incorporation shall not
be modified, revised, altered or amended, repealed or rescinded in whole or
in part, without the affirmative vote of the holders of a majority of the
shares of the Common Stock and of a majority of the shares of the Class B
Stock, each voting separately as a class.
(c) The Corporation may not effect or consummate:
(1) any merger or consolidation of the Corporation with or
into any other person;
(2) any sale, lease, exchange or other disposition of all
or substantially all of the assets of the Corporation to or with any other
person; or
(3) any dissolution of the Corporation;
unless and until such transaction is authorized by the vote, if any,
required by Delaware law; and unless and until such transaction is
authorized by a majority of the votes entitled to be cast by the shares of
Common Stock and of Class B Stock entitled to vote, each voting separately
as a class, but the foregoing shall not apply to any merger or other
transaction described in the preceding subparagraphs (1) and (2) if the
other party to the merger or other transaction is a Subsidiary of the
Corporation.
For purposes of this paragraph (c) a "Subsidiary" is any corporation more
than 50% of the voting securities of which are owned directly or indirectly
by the Corporation; and a "person" is any individual, partnership,
corporation or entity.
(d) Following the initial issuance of shares of Class B Stock, the
Corporation may not effect the issuance of any additional shares of Class B
Stock (except in connection with stock splits and stock dividends) unless
and until such issuance is authorized by the holders of a majority of the
voting power of the shares of Common Stock and of Class B Stock entitled to
vote, each voting separately as a class.
(e) Every reference in this Certificate of Incorporation to a
majority or other proportion of shares of stock shall refer to such majority
or other proportion of the votes entitled to be cast by such shares.
(f) Except as may be otherwise required by law or by this Article
Third, the holders of Common Stock and Class B Stock shall vote together as
a single class, subject to any voting rights which may be granted to holders
of Preferred Stock.
III. Transfer.
(a) No person holding shares of Class B Stock of record
(hereinafter called a "Class B Holder") may transfer, and the Corporation
shall not register the transfer of, such shares of Class B Stock, as Class B
Stock, whether by sale, assignment, gift, bequest, appointment or otherwise,
except to a Permitted Transferee and any purported transfer of shares not
permitted hereunder shall result in the conversion of such shares into
Common Stock as provided by subsection (d) of this Section III. A Permitted
Transferee shall mean, with respect to each person from time to time shown
as the record holder of shares of Class B Stock:
(i) In the case of a Class B Holder who is a natural person:
(A) The spouse of such Class B Holder, any
lineal descendant of a parent of such Class B Holder, and any spouse of
such lineal descendant (which lineal descendants, their spouses, the Class
B Holder, and his or her spouse are herein collectively referred to as
"Class B Holder's Family Members");
(B) The trustee of a trust (including a voting
trust) principally for the benefit of such Class B Holder and/or one or
more of his or her Permitted Transferees described in each subclause of
this clause (i) other than this subclause (B), provided that such trust may
also grant a general or special power of appointment to one or more of such
Class B Holder's Family Members and may permit trust assets to be used to
pay taxes, legacies and other obligations of the trust or of the estates of
one or more of such Class B Holder's Family Members payable by reason of
the death of any of such Class B Holder's Family Members;
(C) Any organization, contributions to which are
deductible for federal income, estate or gift tax purposes or any
split-interest trust described in Section 4947 of the Internal Revenue
Code, as it may from time to time be amended (hereinafter called a
"Charitable Organization");
(D) A corporation, if a majority of the
beneficial ownership of outstanding capital stock of such corporation which
is entitled to vote for the election of directors is owned by, or a
partnership if a majority of the beneficial ownership of the partnership is
held by, the Class B Holder or his or her Permitted Transferees determined
under this clause (i), provided that if by reason of any change in the
ownership of such stock or partnership interests, such corporation or
partnership would no longer qualify as a Permitted Transferee, all shares
of Class B Stock then held by such corporation or partnership shall, upon
the election of the Corporation given by written notice to such corporation
or partnership, without further act on anyone's part, be converted into
shares of Common Stock effective upon the date of the giving of such
notice, and stock certificates formerly representing such shares of Class B
Stock shall thereupon and thereafter be deemed to represent the like number
of shares of Common Stock; and
(E) The estate of such Class B Holder.
(ii) In the case of a Class B Holder holding the shares
of Class B Stock in question as trustee pursuant to a trust (other than a
Charitable Organization or any trust described in clause (iii) below),
"Permitted Transferee" means (A) any person transferring Class B Stock to
such trust and (B) any Permitted Transferee of any such transferor
determined pursuant to clause (i) above.
(iii) In the case of a Class B Holder holding the shares
of Class B Stock in question as trustee pursuant to a trust (other than a
Charitable Organization) which was irrevocable on the date of initial
issuance to such Class B Holder (hereinafter in this Section III called the
"Record Date"), "Permitted Transferee" means (A) any person to whom or for
whose benefit principal may be distributed either during or at the end of
the term of such trust whether by power of appointment or otherwise and (B)
any Permitted Transferee of any such person determined pursuant to clause
(i) above.
(iv) In the case of a Class B Holder which is a
Charitable Organization holding record and beneficial ownership of the
shares of Class B Stock in question, "Permitted Transferee" means any Class
B Holder.
(v) In the case of a Class B Holder which is a
corporation or partnership (other than a Charitable Organization) acquiring
record and beneficial ownership of the shares of Class B Stock in question
upon its initial issuance by the Corporation, "Permitted Transferee" means
(A) any partner of such partnership, or stockholder of such corporation, on
the Record Date, (B) any person transferring such shares of Class B Stock
to such corporation or partnership, and (C) any Permitted Transferee of any
such person, partner, or stockholder referred to in subclauses (A) and (B)
of this clause (v), determined under clause (i) above.
(vi) In the case of a Class B Holder which is a
corporation or partnership (other than a Charitable Organization or a
corporation or partnership described in clause (v) above) holding record
and beneficial ownership of the shares of Class B Stock in question,
"Permitted Transferee" means (A) any person transferring such shares of
Class B Stock to such corporation or partnership and (B) any Permitted
Transferee of any such transferor determined under clause (i) above.
(vii) In the case of a Class B Holder which is the estate
of a deceased Class B Holder, or which is the estate of a bankrupt or
insolvent Class B Holder, which holds record and beneficial ownership of
the shares of Class B Stock in question, "Permitted Transferee" means a
Permitted Transferee of such deceased, bankrupt or insolvent Class B Holder
as determined pursuant to clause (i), (ii), (iii), (iv), (v) or (vi) above,
as the case may be.
(b) Notwithstanding anything to the contrary set forth herein, any
Class B Holder may pledge such Class B Holder's shares of Class B Stock to
a pledgee pursuant to a bona fide pledge of such shares as collateral
security for indebtedness due to the pledgee, provided that such shares
shall not be transferred to or registered in the name of the pledgee and
shall remain subject to the provisions of this Section III. In the event of
foreclosure or other similar action by the pledgee, such pledged shares of
Class B Stock may only be transferred to a Permitted Transferee of the
pledgor or converted into shares of Common Stock, as the pledgee may elect.
(c) For purposes of this Section III:
(i) The relationship of any person that is derived by or
through legal adoption shall be considered a natural one.
(ii) Each joint owner of shares of Class B Stock shall be
considered a "Class B Holder" of such shares.
(iii) A minor for whom shares of Class B Stock are held
pursuant to a Uniform Gifts to Minors Act or similar law shall be
considered a Class B Holder of such shares.
(iv) Unless otherwise specified, the term "person" means
both natural persons and legal entities.
(v) Without derogating from the election conferred upon
the Corporation pursuant to subclause (D) of clause (i) above, each
reference to a corporation shall include any successor corporation
resulting from merger or consolidation and each reference to a partnership
shall include any successor partnership resulting from the death or
withdrawal of a partner.
(d) Any transfer of shares of Class B Stock not permitted
hereunder shall result in the conversion of the transferee's shares of
Class B Stock into shares of Common Stock, effective the date on which
certificates representing such shares are presented for transfer on the
books of the Corporation. The Corporation may, in connection with preparing
a list of stockholders entitled to vote at any meeting of stockholders, or
as a condition to the transfer or the registration of shares of Class B
Stock on the Corporation's books, require the furnishing of such affidavits
or other proof as it deems necessary to establish that any person is the
beneficial owner of shares of Class B Stock or is a Permitted Transferee.
(e) At any time when the number of outstanding shares of Class B
Stock as reflected on the stock transfer books of the Corporation falls
below 2.5% of the aggregate number of the issued and outstanding shares of
the Common Stock and Class B Stock of the Corporation, or the Board of
Directors and the holders of a majority of the outstanding shares of Class
B Stock approve the conversion of all of the Class B Stock into Common
Stock, then, immediately upon the occurrence of either such event, the
outstanding shares of Class B Stock shall be converted into shares of
Common Stock. In the event of such a conversion, certificates formerly
representing outstanding shares of Class B Stock shall thereupon and
thereafter be deemed to represent the like number of shares of Common
Stock.
(f) Shares of Class B Stock shall be registered in the names of
the beneficial owners thereof and not in "street" or "nominee" name. For
this purpose, a "beneficial owner" of any shares of Class B Stock shall
mean a person who, or an entity which, possesses the power, either singly
or jointly, to direct the voting or disposition of such shares. The
Corporation shall note on the certificates for shares of Class B Stock the
restrictions on transfer and registration of transfer imposed by this
Section III.
IV. Conversion Rights.
(a) Subject to the terms and conditions of this Section IV, each
share of Class B Stock shall be convertible at any time or from time to
time, at the option of the respective holder thereof, at the office of any
transfer agent for Class B Stock, and at such other place or places, if
any, as the Board of Directors may designate, or, if the Board of Directors
shall fail so to designate, at the principal office of the Corporation
(attention of the Secretary of the Corporation), into one (1) fully paid
and nonassessable share of Common Stock. Upon conversion, the Corporation
shall make no payment or adjustment on account of dividends accrued or in
arrears on Class B Stock surrendered for conversion or on account of any
dividends on the Common Stock issuable on such conversion. Before any
holder of Class B Stock shall be entitled to convert the same into Common
Stock, he shall surrender the certificate or certificates for such Class B
Stock at the office of said transfer agent (or other place as provided
above), which certificate or certificates, if the Corporation shall so
request, shall be duly endorsed to the Corporation or in blank or
accompanied by proper instruments of transfer to the Corporation or in
blank (such endorsements or instruments of transfer to be in form
satisfactory to the Corporation), and shall give written notice to the
Corporation at said office that he elects so to convert said Class B Stock
in accordance with the terms of this Section IV, and shall state in writing
therein the name or names in which he wishes the certificate or
certificates for Common Stock to be issued. Every such notice of election
to convert shall constitute a contract between the holder of such Class B
Stock and the Corporation, whereby the holder of such Class B Stock shall
be deemed to subscribe for the amount of Common Stock which he shall be
entitled to receive upon such conversion, and, in satisfaction of such
subscription, to deposit the Class B Stock to be converted and to release
the Corporation from all liability thereunder, and thereby the Corporation
shall be deemed to agree that the surrender of the certificate or
certificates therefor and the extinguishment of liability thereon shall
constitute full payment of such subscription for Common Stock to be issued
upon such conversion. The Corporation will as soon as practicable after
such deposit of a certificate or certificates for Class B Stock,
accompanied by the written notice and the statement above prescribed, issue
and deliver at the office of said transfer agent (or other place as
provided above) to the person for whose account such Class B Stock was so
surrendered, or to his nominee or nominees, a certificate or certificates
for the number of full shares of Common Stock to which he shall be entitled
as aforesaid. Subject to the provisions of subsection (d) of this Section
IV, such conversion shall be deemed to have been made as of the date of
such surrender of the Class B Stock to be converted; and the person or
persons entitled to receive the Common Stock issuable upon conversion of
such Class B Stock shall be treated for all purposes as the record holder
or holders of such Common Stock on such date.
(b) The issuance of certificates for shares of Common Stock upon
conversion of shares of Class B Stock shall be made without charge for any
stamp or other similar tax in respect of such issuance. However, if any
such certificate is to be issued in a name other than that of the holder of
the share or shares of Class B Stock converted, the person or persons
requesting the issuance thereof shall pay to the Corporation the amount of
any tax which may be payable in respect of any transfer involved in such
issuance or shall establish to the satisfaction of the Corporation that
such tax has been paid.
(c) The Corporation shall not be required to convert Class B
Stock, and no surrender of Class B Stock shall be effective for that
purpose, while the stock transfer books of the Corporation are closed for
any purpose; but the surrender of Class B Stock for conversion during any
period while such books are so closed shall become effective for conversion
immediately upon the reopening of such books, as if the conversion had been
made on the date such Class B Stock was surrendered.
(d) The Corporation covenants that it will at all times reserve
and keep available, solely for the purpose of issue upon conversion of the
outstanding shares of Class B Stock, such number of shares of Common Stock
as shall be issuable upon the conversion of all such outstanding shares,
provided that nothing contained herein shall be construed to preclude the
Corporation from satisfying its obligations in respect of the conversion of
the outstanding shares of Class B Stock by delivery of shares of Common
Stock which are held in the treasury of the Corporation. The Corporation
covenants that if any shares of Common Stock required to be reserved for
purposes of conversion hereunder require registration with or approval of
any governmental authority under any federal or state law before such
shares of Common Stock may be issued upon conversion, the Corporation will
use its best efforts to cause such shares to be duly registered or
approved, as the case may be. The Corporation will endeavor to list the
shares of Common Stock required to be delivered upon conversion prior to
such delivery upon each national securities exchange, if any, upon which
the outstanding Common Stock is listed at the time of such delivery. The
Corporation covenants that all shares of Common Stock which shall be issued
upon conversion of the shares of Class B Stock, will, upon issue, be fully
paid and nonassessable and not entitled to any pre-emptive rights.
V. Liquidation Rights.
In the event of any dissolution, liquidation or winding up of the affairs of
the Corporation, whether voluntary or involuntary, after payment or
provision for payment of the debts and other liabilities of the Corporation,
the holders of each series of Preferred Stock shall be entitled to receive,
out of the net assets of the Corporation, an amount for each share equal to
the amount fixed and determined by the Board of Directors in any resolution
or resolutions providing for the issuance of any particular series of
Preferred Stock, plus an amount equal to all dividends accrued and unpaid on
shares of such series to the date fixed for distribution, and no more,
before any of the assets of the Corporation shall be distributed or paid
over to the holders of Common Stock or Class B Stock.
After payment in full of said amounts to the holders of Preferred Stock of
all series, the remaining assets and funds of the Corporation shall be
divided among and paid to the holders of Common Stock and Class B Stock as
follows: (i) before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or set apart for
the holders of Class B Stock, the holders of the shares of Common Stock
(including those persons who shall become holders of Common Stock by reason
of converting their shares of Class B Stock) shall be entitled to receive
$0.25 per share (the "Common Stock Initial Liquidation Amount"); (ii)
before any additional payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or set apart for
the holders of Common Stock following the payment of the Common Stock
Initial Liquidation Amount, the holders of Class B Stock shall be entitled
to receive $0.50 per share (the "Class B Liquidation Amount"); and (iii)
before any additional payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or set apart for
the holders of Class B Stock following the payment of the Class B
Liquidation Amount, the holders of Common Stock (including those persons
who shall become holders of Common Stock by reason of converting their
shares of Class B Stock) shall be entitled to receive $0.25 per share (the
"Common Stock Additional Liquidation Amount" and, together with the Common
Stock Initial Liquidation Amount, the "Common Stock Liquidation Amount").
Following the payment or setting apart for payment of the Common Stock
Liquidation Amount and the Class B Liquidation Amount, the holders of
Common Stock and Class B Stock shall participate pari passu and be entitled
to receive, on a pro rata basis, the remaining assets of the Corporation or
proceeds therefrom available for distribution to the holders of Common
Stock and Class B Stock. If, upon any liquidation, dissolution or winding
up of the Corporation, the assets of the Corporation or proceeds thereof:
(i) distributable among the holders of the shares of Common Stock shall be
insufficient to pay in full the Common Stock Initial Liquidation Amount and
liquidating payments on any other shares of stock ranking, as to
liquidation, dissolution or winding up, on a parity with the Common Stock,
then such assets, or the proceeds thereof, shall be distributed among the
holders of shares of Common Stock and any such other stock ratably in
accordance with the respective amounts which would be payable on such
shares of Common Stock and any such other stock if all amounts payable
thereon were paid in full; (ii) distributable among the holders of the
shares of Class B Stock shall be insufficient to pay in full the Class B
Liquidation Amount and liquidating payments on any other shares of stock
ranking, as to liquidation, dissolution or winding up, on a parity with the
Class B Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of shares of Class B Stock and any such other
stock ratably in accordance with the respective amounts which would be
payable on such shares of Class B Stock and any such other stock if all
amounts payable thereon were paid in full; (iii) distributable among the
holders of the shares of Common Stock shall be insufficient to pay in full
the Common Stock Additional Liquidation Amount and liquidating payments on
any other shares of stock ranking, as to liquidation, dissolution or
winding up, on a parity with the Common Stock, then such assets, or the
proceeds thereof, shall be distributed among the holders of shares of
Common Stock and any such other stock ratably in accordance with the
respective amounts which would be payable on such shares of Common Stock
and any such other stock if all amounts payable thereon were paid in full.
For the purposes of this Section V, (i) a consolidation or merger of the
Corporation with one or more corporations, (ii) a sale or transfer of all
or substantially all of the Corporation's assets or (iii) a statutory share
exchange shall not be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary.
B. PREFERRED STOCK
The Board of Directors is authorized, subject to limitations prescribed by
law and the provisions of this Article Third, to provide for the issuance
of the preferred shares in series, and by filing a certificate pursuant to
the General Corporation Law of Delaware, to establish the number of shares
to be included in each such series, and to fix the designations, relative
rights, preferences and limitations of the shares of each such series. The
authority of the Board with respect to each series shall include, but not
be limited to, determination of the following:
(a) The number of shares constituting that series and the
distinctive designations of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall be cumulative and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends of shares of
that series;
(c) Whether that series shall have voting rights, in addition to
the voting rights provided by law and, if so, the terms of such voting
rights;
(d) Whether that series shall have conversion privileges and, if
so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors
shall determine;
(e) Whether or not the shares of that series shall be redeemable
and, if so, the terms and conditions of such redemption, including the date
or dates upon or after which they shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series and, if so, the terms and
amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of
shares of that series;
(h) Any other relative rights, preferences and limitations of that
series. Dividends on outstanding preferred shares shall be declared and
paid, or set apart for payment, before any dividends shall be declared and
paid, or set apart for payment, on the common shares with respect to the
dividend period. Any and all such shares issued, and for which the full
consideration has been paid or delivered shall be deemed fully paid stock
and the holder of such shares shall not be liable for any further call or
assessment or any other payment thereon.
FOURTH: The duration of such Corporation shall be perpetual.
FIFTH: The name and mailing address of the Corporation's Registered Agent
and Office in the State of Delaware are: The ▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation
System, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇.
SIXTH: Each director shall be elected by the stockholders at each annual
meeting and shall hold office until the next annual meeting of stockholders
and until such director's successor shall have been elected and qualified.
The term of office of each director in office at the time this Article
SIXTH becomes effective shall expire at the annual meeting of stockholders
next held after the effectiveness of this Article SIXTH.
SEVENTH: No holder of shares of the Corporation of any class, now or
hereafter authorized, shall have any preferential or preemptive right to
subscribe for, purchase or receive any shares of the Corporation of any
class, now or hereafter authorized, or any options or warrants for such
shares, or any rights to subscribe for or purchase such shares, or any
securities convertible into or exchangeable for such shares, which may at
any time be issued, sold or offered for sale by the Corporation.
EIGHTH: A director of the Corporation shall not personally be liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation law, or (iv) for any transaction from which the
director derived an improper personal benefit.
NINTH: Any action required or permitted to be taken by the stockholders of
the Corporation must be effected at a duly called annual or special meeting
of stockholders of the Corporation, and the ability of the stockholders to
consent in writing to the taking of any action is hereby specifically
denied.
TENTH: The Board of Directors of the Corporation shall have the power to
amend the By-Laws of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be executed on its behalf on this ___ day of
_____________, 2001.
Fedders Corporation
By: __________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President and
Secretary
ANNEX B
FAIRNESS OPINION OF TM CAPITAL
March 1, 2001
Board of Directors
Fedders Corporation
Westgate Corporate Center
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
P.O. Box 813
Liberty Corner, NJ 07938
Gentlemen:
We understand that Fedders Corporation ("Fedders" or the
"Company") is undertaking a transaction whereby the Company intends to
combine its Class A Stock and Common Stock into a single class of Common
Stock (the "New Common Stock") in accordance with the Restated Certificate
of Incorporation. We further understand that each share of Class A Stock
would be exchanged for one share of New Common Stock, each share of Common
Stock would be exchanged for 1.1 shares of New Common Stock and each share
of Class B Stock would be exchanged for 1.1 shares of New Class B Stock
(the "Proposed Recapitalization"). We understand that the Proposed
Recapitalization will be submitted to the shareholders of the Class A Stock
and the shareholders of the Common Stock (collectively, the "Shareholders")
for approval at a special meeting of the Shareholders.
You have asked our written opinion as to the fairness, from a
financial point of view, of the Proposed Recapitalization to the
Shareholders of Fedders (our "Opinion").
In arriving at our Opinion set forth below, we have, among other
things:
(1) Reviewed the Company's Forms 10-K and related financial
information for the years ended August 31, 1996 to 2000
and the Company's Form 10-Q and the related unaudited
financial information for the three months ended November
30, 2000;
(2) Reviewed the Company's Schedule 14A filed in connection
with its Annual Meeting held December 19, 2000 and
subsequent Forms 4 and Forms 13-F;
(3) Reviewed the historical market prices and trading activity
for the Class A Stock and the Common Stock for the period
from January 2, 1998 to February 22, 2001;
(4) Reviewed the historical market prices for the Class A
Stock and the Common Stock and compared them with that of
certain publicly traded companies which we deemed to be
relevant;
(5) Compared the financial position and results of operations
of the Company with that of certain companies which we
deemed to be relevant;
(6) Reviewed and analyzed the terms of transactions in which
public companies with two classes of publicly traded
common stock were combined into a single class of stock;
(7) Reviewed and analyzed the terms of transactions in which
public companies with two classes of common stock were
acquired;
(8) Reviewed and analyzed premiums paid in relevant
transactions in which the purchaser acquired a
controlling share of the target company; and
(9) Conducted other financial analyses and investigations as
we deemed necessary or appropriate in arriving at our
Opinion.
In preparing our Opinion, we have relied on the accuracy and
completeness of all information that was available to us from public
sources, that was supplied or otherwise made available to us by the Company
or was otherwise reviewed by us and we have not assumed any responsibility
to independently verify such information. We have also relied upon
assurances of the management of the Company that they are unaware of any
facts that would make the information provided to us incomplete or
misleading. We have not made any independent evaluation or appraisal of the
assets or liabilities (contingent or otherwise) of the Company nor have we
been furnished with any such evaluations or appraisals.
This opinion is directed to the Board of Directors of the Company
and does not constitute a recommendation to any shareholder of the Company
as to whether any such shareholder of Fedders should or should not vote to
approve the Proposed Recapitalization. This opinion does not address the
relative merits of the Proposed Recapitalization and any other transactions
or business strategies discussed by the Board of Directors of the Company.
Our opinion is based on economic, monetary and market conditions existing
on the date hereof.
TM Capital Corp. is currently acting as financial advisor to the
Company in connection with the Proposed Recapitalization and will be
receiving a fee in connection with the rendering of this opinion. TM
Capital Corp. is familiar with the Company having served as financial
advisor to Fedders and received customary compensation for the rendering of
such services.
On the basis of, and subject to the foregoing, we are of the
opinion as of the date hereof the Proposed Recapitalization is fair to the
shareholders of the Class A Stock and the shareholders of the Common Stock
from a financial point of view.
This opinion has been prepared for the information of the Board of
Directors of the Company in connection with the Proposed Recapitalization
and shall not be reproduced, summarized, described or referred to, provided
to any person or otherwise made public or used for any other purpose without
the prior written consent of TM Capital Corp., provided, however, that this
letter may be reproduced in full in the Form S-4 filed by the Company
related to the Proposed Recapitalization.
Very truly yours,
TM CAPITAL CORP.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
ANNEX C
SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
(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 ss. 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 stock corporation and
also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation;
and the words "depository receipt" mean a receipt or other instrument
issued by a depository representing an interest in one 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 ss. 251 (other than a merger
effected pursuant to ss. 251(g) of this title), ss. 252, ss. 254, ss. 257,
ss. 258, ss. 263 or ss. 264 of this title:
(1) Provided, however, that 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 and to vote at the meeting of stockholders to act upon
the agreement of merger or consolidation, were either (i) listed on
a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. 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 subsection (f) of ss. 251 of
this title. (2) Notwithstanding paragraph (1) of this subsection,
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, 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 designated as a national market
system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. 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
subparagraphs a. and b. of this paragraph; 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
subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under ss. 253 of this title
is not owned by the parent corporation immediately prior to the
merger, appraisal rights shall be available for the shares of the
subsidiary Delaware 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 procedures of this section,
including those set forth in subsections (d) and (e) 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 such meeting with
respect to shares for which appraisal rights are available pursuant
to subsection (b) or (c) hereof 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. 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 ss. 228
or ss. 253 of this title, each constituent corporation, either
before the effective date of the merger or consolidation or within
ten 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; provided that,
if the notice is given on or after the effective date of the merger
or consolidation, such notice shall be given by the surviving or
resulting corporation to all such holders of any class or series of
stock of a constituent corporation that are entitled to appraisal
rights. 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, 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, 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) hereof and who is otherwise
entitled to appraisal rights, may file 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
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) 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) hereof, whichever is later.
(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.
(h) After determining the stockholders entitled to an appraisal,
the Court shall appraise the shares, determining their fair value exclusive
of any element of value arising from the accomplishment or expectation of
the merger or consolidation, together with a fair rate of 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. In
determining the fair rate of interest, the Court may consider all relevant
factors, including the rate of interest which the surviving or resulting
corporation would have had to pay to borrow money during the pendency of
the proceeding. 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, permit discovery or other pretrial
proceedings and may proceed to trial upon the appraisal prior to the final
determination of the stockholder 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. Interest may be simple or
compound, as the Court may direct. 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.
(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.
ANNEX D
FEDDERS CORPORATION
AUD1T COMMITTEE CHARTER
November 1, 1999
I. Statement of Policy
The Audit Committee is an arm of the Board of Directors and must diligently
fulfill its objectives for the Board while meeting its responsibilities to
the stockholders by maintaining a close working relationship with the Board
of Directors, executive management, independent auditors and Vice President,
Internal Audit. Its primary function is to assist the Board of Directors in
fulfilling its oversight responsibilities by reviewing the financial
information provided by the Corporation to the public; the Corporation's
systems of internal controls regarding finance, accounting, operational
policies, legal compliance and ethics that management and the Board have
established; Corporation's auditing, accounting and financial reporting
processes generally; and fostering adherence to the Corporation's policies
at all levels. The Audit Committee's primary duties and responsibilities are
to:
o Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control
systems.
o Review and appraise the audit practices of the Corporation's
independent accountants and internal auditing department.
o Provide an open path of communication among the independent
auditors, financial and executive management, the Vice
President, Internal Audit, and the Board of Directors.
II. Structure
o The Audit Committee shall be comprised of three or more
directors appointed by the Board of Directors, one of whom
shall be Chairperson, each free from any association with the
Corporation that, in the opinion of the Board, would
interfere with the exercise of his or her independent
judgment as a member of the Committee. A member of the
Committee shall have no director or indirect management role
in corporate operational policy formulation. A member of the
Committee could be a former officer of the Corporation, a
consultant or professional, each of whom may receive
compensation or fees from the Corporation, but who, in the
opinion of the Board, will under all circumstances exercise
independent judgment, and whose expertise will materially
assist the function of the Committee.
o Members shall have broad knowledge of the Corporation, or
broad business or other knowledge or expertise useful to the
Corporation. Familiarity with accounting principles,
particularly for the Committee Chair, is considered an
advantage, but is not a requirement.
III. Meetings
o The Audit Committee shall meet at least four times per year.
One meeting shall be held prior to the start of the
independent audit to review the audit plan and planned audit
scope of the independent auditor. A second meeting will be
held to discuss results of the audit to date and potential
problems affecting the year-end results. A recommendation
should also be made at this time to management and the Board
for the retention of independent public accountants for the
ensuing year. A third meeting will be held upon completion of
the year-end audit to discuss the management letter prepared
by the independent auditor. The above and any other meetings
will include review of internal audit activity reports and
approval of an Internal Audit plan. Additional meetings will
be called as required.
o The Chief Executive Officer, Chief Financial Officer, Vice
President, Internal Audit and Corporate Controller will be
invited to attend all meetings of the Audit Committee. As a
matter of sound business practice and to provide a record that
the Committee has appropriately discharged its
responsibilities, minutes should be taken of all Audit
Committee meetings.
IV. Responsibilities and Duties
Within the context of the Audit Committee's Statements of Policy, the roles
of the Committee shall be:
o The Audit Committee must distinguish its oversight
responsibility form any involvement in the day-to- day
management of the Corporation and the conduct of the audit.
The Committee must not be considered an adversary of
management; rather, it is part of the Corporation's
governance and oversight process.
o The most important key to success for an Audit Committee is
effective communication -- between the Committee, executive
management, the Board of Directors, independent public
accountants and the Vice President, Internal Audit.
o The Committee is an agent for the Board of Directors to help
ensure the integrity of management, the independence of the
Company's independent auditors, internal audit function, and
the adequacy of disclosures to stockholders.
V. Internal Audit Function
o The Committee shall review the Internal Audit function
responsible for reviewing and monitoring administrative
controls in the accounting, financial and operating functions
of the Corporation, and shall make recommendations for
improvements to the quality of the overall control system.
The Internal Audit function shall operate with maximum
objectivity and have direct and unrestricted access to the
Committee. The Vice President, Internal Audit shall report
directly to the Audit Committee and have dotted-line
reporting responsibility to the Chief Executive Officer of
the Corporation.
VI. Reporting
o At the Board of Directors meeting next following the Audit
Committee meeting, the Committee Chairman shall make a report
to the Board of Directors.
Specifically, the roles of the Audit Committee include:
1. In conjunction with the Board of Directors and executive
management, review and update this Charter as conditions
dictate.
2. Review the Corporation's financial statements submitted
to any governmental body or the public, including any
certification, report, opinion or review, rendered by
the independent auditors, including the management
letter and management's response.
3. Review and act upon the regular reports prepared by the
internal audit department and management's response.
4. Review with financial management the financial results
of the Corporation in advance of their release to the
public. This may be done by telephone meeting.
5. Evaluate the Corporation's independent auditors and
recommend to the Board annually, or when otherwise
required or deemed by the Committee appropriate, the
retention, selection or removal of the Corporation's
independent auditors, considering independence and
effectiveness. On an annual basis, or when otherwise
required or deemed by the Committee appropriate, the
Committee (i) should ensure that the Corporation's
independent auditors submit a written statement to the
Committee delineating all relationships between such
auditors and the Corporation, (ii) actively review and
discuss with the independent auditors all significant
relationships they have with the Corporation to
determine what impact any such disclosed relationships
or services may have on the objectivity and independence
of such auditors, and (iii) recommend to the Board any
actions the Committee may deem appropriate to ensure the
independence of such auditors.
6. Periodically consult with the independent auditors about
internal controls and the fullness and accuracy of the
Corporation's financial statements.
7. In consultation with the independent auditors and Vice
President, Internal Audit, review the integrity fo the
Corporation's financial reporting processes, both
internal and external.
8. Consider and approve, if appropriate, major changes to
the Corporation's auditing and accounting principles and
practices as suggested by the independent accountants,
management or the Vice President, Internal Audit.
9. Review with the independent auditors, the Vice President,
Internal Audit, and management the extent to which any
changes or improvements in financial or accounting
practice have been implemented.
10. Keep minutes of all meetings, appropriately memorialize
the Committee's discharge of its duties, and report the
Committee's actions regularly to the Board of Directors
at the meeting following the Committee meeting.
11. Review with appropriate corporation officials the actions
taken to ensure compliance with the Corporation's
policies relating to conduct, and the results of
confirmations or violations of such policies.
12. Consider such other matters in relation to the financial
affairs of the Corporation and its accounts, and in
relation to internal and external auditors of the
Corporation as the Audit Committee may deem advisable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Fedders Corporation, certifies that it has reasonable grounds
to believe that it meets all the requirements for filing on Form S-4 and
has duly caused this Amendment No. 3 to Registration Statement (No.
333-58876) to be signed on its behalf by the undersigned, thereunto duly
authorized, in Liberty Corner, New Jersey, on the 21st day of December,
2001.
FEDDERS CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇*
------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Executive Vice President,
Finance and Administration
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ * Chairman Emeritus and a Director December 21, 2001
------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. * Chairman and Chief Executive December 21, 2001
----------------------- Officer (Principal
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. Executive Officer)
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ * Director December 21, 2001
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ * Director December 21, 2001
--------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ * Director December 21, 2001
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ * Director December 21, 2001
---------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ C.A. KEEN * Director December 21, 2001
---------------
C.A. Keen
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ * Director December 21, 2001
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇.▇. ▇▇▇▇▇▇▇▇▇▇ * Director December 21, 2001
---------------------
▇.▇. ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ * Director December 21, 2001
-------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ * Executive Vice President, December 21, 2001
---------------------- Finance and Administration
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (Principal Financial Officer)
-----------------
* The undersigned, by signing his name hereto, does sign and execute
this Amendment No. 3 to Registration Statement pursuant to the powers
of attorney executed by the above-named officers and directors of the
registrant, which have been previously filed with the Securities and
Exchange Commission on behalf of such officers and directors.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
and Secretary
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
Exhibit 2.1 Recapitalization Agreement and Plan of Merger, dated
as of _________________ between Fedders Corporation
and FC Merger Sub, Inc., which is attached as Annex A
to the proxy statement/prospectus contained in this
Registration Statement.
Exhibit 3.1 Restated Certificate of Incorporation of Fedders
Corporation which is attached as Exhibit A to the
Recapitalization Agreement and Plan of Merger
attached as Annex A to the proxy statement/prospectus
contained in this Registration Statement.
Exhibit 5+ Opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. as to the legality
of the securities registered hereunder.
Exhibit 8.1 Opinion of ▇▇▇▇▇▇▇, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP,
regarding tax matters (included in the proxy statement/
prospectus).
Exhibit 12.1* Statement regarding computation of ratios.
Exhibit 23.1+ Consent of Deloitte & Touche LLP.
Exhibit 23.2 Consent of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. (included in
Exhibit 5).
Exhibit 23.3+ Consent of BDO ▇▇▇▇▇▇▇ LLP.
Exhibit 24* Powers of Attorney.
Exhibit 99.1+ Form of Proxy for Class A stockholders.
Exhibit 99.2+ Form of Proxy for Class B and Common stockholders.
Exhibit 99.3* Proposed Recapitalization Analysis prepared by TM
Capital Corp.
* Previously filed.
+ Filed herewith.
Exhibit 5.1
[FEDDERS LETTERHEAD]
______, 2002
Fedders Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Re: Fedders Corporation
Registration Statement on Form S-4
(File No. 333-58876)
Ladies and Gentlemen:
I am the Vice President and General Counsel of Fedders
Corporation, a Delaware corporation (the "Company"), and have acted in that
capacity in connec tion with the recapitalization of the Company through a
merger of FC Merger Sub, Inc., a wholly owned subsidiary of the Company,
with and into the Company, with the Company as the surviving corporation
(the "Recapitalization"), and the registra tion of up to 33,387,219 shares
of new voting common stock of the Company (the "New Common Stock") and up
to 2,493,046 shares of new Class B stock of the Company (the "New Class B
Stock") in the Recapitalization.
This opinion is being furnished in accordance with the
requirements of Item 601(b)(5) of Regulation S-K under the Securities Act
of 1933, as amended (the "Act").
In connection with this opinion, I have examined originals or
copies, certified or otherwise identified to my satisfaction, of (i) the
Registration Statement on Form S-4 (File No. 333-58876) as filed with the
Securities and Exchange Com mission (the "Commission") on April 13, 2001
under the Act; (ii) Amendment No. 1 to the Registration Statement as filed
with the Commission on June 6, 2001; (iii) Amendment No. 2 to the
Registration Statement as filed with the Commission on August 24, 2001,
(iv) Amendment No. 3 to the Registration Statement as filed with the
Commission on the date hereof (such Registration Statement, as so amended,
being hereinafter referred to as the "Registration Statement"); (v) the
Transaction Statement on Schedule 13e-3 (File No. 5-36324) as filed with
the Commission on April 13, 2001 under the Act; (v) Amendment No. 1 to the
Transaction Statement as filed with the Commission on June 6, 2001; (vi)
Amendment No. 2 to the Transac tion Statement as filed with the Commission
on August 24, 2001; (vii) Amendment No. 3 to the Transaction Statement as
filed with the Commission on the date hereof (such Transaction Statement,
as so amended, being hereinafter referred to as the "Transaction
Statement"); (viii) the Recapitalization Agreement and Plan of Merger
between the Company and FC Merger Sub, Inc., dated as of _________, 2002
(the "Recapitalization Agreement"); (ix) a specimen certificate
representing the New Common Stock; (x) a specimen certificate representing
the New Class B Stock; (xi) the Certificate of Incorporation of the
Company, as amended to date and currently in effect; (xii) the form of the
Restated Certificate of Incorporation of the Company intended to be filed
with the Secretary of State for the State of Delaware to reflect the
transactions contemplated by the Recapitalization (the "New Charter");
(xiii) the By- Laws of the Company, as amended to date and currently in
effect; and (xiv) certain resolutions of the Board of Directors of the
Company, relating to the Recapitalization and the transactions contemplated
thereby. I also have examined originals or copies, certified or otherwise
identified to my satisfaction, of such records of the Company and such
agreements, certificates of public officials, certificates of officers or
other representatives of the Company and others, and such other documents,
certificates and records as I have deemed necessary or appropriate as a
basis for the opinions set forth herein.
In my examination, I have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submit ▇▇▇ to me as originals, the conformity to original
documents of all documents submitted to me as certified, conformed or
photostatic copies and the authenticity of the originals of such latter
documents. In making my examination of executed documents, I have assumed
that the parties thereto, other than the Company, its directors and
officers, had the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such
parties of such documents and the validity and binding effect thereof on
such parties. In rendering the opinions set forth below, I have assumed the
due filing of the New Charter with the Secretary of State of the State of
Delaware. As to any facts material to the opinions expressed herein which I
have not independently established or verified, I have relied upon
statements and representations of officers and other representatives of the
Company and others.
I am admitted to the Bar of the State of New Jersey, and I do
not express any opinion as to the laws of any jurisdiction other than the
laws of the State of New Jersey, the General Corporations Law of the State
of Delaware and the federal laws of the United States of America to the
extent referred to specifically herein. Insofar as the opinions expressed
herein relate to matters governed by laws other than those referred to in
the preceding sentence, I have assumed, but without having made any
independent investigation, that such laws do not affect any of the opinions
set forth herein. The opinions expressed herein are based on laws in effect
on the date hereof, which laws are subject to change with possible
retroactive effect.
Based upon and subject to the foregoing, I am of the opinion that:
When (i) the Registration Statement becomes effective under the
Act; (ii) the Company files a certificate of merger with the Secretary of
State of Delaware; (iii) the Company files the New Charter with the
Secretary of State of Delaware; and (iv) the certificates representing the
New Common Stock and New Class B Stock, in the form of the specimen
certificates examined by me, have been manually signed, registered and
delivered by an authorized officer of the transfer agent and registrar for
the New Common Stock and New Class B Stock, the New Common Stock and New
Class B Stock will thereupon be validly issued, fully paid and
nonassessable.
I hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. I also consent to
the reference to myself under the caption "Legal Matters" in the
Registration Statement. In giving this consent, I do not thereby admit that
I am included in the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Commission.
Very truly yours,
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No.
3 to Registration Statement No. 333-58876 of Fedders Corporation on Form
S-4 of our report dated October 12, 2001, appearing in the Annual Report
on Form 10-K of Fedders Corporation for the fiscal year ended August 31,
2001 and to the reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
December 21, 2001
Exhibit 23.3
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Fedders Corporation
Liberty Corner, New Jersey
We hereby consent to the incorporation by reference in the
Prospectus constituting a part of this Registration Statement of our
reports dated October 12, 1999, relating to the consolidated financial
statements and schedule for the year ended August 31, 1999 of Fedders
Corporation appearing in the Company's Annual Report on Form 10-K for the
year ended August 31, 2001.
We also consent to the reference to us under the caption "Experts"
in the Prospectus.
/s/ BDO ▇▇▇▇▇▇▇, LLP
Woodbridge, New Jersey
December 21, 2001
Exhibit 99.1
PROXY
FEDDERS CORPORATION
Annual Meeting of Stockholders - February 26, 2002
Solicited on Behalf of the Board of Directors
You May Vote by
the Internet, by Telephone or by Mail
(see instructions on reverse side)
The undersigned stockholder of FEDDERS CORPORATION (the "Company") hereby
constitutes and appoints ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇ ▇.
▇▇▇▇▇▇, and each of them, the attorneys and proxies of the undersigned,
with full power of substitution, to vote for all the shares of Common
Stock,Class B Stock and in the name, place and stead of the undersigned, at
the Annual Meeting of Stockholders of the Company, to be held at the
Company's corporate offices at the Somerset Hills Hotel, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, on February 26, 2002 at 10:30 a.m. and at
any adjournments thereof, the number of votes the undersigned would be
entitled to cast if personally present, on the items as set forth on the
reverse side of this proxy and in their discretion, upon such other matters
as may properly come before the meeting or any adjournment thereof. The
Board of Directors recommends a vote in favor of each of Proposals 1
through 10.
A majority of said attorneys and proxies, or their substitutes, at said
meeting or any adjournment thereof (or, if only one, that one) may exercise
all of the power hereby given. Any proxy to vote any of the shares with
respect to which the undersigned is, or would be entitled to vote,
heretofore given to any persons, other than the persons named above, is
hereby revoked.
IN WITNESS WHEREOF, the undersigned has signed this proxy and hereby
acknowledges receipt of a copy of the notice of said meeting and proxy
statement in reference thereto both dated ___________, 2002.
IF PROPERLY SIGNED, DATED AND RETURNED, THIS PROXY WILL BE VOTED AS
SPECIFIED ON THE REVERSE SIDE OR, IF NO CHOICE IS SPECIFIED, THIS PROXY
WILL BE VOTED "AGAINST" EACH OF PROPOSALS 1 THROUGH 10.
(SPECIFY CHOICES AND SIGN ON REVERSE SIDE)
If you do not vote by internet or telephone,
please mark, date, sign and mail your proxy
card back as soon as possible.
Annual Meeting of Stockholders
FEDDERS CORPORATION
February 26, 2002
VOTE BY INTERNET/TELEPHONE
24 HOURS A DAY, 7 DAYS A WEEK
-------------------------------------------------------------------------------
INTERNET TELEPHONE
-------------------------------------------------------------------------------
http://_________________________ 1-800-xxx-xxxx
GO TO THE WEBSITE ADDRESS LISTED ABOVE. USE ANY TOUCH-TONE TELEPHONE.
HAVE YOUR PROXY CARD READY. THIS IS A TOLL-FREE NUMBER.
ENTER YOUR CONTROL NUMBER LOCATED IN HAVE YOUR PROXY CARD READY.
THE BOX BELOW. ENTER YOUR CONTROL NUMBER LO-
FOLLOW THE SIMPLE INSTRUCTIONS THAT CATED IN THE BOX BELOW.
APPEAR ON YOUR COMPUTER SCREEN. FOLLOW THE SIMPLE RECORDED IN-
STRUCTIONS.
-------------------------------------------------------------------------------
-------------------------------------
Your Internet or telephone vote authorizes the named Proxies
to vote your shares in the same manner as if you marked,
signed and returned your Proxy Card.
-------------------------------------
1-800-xxx-xxxx
CALL TOLL-FREE TO VOTE
----------------------------------------------
CONTROL NUMBER
FOR INTERNET/TELEPHONE VOTING
----------------------------------------------
THE INTERNET AND TELEPHONE VOTING FACILITIES WILL CLOSE AT 9:00 A.M. E.D.T.
ON [MONTH, DAY], 2002.
If you do not vote through the internet or
telephone, please detach the following and mail it in
the envelope provided.
-------------------------------------------------------------------------------
Please mark your votes as in the example: | X |
FOR AGAINST ABSTAIN
1. Proposal to amend the Company's certificate of | | | | | |
incorporation to delete Section VI of clause A of
Article Second.
2. Proposal to recapitalize the Company through a | | | | | |
merger of FC Merger Sub, Inc., a wholly owned
subsidiary of the Company, with and into the
Company, with the Company as the surviving entity.
3. Proposal to amend the Company's certificate of | | | | | |
incorporation to eliminate the Class A Stock.
4. Proposal to amend the Company's certificate of | | | | | |
incorporation to change the par value of the
Common Stock and the Class B Stock to $.01.
5. Proposal to amend the Company's certificate of | | | | | |
incorporation to create alternating preferences for
the Common Stock and the Class B Stock for payments
or distributions in the event of any dissolution,
liquidation or winding up of the Company.
6. Proposal to amend the Company's certificate of | | | | | |
incorporation to make each share of Class B Stock
share equally with each share of Common Stock in
the payment of dividends.
7. Proposal to amend the Company's certificate of | | | | | |
incorporation to make the Class B Stock automatically
convert into shares of Common Stock if the
number of outstanding shares of Class B Stock falls
below 2.5% of the aggregate number of issued and
outstanding shares of Common Stock and Class B
Stock.
8. Proposal to amend the Company's certificate of | | | | | |
incorporation to require that any action required or
permitted to be taken by the stockholders of the
Company must be effected at a duly called annual or
special meeting of stockholders and to deny the
ability of the stockholders to consent in writing to
the taking of any action.
FOR ALL WITHHELD FOR ALL NOMINEES
NOMINEES FROM ALL EXCEPT THOSE LISTED
NOMINEES BELOW
9. Proposal to elect directors for a | | | | | |
term of one year
------------------------
Nominees: ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, C.A. ▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
FOR AGAINST ABSTAIN
10. Ratification of appointment of Deloitte & | | | | | |
Touche LLP as the Company's independent auditors
▇▇▇▇ HERE FOR ADDRESS CHANGE AND NOTE AT LEFT | |
Signature: ________________________ Date: _________, 2002
Signature: ________________________ Date: _________, 2002
NOTE: If a signer is a corporation, sign in full corporate name by a duly
authorized officer. Attorneys, executors administrators, trustees
or guardians should sign full name and ▇▇▇▇ as such.
NOTE: Approval of each of the proposals is conditional upon approval
of all of the proposals.
Exhibit 99.2
PROXY
FEDDERS CORPORATION
Annual Meeting of Stockholders - February 26, 2002
Solicited on Behalf of the Board of Directors
You May Vote by
the Internet, by Telephone or by Mail
(see instructions on reverse side)
The undersigned stockholder of FEDDERS CORPORATION (the "Company") hereby
constitutes and appoints ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇ ▇.
▇▇▇▇▇▇, and each of them, the attorneys and proxies of the undersigned,
with full power of substitution, to vote for all the shares of Class A
Stock and in the name, place and stead of the undersigned, at the Annual
Meeting of Stockholders of the Company, to be held at the Company's
corporate offices at the Somerset Hills Hotel, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, on February 26, 2002 at 10:30 a.m. and at any
adjournments thereof, the number of votes the undersigned would be entitled
to cast if personally present, on the items as set forth on the reverse
side of this proxy and in their discretion, upon such other matters as may
properly come before the meeting or any adjournment thereof. The Board of
Directors recommends a vote in favor of Proposal 1.
A majority of said attorneys and proxies, or their substitutes, at said
meeting or any adjournment thereof (or, if only one, that one) may exercise
all of the power hereby given. Any proxy to vote any of the shares with
respect to which the undersigned is, or would be entitled to vote,
heretofore given to any persons, other than the persons named above, is
hereby revoked.
IN WITNESS WHEREOF, the undersigned has signed this proxy and hereby
acknowledges receipt of a copy of the notice of said meeting and proxy
statement in reference thereto both dated ___________, 2001.
IF PROPERLY SIGNED, DATED AND RETURNED, THIS PROXY WILL BE VOTED AS
SPECIFIED ON THE REVERSE SIDE OR, IF NO CHOICE IS SPECIFIED, THIS PROXY
WILL BE VOTED "AGAINST" PROPOSAL 1.
(SPECIFY CHOICE AND SIGN ON REVERSE SIDE)
If you do not vote by internet or telephone,
please mark, date, sign and mail your proxy
card back as soon as possible.
Annual Meeting of Stockholders
FEDDERS CORPORATION
February 26, 2002
VOTE BY INTERNET/TELEPHONE
24 HOURS A DAY, 7 DAYS A WEEK
-------------------------------------------------------------------------------
INTERNET TELEPHONE
-------------------------------------------------------------------------------
http://_________________________ 1-800-xxx-xxxx
GO TO THE WEBSITE ADDRESS LISTED ABOVE. USE ANY TOUCH-TONE TELEPHONE.
HAVE YOUR PROXY CARD READY. THIS IS A TOLL-FREE NUMBER.
ENTER YOUR CONTROL NUMBER LOCATED IN HAVE YOUR PROXY CARD READY.
THE BOX BELOW. ENTER YOUR CONTROL NUMBER LO-
FOLLOW THE SIMPLE INSTRUCTIONS THAT CATED IN THE BOX BELOW.
APPEAR ON YOUR COMPUTER SCREEN. FOLLOW THE SIMPLE RECORDED IN-
STRUCTIONS.
-------------------------------------------------------------------------------
--------------------------------------------------
Your Internet or telephone vote authorizes the named
Proxies to vote your shares in the same manner as if you marked,
signed and returned your Proxy Card.
----------------------------------------------------
1-800-xxx-xxxx
CALL TOLL-FREE TO VOTE
----------------------------------------------
CONTROL NUMBER
FOR INTERNET/TELEPHONE VOTING
----------------------------------------------
THE INTERNET AND TELEPHONE VOTING FACILITIES WILL CLOSE AT 9:00 A.M. E.D.T.
ON [MONTH, DAY], 2002.
If you do not vote through the internet or
telephone, please detach the following and mail it in
the envelope provided.
-------------------------------------------------------------------------------
Please mark your votes as in the example: | X |
FOR AGAINST ABSTAIN
1. Proposal to amend the Company's certifi- | | | | | |
cate of incorporation to delete Section VI of
clause A of Article Second.
▇▇▇▇ HERE FOR ADDRESS CHANGE AND NOTE AT LEFT | |
Signature: ________________________ Date: _________, 2002
Signature: ________________________ Date: _________, 2002
NOTE: If a signer is a corporation, sign in full corporate name by a duly
authorized officer. Attorneys, executors administrators, trustees or
guardians should sign full name and ▇▇▇▇ as such.