REGISTRATION NO. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
FEDDERS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 3585 22-2572390
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
505 MARTINSVILLE ROAD
LIBERTY CORNER, NEW JERSEY 07938-0813
TELEPHONE: (908) 604-8686
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ROBERT N. EDWARDS, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
FEDDERS CORPORATION
505 MARTINSVILLE ROAD
LIBERTY CORNER, NEW JERSEY 07938-0813
TELEPHONE: (908) 604-8686
(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. [ ]
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Title of each class of Amount to be registered (1) Proposed maximum Proposed maximum Amount of registration
securities to be registered offering price per aggregate offering fee (2)
unit price (2)
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock, par value 33,387,219 N/A $140,258,973.60 $35,064.74
$0.01 per share
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Class B Stock, par value 2,493,046 N/A $6,821,882.06 $1,705.47
$0.01 per share
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(1) Represents the maximum numbers of shares of Common Stock and Class
B Stock of Fedders Corporation, in each case par value $0.01 per
share, issuable by the Registrant in the recapitalization merger
described herein and based on (a) the number of shares of Fedders
Common Stock, Class A Stock and Class B stock, in each case par
value $1.00 per share, outstanding as of April 10, 2001, plus (b)
the number of shares of Fedders Common Stock, Class A Stock and
Class B Stock that could be issued before the effective time of
the recapitalization, plus (c) the number of shares of Fedders
Common Stock into which the Class B Stock may be converted after
the recapitalization. This registration statement also relates to
an additional indeterminate number of shares of Fedders Common
Stock and Class B Stock, in each case par value $0.01 per share,
that may be issued upon stock splits, stock dividends or similar
transactions in accordance with Rule 416 under the Securities Act.
(2) Pursuant to Rules 457(f) and 457(c) under the Securities Act of
1933, the registration fee was calculated based on the product of
(1) 14,531,659 shares of Fedders Common Stock, par value $1.00 per
share, 14,909,349 shares of Fedders Class A Stock, par value $1.00
per share, and 2,266,406 shares of Class B stock, par value $1.00
per share, outstanding as of April 10, 2001, to be received by the
Registrant and cancelled in the recapitalization merger described
herein, and (2) $5.035 per share, the average of the high and low
sales prices for shares of Fedders Common Stock on the New York
Stock Exchange on April 10, 2001 and $4.50 per share, the average
of the high and low sales prices for shares of Fedders Class A
Stock on the New York Stock Exchange on April 10, 2001 and $3.01
per share, the book value of the Class B Stock as of April 10,
2001, respectively.
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.
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PROXY STATEMENT FOR
FEDDERS CORPORATION
--------------------------
SPECIAL MEETING OF STOCKHOLDERS TO BE HELD
___________, 2001
--------------------------
PROSPECTUS FOR
FEDDERS CORPORATION
COMMON STOCK, PAR VALUE $.01
CLASS B STOCK, PAR VALUE $.01
--------------------------
Dear Fellow Stockholder:
You are cordially invited to attend a special meeting of stockholders
at 10:30 a.m., local time, on _______, 2001, at Fedders' corporate offices
located at 505 Martinsville Road, Liberty Corner, New Jersey 07938. A notice of
the special meeting and the proxy statement follow.
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 and (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. 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 the proposal to amend
Fedders' certificate of incorporation.
The new Common Stock will, upon issuance, have rights
substantially similar to the Common Stock, except for certain modifications
to the liquidation rights of the Common Stock described more fully in the
accompanying proxy statement/prospectus. The new Class B Stock will, upon
issuance, have rights substantially similar to the Class B Stock, except
for certain modifications to the dividend rights, conversion rights and
liquidation rights of the Class B Stock described more fully in the
accompanying proxy statement/prospectus.
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 board of directors unanimously recommends that you
approve the amendment to the certificate of incorporation, the combination
of our Common Stock and Class A Stock into a single class of new voting
Common Stock and the exchange of our voting Class B Stock for a class of
new voting Class B Stock.
This document provides you with information about the special
meeting, the amendment to the certificate of incorporation, the combination
of our Common Stock and Class A Stock into a single class of new Common
Stock, and the exchange of our Class B Stock for a class of new Class B
Stock. The new Common Stock will be listed for trading on the New York
Stock Exchange. The new Class B Stock will not be listed for trading.
It is important that your shares be represented at the special
meeting, whether or not you are personally able to be present. If your
shares are held in the name of your broker or a nominee, they can vote your
preferences for you. The board of directors strongly recommends that you
vote, or instruct your broker or nominee to vote, FOR approval of (i) the
proposed amendment to the certificate of incorporation and (ii) the
recapitalization. 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.
For more information concerning voting by proxy, please see the
section of this document beginning on page 19 entitled "The Special Meeting
- - Revocation of Proxies." We encourage you to read this entire document
carefully. You may also obtain information about Fedders from publicly
available documents that we have filed with the Securities and Exchange
Commission. See "Where You Can Find More Information" beginning on page 52.
The accompanying proxy statement/prospectus provides detailed
information about the recapitalization. Please read the entire proxy
statement/prospectus and the appendices carefully.
Enclosed are the Notice of Special Meeting, Proxy
Statement/Prospectus and proxy card.
Sincerely,
/s/ Salvatore Giordano /s/ Sal Giordano, Jr.
Chairman Vice 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 ________, 2001 and it is first being mailed to
stockholders on or about ________, 2001
FEDDERS CORPORATION
LIBERTY CORNER, NEW JERSEY 07938
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON , 2001
--------------------------
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of
Fedders Corporation will be held at Fedders' corporate offices located at 505
Martinsville Road, Liberty Corner, New Jersey 07938 on __________ [day of the
week], April ___, 2001 at 10:30 a.m.
The purpose of the meeting is to consider and vote upon (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
and (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. Consummation of the
recapitalization is conditioned on approval of the proposal to amend
Fedders' certificate of incorporation.
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 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
KENT E. HANSEN
Executive Vice President and Secretary
Dated: April ___, 2001
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: (908) 604-8686
Fedders Corporation
505 Martinsville Road Facsimile: (908) 604-8576
Liberty Corner, NJ 07938-0813
E-mail: khansen@fedders.com
If you would like to request documents from us, please do so by
____________, 2001 to receive them before the special meeting.
TABLE OF CONTENTS
PAGE
QUESTIONS AND ANSWERS ABOUT THE RECAPITALIZATION............................1
ADDITIONAL INFORMATION......................................................5
Fedders Corporation....................................................5
FC Merger Sub, Inc.....................................................5
SUMMARY.....................................................................6
The Recapitalization...................................................6
Stockholder Vote.......................................................6
Appraisal Rights.......................................................6
Conditions to Completion of the Recapitalization.......................7
Termination of the Recapitalization or Amendment of Terms..............7
Regulatory Matters.....................................................7
Description of Fedders Capital Stock Before and After the
Recapitalization.....................................................7
Fairness Opinion of TM Capital Corp....................................9
Interests of Certain Persons in the Recapitalization...................9
Certain Federal Income Tax Consequences of the Recapitalization........9
Employee Stock Options................................................10
New York Stock Exchange Listing.......................................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 SPECIAL MEETING........................................................18
Date, Place and Time..................................................18
Purpose of the Special Meeting........................................18
Record Date; Stock Entitled to Vote; Vote Required; Quorum............18
Voting of Proxies.....................................................19
Revocation of Proxies.................................................19
Matters to be Acted on at the Special 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 Amendment to the Certificate of
Incorporation.......................................................22
Board Review of the Recapitalization..................................22
Recommendations of the Fedders Board; Reasons for the
Recapitalization....................................................24
Fairness Opinion of TM Capital Corp...................................25
Effect of the Recapitalization........................................29
Stockholder Vote......................................................29
Interests of Certain Persons in the Recapitalization..................30
Directors.............................................................32
Officers..............................................................33
Financing the Recapitalization........................................34
Certain Federal Income Tax Consequences of the Recapitalization.......35
THE RECAPITALIZATION.......................................................36
General...............................................................36
What Fedders Stockholders Will Receive................................36
Conditions to Completion of the Recapitalization......................36
Amendment of the Recapitalization Agreement...........................37
Abandonment of the Recapitalization...................................37
Estimated Fees and Expenses of the Recapitalization...................37
Effective Time of the Recapitalization................................38
Regulatory Matters....................................................38
Appraisal Rights......................................................38
Employee Benefit Plans................................................40
Employee Stock Options................................................40
New York Stock Exchange Listing.......................................40
RECENT TRANSACTIONS IN SECURITIES..........................................41
FINANCIAL STATEMENTS.......................................................42
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL DATA.............42
RATIO OF EARNINGS TO FIXED CHARGES....................................44
THE RECAPITALIZATION AGREEMENT.............................................46
General...............................................................46
Effect on Capital Stock...............................................46
Fractional Shares.....................................................46
Closing...............................................................46
Restated Certificate of Incorporation.................................46
By-Laws...............................................................46
Directors and Officers................................................47
Termination...........................................................47
Amendments and Waiver.................................................47
DESCRIPTION OF FEDDERS CAPITAL STOCK BEFORE AND AFTER THE RECAPITALIZATION.48
General...............................................................48
FEDDERS COMMON STOCK..................................................48
FEDDERS CLASS A STOCK.................................................49
FEDDERS CLASS B STOCK.................................................50
LEGAL MATTERS..............................................................51
EXPERTS....................................................................52
STOCKHOLDER PROPOSALS FOR 2001.............................................52
OTHER MATTERS..............................................................52
WHERE YOU CAN FIND MORE INFORMATION........................................52
FORWARD-LOOKING STATEMENTS.................................................54
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
QUESTIONS AND ANSWERS ABOUT THE RECAPITALIZATION
Q: What am I being asked to vote on?
A: We are asking you to vote your shares for the recapitalization of
Fedders Corporation ("Fedders"), through the merger of FC Merger Sub,
Inc., a wholly owned subsidiary of Fedders, with and into Fedders,
with Fedders as the surviving corporation. 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 special meeting?
A: You are eligible to vote your shares of Common Stock, Class A Stock and
Class B Stock at the special meeting if you were a stockholder of record
of those shares on the record date. The record date for the special
meeting is the close of business on ____, 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?
A: The board of directors has unanimously approved the recapitalization,
and recommends that you vote FOR both the proposed amendment to the
certificate of incorporation and the recapitalization.
Q: How many votes are needed for the proposed amendment to the
certificate of incorporation and the recapitalization to be approved?
A: The proposed amendment to 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 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 recapitalization 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 both the proposed amendment and the
recapitalization. The board of directors of Fedders unanimously
approved the recapitalization at a meeting held on Tuesday, February
27, 2001. As of April 10, 2001, these directors and executive
officers were entitled to vote, or exercised voting power over shares
entitled to vote, approximately 4,045,102 shares of Class A Stock, or
27.1% of the outstanding Class A Stock, 101,036 shares of Common
Stock, or approximately 0.7% 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 14.1% of the aggregate
outstanding Common Stock and Class B Stock, voting together as a
single class.
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 by following the
procedures described in this document to assert their appraisal
rights. The Giordano Holding Corporation holds approximately 99.8% of
the Class B Stock. Salvatore Giordano, Fedders' Chairman of the
Board, Sal Giordano, Jr., Fedders' Vice Chairman and Chief Executive
Officer and Joseph Giordano, a director of Fedders, exercise all the
voting power of Giordano Holding Corporation. They have unanimously
indicated their intention not to cause Giordano Holding Corporation
to exercise its statutory appraisal rights. See "The Recapitalization
- Appraisal Rights" beginning on page 38.
Q: What are my income tax consequences from the recapitalization?
A: 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 tax
consequences of the recapitalization to you based on your particular
circumstances. See the discussion of federal income tax consequences
beginning on page 35.
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 48 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 special 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 special meeting should I return my proxy
card(s)?
A: Yes. Returning your proxy card(s) ensures that your shares will be
represented at the special 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 Fedders' Corporate Secretary that is
received prior to the special 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 special meeting; or
o attending the special meeting, and voting in person.
Your presence at the special 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.
Q: Do I need to send in my share certificates?
A: No. If you hold your own share certificates, you should not send in
your share certificates. If you hold Class B share certificates, you
will be required to surrender your old Class B certificates after the
recapitalization is approved in order to receive new Class B
certificates.
Your share certificates representing Common Stock and Class A Stock will
automatically represent new Common Stock following the recapitalization.
If the recapitalization is approved, the new Common Stock will be
represented only in book entry form and stock certificates will not be
delivered to stockholders.
A number of companies have adopted such a certificate less book entry
system, whereby stockholders' ownership and transfers are recorded on the
books of the company without the need for stockholders to physically hold
or, if they wish to transfer or sell their stock, to deliver stock
certificates.
However, following the recapitalization, new Common stockholders will, if
they so desire, be able to obtain physical certificates representing the
number of shares of new Common Stock they will receive in the
recapitalization.
If the recapitalization is approved, Class B stockholders will be
required to surrender their old Class B Stock certificates in order
to receive certificates representing new Class B Stock.
Q: Who can answer my questions?
A: If you have questions regarding the special meeting or need assistance in
voting your shares, please contact Fedders' proxy solicitor:
[----------------]
Telephone:
All other questions should be directed to:
Fedders Corporation
505 Martinsville Road,
Liberty Corner, New Jersey 07938
Attn: Kent E. Hansen
Telephone: (908) 604-8686
ADDITIONAL INFORMATION
Fedders Corporation
Fedders Corporation
505 Martinsville Road,
Liberty Corner, New Jersey 07938
Telephone: (908) 604-8686
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 the filing person for the recapitalization.
FC Merger Sub, Inc.
FC Merger Sub, Inc.
505 Martinsville Road,
Liberty Corner, New Jersey 07938
Telephone: (908) 604-8686
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.
SUMMARY
This summary highlights selected information contained in this
document, and does not include all of the information that is important to you.
To understand the recapitalization fully and for a more complete description of
the legal terms of the recapitalization, you should carefully read this entire
document and the documents to which we have referred you. See "Where You Can
Find More Information" (page 52). We have included page references
parenthetically to direct you to a more complete description of each topic
presented in this summary.
The Recapitalization (page 36)
The proposed amendment to the certificate of incorporation will
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. Consummation of the recapitalization is conditioned on
approval of the proposal to amend Fedders' certificate of incorporation. In
the recapitalization, the non-voting Class A Stock will be exchanged for
shares of new voting Common Stock.
Assuming the amendment is approved, after the recapitalization,
Fedders will continue its current businesses in the same manner as before
under the Fedders Corporation name.
After the recapitalization, Fedders will have two classes of stock
outstanding, new Common Stock and new Class B Stock, all of which will be
owned by the existing stockholders of Fedders, other than Class B
stockholders that exercise statutory appraisal rights. The new Common Stock
will be voting, and will be listed for trading on the New York Stock
Exchange. The new Class B Stock will be voting but will not be listed for
trading.
Holders of Common Stock will be entitled to 1.1 shares of new
Common Stock for each share of Common Stock they currently hold, and
holders of Class A Stock will be entitled to one share of new Common Stock
for each share of Class A Stock they currently hold. The new Common Stock
will be entitled to one vote per share.
Holders of Class B Stock will be entitled to 1.1 shares of new
Class B Stock for each share of Class B Stock they currently hold. 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. For a complete description of these voting rights, see
"Description of Fedders Capital Stock Before and After the
Recapitalization", beginning on page 48 of this document.
Because this proxy statement/prospectus only summarizes certain
key information about the recapitalization, we urge you to read the
recapitalization agreement attached hereto as Annex A in its entirety.
Stockholder Vote (page 29)
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 amendment is approved, 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.
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 0.7% of the aggregate
voting power of the Common Stock, 27.1% 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 14.1% of the aggregate voting power.
In addition, approval of the recapitalization is not conditioned upon
the favorable vote of a majority of Fedders' unaffiliated stockholders.
Appraisal Rights (page 38)
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. The Giordano Holding Corporation holds approximately 99.8% of
the Class B Stock. Salvatore Giordano, Fedders' Chairman of the Board, Sal
Giordano, Jr., Fedders' Vice Chairman and Chief Executive Officer and
Joseph Giordano, a director of Fedders, exercise all the voting power of
Giordano Holding Corporation. They have unanimously indicated their
intention not to cause the Giordano 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 is listed on the New York Stock
Exchange and the Common Stock and Class A Stock is being combined into new
Common Stock in the recapitalization. See "The Recapitalization - Appraisal
Rights."
Conditions to Completion of the Recapitalization (page 36)
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 the certificate of incorporation;
o Fedders receives the required stockholder approval for 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 Hart-Scott-Rodino
Antitrust Improvements Act, all waiting periods must 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.
Termination of the Recapitalization or Amendment of Terms (page 47)
The board of directors of Fedders may defer, terminate or abandon
the recapitalization at any time before the closing of the recapitalization
if it determines that it is appropriate to do so. To the fullest extent
permitted by law, the board of directors of Fedders and its wholly-owned
subsidiary, FC Merger Sub, Inc., by mutual consent, may amend the terms of
the recapitalization described in the recapitalization agreement at any
time before the closing of the recapitalization.
Regulatory Matters (page 38)
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 Hart-Scott-Rodino
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 recapitalization.
Description of Fedders Capital Stock Before and After the Recapitalization
(page 48)
General
The recapitalization is contingent upon approval of the proposed
amendment to Fedders' certificate of incorporation. Assuming both the
amendment and the recapitalization are approved by the stockholders of
Fedders, after the recapitalization, a new restated certificate of
incorporation will set forth the rights, privileges and preferences of the
Fedders stockholders. 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 48 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 new share of Common Stock received.
Par Value; Liquidation Preference
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. 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 a 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. Prior to the recapitalization, upon a
liquidation, Fedders' assets are divided pro rata among the holders of
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).
Class A Stock
The proposed amendment to 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. This will allow the recapitalization to be consummated on the
terms described elsewhere in this document. In the recapitalization, the
non-voting Class A Stock will be exchanged for shares of new voting Common
Stock.
Class B Stock
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. In particular, the new Class B Stock will
be entitled to ten votes per share on the election of directors if more
than fifteen percent (15%) of the new Common Stock outstanding on the
record date for the meeting to elect directors is beneficially owned by a
person or group of persons acting in concert or if a director is nominated
by any person or group of persons other than the new Class B stockholders.
As is currently the case for the Class B Stock under the certificate of
incorporation, the approval of the new Class B Stock, voting separately as
a class, will be required to modify the restated certificate of
incorporation or to consummate certain important transactions, such as
merger or consolidation of Fedders into another corporation or the sale 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.
The restated certificate of incorporation will contain certain
changes to the new Class B Stock that are intended 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. Because of the exchange of the Class A
Stock for new Common Stock, the recapitalization will cause the number of
votes the holders of new Class B Stock are entitled to vote, including in a
vote for the election of directors regarding which they are entitled to
vote ten votes per share, to decrease relative to the number of votes of
new Common Stock. To compensate the holders of new Class B Stock for this
decrease, a modification will be made to 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, holders of the
new Class B Stock will share equally in the payment of dividends with
holders of the new Common Stock.
In addition, the restated certificate of incorporation will modify the
automatic conversion rights of the Class B Stock. Currently, the Class B Stock
is automatically 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 number of shares of Class B Stock
currently outstanding represent approximately 13.5% 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 7.5% of the aggregate number of shares of Class B Stock
and Common Stock. To adjust for this percentage reduction, the restated
certificate of incorporation will provide that 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.
Action by Written Consent
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.
Fairness Opinion of TM Capital Corp. (page 25)
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 beginning on page 25 of this
document. In addition, the opinion is attached as Annex B to this document.
The board of directors encourages you to read both the summary and the
opinion in its entirety.
Interests of Certain Persons in the Recapitalization (page 30)
Voting Power
The directors and executive officers of Fedders together control
101,036 shares of the Common Stock, or approximately 0.7% of the Common
Stock, 4,045,102 shares of Class A Stock, or approximately 27.1% of the
Class A Stock and 2,262,566 shares of the Class B Stock, or approximately
99.8% 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 14.1% 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 19.9% of the aggregate voting power.
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 61.1% 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 52.0% of the aggregate voting power.
Beneficial Ownership
Fedders' directors and executive officers currently beneficially
own 357,836 shares of Common Stock, or approximately 2.5% of the Common
Stock, 4.766,662 shares of Class A Stock, or approximately 32.0% 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 16.7% of the new
Common Stock and 99.8% of the new Class B Stock.
Certain Federal Income Tax Consequences of the Recapitalization (page 35)
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).
Employee Stock Options (page 40)
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.
New York Stock Exchange Listing (page 40)
The shares of new Fedders Common Stock to be issued in the
recapitalization will be listed on the New York Stock Exchange under the
symbol "FJC."
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 the last two years.
Common Stock Class A Stock Class B Stock
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
High Low Dividends High Low Dividends Dividends
-------------------------------------------------------------------------------------------
1999
Second Quarter $ 5 7/8 $ 4 13/16 $ 0.025 $ 5 3/4 $ 4 3/8 $ 0.025 $ 0.0225
Third Quarter 6 1/16 5 0.025 5 13/16 4 5/8 0.025 0.0225
Fourth Quarter 6 15/16 5 3/16 0.030 6 3/4 5 3/16 0.030 0.027
2000
First Quarter $ 6 9/16 $ 5 1/4 $ 0.030 $ 5 3/4 $ 4 5/8 $ 0.0300 $ 0.027
Second Quarter 6 5 1/16 0.030 5 1/4 4 5/8 0.0300 0.027
Third Quarter 6 1/4 5 1/4 0.030 5 7/8 4 7/8 0.0300 0.027
Fourth Quarter 6 3/16 4 3/4 0.030 5 15/16 4 1/2 0.0300 0.027
2001
First Quarter $ 5 3/16 $ 3 3/8 $ 0.030 $ 4 7/8 $ 3 1/4 $ 0.0300 $ 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 April 10, 2001 was $5.05 per
share. The last reported sale price of Class A Stock as reported by the New
York Stock Exchange Composite Tape on April 10, 2001 was $4.55 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. Fedders derived the
consolidated financial data as of and for the three months ended November 30,
2000 and 1999 from Fedders' unaudited 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 quarterly reports on Form 10-Q
and other information that Fedders has filed with the Securities and Exchange
Commission. See "Where You Can Find More Information" beginning on page 52.
Consolidated Statement of Operations Data
Three months ended
November 30, Fiscal Year Ended August 31,
-----------------------------------------------------------------
2000 1999 2000 1999 1998 1997 1996
- --------------------------------- -------------------------- -------------------------- -------------------------- -----------
Net sales........................ $ 39,948 $ 44,683 $ 409,809 $ 355,956 $ 322,121 $ 314,100 $ 371,772
Gross profit..................... 8,678 13,258 104,956 84,591 69,770 70,076 83,028
Percent of net sales............ 21.7% 29.7% 25.6% 23.8% 21.7% 22.3% 22.3%
Operating income (loss) (1)...... (7,419) (11) 46,854 40,258 12,810 31,729 50,988
Percent of net sales............. (18.6%) - 11.4% 11.3% 4.0% 10.1% 13.7%
Income (loss) before income taxes (11,122) (3,116) 30,474 30,986 4,603 28,867 50,266
Percent of net sales............. (27.8%) (7.0%) 7.4% 8.7% 1.4% 9.2% 13.5%
Net (loss) income................ (7,512) (2,133) 20,401 20,724 2,992 18,764 31,158
Net (loss) income attributable to
common stockholders.............. (7,512) (2,133) 20,401 20,724 2,992 16,344 31,007
Earnings (loss) per share:
Basic....................... $ (0.23) $ (0.06) $ 0.58 $ 0.56 $ 0.07 $ 0.42 $ 0.77
Diluted..................... (0.23) (0.06) 0.57 0.56 0.07 0.39 0.74
Dividends per share declared:
Convertible Preferred (2)... --- --- -- -- -- $ 0.318 $ 0.050
Common/Class A.............. $ 0.30 $ 0.30 $ 0.120 $ 0.105 $ 0.085 0.080 0.080
Class B..................... 0.027 0.027 0.108 0.095 0.077 0.072 0.072
Other Financial Data:
Earnings before interest, taxes,
depreciation and amortization,
as adjusted(5)(6).............. $ (2,903)$ 3,711 $ 58,786 $ 54,613 $ 41,757 $ 42,232 $ 57,796
Capital expenditures........... 3,833 619 9,858 9,378 8,497 9,236 7,043
Depreciation and amortization.. 3,873 3,163 13,076 10,279 9,263 9,935 6,578
Cash flow provided by (used in):
Operating activities........... $ (56,006) (65,272) $ 4,619 $ 51,989 $ 39,302 $ (8,826) $ 41,871
Investing activities........... (14,719) (619) (15,037) (48,778) (6,650) (8,808) (6,508)
Financing activities........... (1,267) (1,455) (19,898) 23,312 (52,059) 37,732 (2,775)
Consolidated Balance Sheet Data
August 31,
November 30, -----------------------------------------------------------------
2000 2000 1999 1998 1997 1996
- ------------------------------------------- ---------------------------------------------------------------------------------
Cash and cash equivalents.................. $ 15,201 $ 87,193 $ 117,509 $ 90,986 $ 110,393 $ 90,295
Total assets............................... 362,102 378,957 382,342 304,629 329,014 290,220
Long-term debt (including current portion) (3) 165,788 166,434 161,363 111,013 115,380 40,406
Stockholders' equity (4)................... 99,324 112,260 108,933 104,792 145,687 159,751
- ------------
(1) In 1999, operating income reflects a $3,100 restructuring charge.
In 1998, operating income reflects a $16,750 restructuring charge
relating to actions taken by Fedders to enhance competitiveness in
global markets and a $2,891 provision for the implementation of an
early retirement program.
(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 the first quarter of fiscal 2001, Fedders repurchased 1,322
shares of Common and Class A Stock at an average price of $3.93
per share for a total of $5,195. During fiscal 2000, Fedders
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, Fedders 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, Fedders 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, Fedders 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) For the three months ended November 30, 2000, the amount shown
excludes a $1.2 million non- cash charge for the repricing of a
majority of unexercised stock options. In fiscal 1999, the amount
shown excludes a one-time charge for the restructuring ($3,100).
For fiscal 1998, the amount shown excludes a one-time charge for
the 1998 restructuring ($16,750) and early retirement program
($2,891).
(6) EBITDA represents income before income taxes plus net interest
expense and depreciation and amortization (excluding amortization
of debt discounts and deferred financing costs). While EBITDA
should not be construed as a substitute for operating income or a
better indicator of liquidity than cash flow from operating
activities, which are determined in accordance with accounting
principles generally accepted in the United States of America, it
is included herein to provide additional information with respect
to the ability of Fedders to meet its future debt service, capital
expenditure and working capital requirements. In addition, Fedders
believes that certain investors and lenders find EBITDA to be a
useful tool for measuring the ability of Fedders to service its
debt. EBITDA is not necessarily a measure of Fedders' ability to
fund cash needs.
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.
Three Months Fiscal Year
Ended Ended
November 30, August 31,
2000 2000
----------------------------
Book value per common share:
Reported........................................................ $ 3.08 $ 3.35
Pro Forma....................................................... 2.93 3.18
Cash dividends declared per share:
Common and Class A
Reported........................................... 0.03 0.12
Pro forma.......................................... 0.03 0.12
Class B
Reported........................................... 0.027 0.108
Pro forma.......................................... 0.030 0.120
Earnings (loss) per share - basic:
Reported........................................................ (0.23) 0.58
Pro forma....................................................... (0.22) 0.55
Earnings (loss) per share - diluted:
Reported........................................................ (0.23) 0.57
Pro forma....................................................... (0.22) 0.55
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 as of November 30, 2000 and for the
three months ended November 30, 2000 and for the fiscal year ended August 31,
2000 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 Fedders 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. In addition, the
results for the three months ended November 30, 2000 are not necessarily
indicative of results that may be expected for the full year. This information
should be read together with Fedders' 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 November 30,
2000. The unaudited recapitalization data is derived from the unaudited
Consolidated Balance Sheet of Fedders as of November 30, 2000. Information is
presented to reflect pro forma adjustments for the recapitalization of the
Company's 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 unaudited
Consolidated Statements of Operations and Comprehensive Income for the three
months ended November 30, 2000 and the audited Consolidated Statements of
Operations and Comprehensive Income for the fiscal year ended August 31, 2000.
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 November 30, 2000)
(dollars in thousands, except per share amounts)
As of Pro Forma
November 30, 2000 Adjustments As Adjusted
Stockholders' Equity:
Common Stock, $1.00 par value,
80,000,000 shares authorized;
16,135,459 shares issued and
14,901,059 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;
37,581,720 shares issued and
31,450,209 outstanding, as adjusted. - 376(a) 376
Class A Stock, $1.00 par value,
60,000,000 shares authorized;
19,832,715 shares issued and
15,059,044 shares outstanding, actual;
no shares issued and outstanding, as
adjusted. 19,833 (19,833)(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;
2,493,046 shares issued and
outstanding, as adjusted. - 25(b) 25
Paid-in capital 30,858 37,834(c) 68,692
Retained Earnings 61,065 - 61,065
Treasury Stock, at cost, 6,008,071 shares
of Common and Class A Stock, actual;
6,131,511 shares of new Common
Stock, as adjusted. (28,259) - (28,259)
Deferred Compensation (870) - (870)
Accumulated Comprehensive loss (1,705) - (1,705)
--------------- ------------- --------------
Total stockholders' equity $99,324 - $99,324
=============== ============= ==============
Notes to the Pro Forma Consolidated Condensed Unaudited Recapitalization Table
(a) Pro forma adjustments as of November 30, 2000 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, 37,581,720 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. 2,493,700 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
Three Months Ended Fiscal Year Ended
November 30, August 31,
2000 2000
---- ----
Net income (loss)(a):
As reported $(7,512) $20,401
Pro forma $(7,512) $20,401
Earnings (loss) per share (b):
Basic as reported $ (0.23) $0.58
Basic pro forma $ (0.22) $0.55
Diluted as reported $ (0.23) $0.57
Diluted pro forma $ (0.22) $0.55
Weighted average shares (c):
Basic as reported 32,865 35,325
Basic pro forma 34,619 37,176
Diluted as reported 32,865 35,490
Diluted pro forma 34,619 37,341
Cash dividends per share (d):
As reported:
Common and Class A $0.0300 $0.120
Class B 0.0270 0.108
Pro forma:
New Common and Class B 0.030 0.120
Notes to the Unaudited Pro Forma Condensed 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 SPECIAL MEETING
The matters to be considered at the special 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 special 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 special meeting is scheduled to be held at 10:30 a.m., local time,
at Fedders' corporate offices located at 505 Martinsville Road, Liberty Corner,
New Jersey 07938.
Purpose of the Special Meeting
The purpose of the special 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 ______, 2001, between
Fedders Corporation and FC Merger Sub, Inc., a wholly owned subsidiary of
Fedders Corporation, and (iii) such other matters as may be appropriate for
consideration at the special meeting.
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 ________, 2001, the record date for
the special meeting, are entitled to receive notice of and vote at the special
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 special 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
amendment 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 amendment is approved, 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.
Abstentions and broker non-votes each will be included in
determining the number of shares present at the special 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 adopt the proposed amendment and recapitalization,
abstentions and broker non-votes will have the same effect as votes against
such matters.
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 special
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 special 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, Fedders 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
special meeting in any of four ways:
o sending a written notice to Fedders' Corporate Secretary that
is received prior to the special meeting that states that you
are revoking your proxy. If your broker holds your shares,
contact your broker;
o by 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 special meeting; or
o attending the special meeting, and voting in person.
Your presence at the special meeting will not, in and of itself, revoke your
proxy.
Matters to be Acted on at the Special Meeting
Amendment of the certificate of incorporation and adoption of the
recapitalization agreement are the only matters to be presented or acted
upon at the special meeting. The actions proposed in this proxy
statement/prospectus are not a matter 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 special meeting. No postage is required if the
proxy is returned in the enclosed envelope and mailed in the United States.
Proxy Solicitation Information
Fedders is furnishing this document to you in connection with the
solicitation by Fedders' board of directors of the enclosed form of proxy
for the ____________, 2001 special 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 Fedders. In addition, Fedders has retained [__________________]
to assist in the distribution and solicitation of proxies and will pay
[___________________] a fee estimated not to exceed $_______ plus $____ per
minute per 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
Giordano family.
o Continuity. Because the three class structure would allow the
Giordano 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
Giordano 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
two classes of listed stock, 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 capital structure with dual listing 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' two classes of listed 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.
The board tabled consideration of various recapitalization
alternatives in August 2000. 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.
At the regular meeting of the board of directors held on February
27, 2001, the board, together with Fedders' 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 and each share of Class A Stock for one
share of new Common Stock was fair, from a financial point of view, to
holders of each class of 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 amendment, 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 Amendment to 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 amendment 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 to the certificate 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
amendment 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 48 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. Currently, 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 61.1% 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 52.0% 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 48 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 currently outstanding
represent approximately 13.5% 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 7.5% 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
ioterested 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 special 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 both the proposed
amendment to the certificate and the proposed 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 amendment to the certificate of incorporation. Assuming the
proposed amendment is approved, 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 approximately 0.7% of the
outstanding voting power of the Common Stock, 27.1% 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 amendment to the certificate of incorporation. The board further
noted that approximately 14.1% 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.
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. 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 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 recapitalization was unanimously approved by the board of
directors, including the independent, non-employee directors. 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. The
board of directors believes that the recapitalization is fair to all Fedders
stockholders, including those that are not members of Fedders management.
In determining whether to approve the recapitalization and related
merger, and in the process of determining that the recapitalization is 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.
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 did not assign relative weights to the specific
factors it considered in reaching its decision to approve the
recapitalization. In considering the factors described above, individual
directors may have given different weight to different factors. The board
of directors 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. Fedders 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 and shortly after the February 27, 2001 meeting, the
recapitalization agreement was signed. At the February 27, 2001 meeting,
the board of directors received an oral opinion which was later confirmed
in writing on ___________, 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."
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. Fedders has also
agreed to indemnify TM Capital against potential liabilities arising out of
its engagement.
At the request of Fedders' 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. 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
Suock 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 Fedders 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 current and proposed terms, control and voting rights of
the Class A, Common and Class B Stock.
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%.
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%.
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 the present 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%.
Current and Proposed Terms, Control and Voting Rights of Class A,
Common and Class B Shares. TM Capital analyzed the current and proposed
control and voting rights of each of the classes of stock. Under the
current capitalization, 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 current
capitalization, in the event of a 15% stake 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%
stake 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 Fedders' 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, Fedders' 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.
In the past, TM Capital has provided certain investment banking and
financial advisory services to Fedders and has received customary compensation.
Effect of the Recapitalization
Business and Operations; Officers and Directors. Fedders 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, Fedders
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 April 10, 2001, approximately 14,531,659 shares of
Common Stock, 14,909,349 shares of Class A Stock and 2,266,406 shares of
Class B Stock, or a total of approximately 31,708,008 shares, were
outstanding. Following the recapitalization, approximately 30,894,173
shares of new Fedders Common Stock and approximately 2,493,700 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.
Stockholder Vote
Under the terms of the certificate of incorporation, the proposed
amendment 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 a majority of the holders of Common Stock, Class A Stock
and Class B Stock approve the proposed amendment, 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.
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 0.7% of the aggregate
voting power of the Common Stock, 27.1% 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 14.1% 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 amendment but does not
require the vote of the holders of Class A Stock for 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 Salvatore
Giordano, the Chairman of the Board, Sal Giordano, Jr., the Vice Chairman
and Chief Executive Officer, and Joseph Giordano, a director of Fedders,
have in the recapitalization. These interests may be different than the
interests of other stockholders.
Effect on Voting Power.
The directors and executive officers of Fedders together control
101,036 shares of the Common Stock, or approximately 0.7% of the Common
Stock, 4,045,102 shares of Class A Stock, or approximately 27.1% of the
Class A Stock and 2,262,566 shares of the Class B Stock, or approximately
99.8% 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 14.1% 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 19.9% of the aggregate voting power.
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 61.1% 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 52.0% of the aggregate voting power.
Effect on Beneficial Interest.
The directors and executive officers currently beneficially own
approximately 2.5% of the Common Stock, 32.0% 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 16.7% of the new
Common Stock and 99.8% of the new Class B Stock. As of April 10, 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.
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 and address of
beneficial owner
Directors
- ---------
Salvatore Giordano 1,100(2) Less than 1% 1,340,759(4)(5) 9.0% 2,262,566(9) 99.8% 3,604,425 11.4%
Sal Giordano, Jr. 1,100(2) Less than 1% 1,881,442(4)(6) 12.6% 2,262,566(9) 99.8% 4,145,108 13.1%
William J. Brennan 5,000 Less than 1% 81,885 Less than 1% __ 0.0% 86,885 Less than 1%
David C. Chang __ 0.0% 9,908 Less than 1% __ 0.0% 9,908 Less than 1%
Michael L. Ducker __ 0.0% __ 0.0% __ 0.0% __ 0.0%
Joseph Giordano 13,910(2) Less than 1% 1,318,947(4)(7) 8.8% 2,262,566(9) 99.8% 3,595,423 11.3%
C.A. Keen __ 0.0% 113,951 Less than 1% __ 0.0% 113,951 Less than 1%
Howard S. Modlin 256,800(3) 1.8% 407,038 (8) 2.7% __ 0.0% 663,838 2.1%
S.A. Muscarnera 55,000 Less than 1% 189,602 1.3% __ 0.0% 244,602 Less than 1%
Anthony E. Puleo 2,000 Less than 1% 37,385 Less than 1% __ 0.0% 39,385 Less than 1%
Officers
- --------
Jordan Bruno __ 0.0% 5,000 Less than 1% __ 0.0% 5,000 Less than 1%
Nancy DiGiovanni __ 0.0% 7,005 Less than 1% __ 0.0% 7,005 Less than 1%
Robert N. Edwards __ 0.0% 15,000 Less than 1% __ 0.0% 15,000 Less than 1%
Daryl G. Erbs __ 0.0% 30,769 Less than 1% __ 0.0% 30,769 Less than 1%
Michael B. Etter __ 0.0% 10,000 Less than 1% __ 0.0% 10,000 Less than 1%
Michael Giordano __ 0.0% 70,088 Less than 1% __ 0.0% 70,088 Less than 1%
Sal Giordano III 100 Less than 1% 3,719 Less than 1% __ 0.0% 3,819 Less than 1%
Kent E. Hansen __ 0.0% 45,593 Less than 1% __ 0.0% 45,593 Less than 1%
Judy Katz 26 Less than 1% 7,474 Less than 1% __ 0.0% 7,500 Less than 1%
Robert L. Laurent,
Jr. 20,000 Less than 1% 442,419 3.0% __ 0.0% 464,419 1.5%
Joseph B. Noselli __ 0.0% __ 0.0% __ 0.0% __ 0.0%
Marlene M. Volpe 5,000 Less than 1% 35,296 Less than 1% __ 0.0% 40,296 Less than 1%
Total Officers and 357,836 2.5% 4,766,662 32.0% 2,262,566 99.8% 7,387,064 23.3%
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. Salvatore Giordano, Sal Giordano, Jr.
and Joseph Giordano are officers, directors and stockholders and
share voting and investment power over such shares.
(3) Shares owned by members of Mr. Modlin's family, as to which Mr.
Modlin disclaims beneficial ownership.
(4) Includes 643,309 shares which are held by corporations in which
Messrs. Salvatore Giordano, Sal Giordano, Jr. and Joseph Giordano
are officers, directors and stockholders, and share voting and
investment power over such shares.
(5) Includes 204,292 shares held of record by Mr. Giordano's wife, and
78,861 shares held of record by Mr. Giordano's wife in trust for
their grandchildren, as to which Mr. Giordano disclaims beneficial
ownership.
(6) Includes 18,119 shares held of record by Mr. Giordano's wife,
258,659 shares held of record by Mr. Giordano's wife in trust for
their grandchildren, as to which Mr. Giordano disclaims beneficial
ownership, and 71,630 shares held by Mr. Giordano in trust as
trustee for himself.
(7) Includes 71,630 shares held by Mr. Giordano in trust as trustee
for himself and 186,319 shares held by Mr. Giordano in trust for
his grandchildren.
(8) Includes 384,040 shares owned by members of Mr. Modlin's family,
as to which Mr. Modlin disclaims beneficial ownership.
(9) Shares are owned by Giordano Holding Corporation, as to which
Messrs. Salvatore Giordano, Sal Giordano, Jr. and Joseph Giordano
share voting and investment power.
If the recapitalization had occurred on April 10, 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 and address of
beneficial owner
Directors
- ---------
Salvatore Giordano 1,341,969(2)(4)(5) 4.3% 2,488,822(8) 99.8% 3,830,791 11.5%
Sal Giordano, Jr. 1,882,652(2)(4)(6) 6.1% 2,488,822(8) 99.8% 4,371,474 13.1%
William J. Brennan 87,385 Less than 1% __ 0.0% 87,385 Less than 1%
David C. Chang 9,908 Less than 1% __ 0.0% 9,908 Less than 1%
Michael L. Ducker __ 0.0% __ 0.0% __ 0.0%
Joseph Giordano 1,334,248(2)(4)(7) 4.3% 2,488,822(8) 99.8% 3,823,070 11.5%
C.A. Keen 113,951 Less than 1% __ 0.0% 113,951 Less than 1%
Howard S. Modlin 689,518(3) 2.2% __ 0.0% 689,518 2.1%
S.A. Muscarnera 250,102 Less than 1% __ 0.0% 250,102 Less than 1%
Anthony E. Puleo 39,585 Less than 1% __ 0.0% 39,585 Less than 1%
Officers
- --------
Jordan Bruno 5,000 Less than 1% __ 0.0% 5,000 Less than 1%
Nancy DiGiovanni 7,005 Less than 1% __ 0.0% 7,005 Less than 1%
Robert N. Edwards 15,000 Less than 1% __ 0.0% 15,000 Less than 1%
Daryl G. Erbs 30,769 Less than 1% __ 0.0% 30,769 Less than 1%
Michael B. Etter 10,000 Less than 1% __ 0.0% 10,000 Less than 1%
Michael Giordano 70,088 Less than 1% __ 0.0% 70,088 Less than 1%
Sal Giordano III 3,829 Less than 1% __ 0.0% 3,829 Less than 1%
Kent E. Hansen 45,593 Less than 1% __ 0.0% 45,593 Less than 1%
Judy Katz 7,502 Less than 1% __ 0.0% 7,502 Less than 1%
Robert L. Laurent, Jr. 464,419 1.5% __ 0.0% 476,419 1.4%
Joseph B. Noselli __ 0.0% __ 0.0% __ 0.0%
Marlene M. Volpe 40,796 Less than 1% __ 0.0% 40,796 Less than 1%
Total Officers and 5,160,281 16.7% 2,488,822 99.8% 7,649,103 22.9%
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 1,210 shares held by a corporation in
which Messrs. Salvatore Giordano, Sal Giordano, Jr. and Joseph
Giordano are officers, directors and stockholders and share voting
and investment power over such shares.
(3) Includes 666,520 shares owned by members of Mr. Modlin's family,
as to which Mr. Modlin disclaims beneficial ownership.
(4) Includes 643,309 shares held by corporations in which Messrs.
Salvatore Giordano, Sal Giordano, Jr. and Joseph Giordano are
officers, directors and stockholders, and share voting and
investment power over such shares.
(5) Includes 204,292 shares held of record by Mr. Giordano's wife, and
78,861 shares held of record by Mr. Giordano's wife in trust for
their grandchildren, as to which Mr. Giordano disclaims beneficial
ownership.
(6) Includes 18,119 shares held of record by Mr. Giordano's wife,
258,659 shares held of record by Mr. Giordano's wife in trust for
their grandchildren, as to which Mr. Giordano disclaims beneficial
ownership, and 71,630 shares held by Mr. Giordano in trust as
trustee for himself.
(7) Includes 71,630 shares held by Mr. Giordano in trust as trustee
for himself and 186,319 shares held by Mr. Giordano in trust for
his grandchildren.
(8) Shares owned by Giordano Holding Corporation, as to which Messrs.
Salvatore Giordano, Sal Giordano, Jr. and Joseph Giordano share
voting and investment power.
Directors
This section sets forth the names, addresses and principal
occupations of the members of the board of directors of Fedders. Only two
of the current ten members of the board of directors hold positions with
Fedders and the remaining seven individuals are independent non-employee
directors.
None of the individuals named in this section have been convicted
in a criminal proceeding during the past five years (excluding traffic
violations or similar misdemeanors) nor were any of such individuals 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.
Each of the individuals named below is a citizen of the United
States of America.
Salvatore Giordano, the Chairman of the Board, has been a director
of Fedders since 1945. Mr. Giordano has been associated with Fedders in an
executive capacity for more than five years. He is also currently Chairman
of the Executive Committee of Fedders.
Sal Giordano, Jr., the Vice Chairman and Chief Executive Officer
of Fedders, has been a director since 1965. Mr. Giordano 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. Mr. Giordano is the son of Salvatore
Giordano.
William J. Brennan has been a director since 1980. He 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. Mr.
Brennan is also currently the Chairman of the Audit Committee of Fedders.
David C. Chang has been a director since 1998. For the past five
years, Dr. Chang has been the President of Polytechnic University located
at Six Metrotech Center, Brooklyn, New York 11201. Prior to that, Dr. Chang
was the Dean of the College of Engineering and Applied Sciences at Arizona
State University. Dr. Chang is also currently a member of the Finance and
Nominating Committees of Fedders.
Michael L. Ducker has been a director since 2000. From 1999 to
present, Mr. Ducker has been Executive Vice President, International of
Federal Express Corporation located at 3610 Hacks Cross Road, Memphis,
Tennessee 38125. 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. Mr. Ducker
is a member of the Audit and Compensation Committees of Fedders.
Joseph Giordano has been a director since 1961. Mr. Giordano 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. Mr. Giordano is
currently a member of the Executive and Finance Committees. Mr. Giordano is
the son of Salvatore Giordano.
C.A. Keen has been a director since 1996. Mr. Keen 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.
Mr. Keen is currently a member of the Finance and Nominating Committees of
Fedders.
Howard S. Modlin has been a director since 1977. For the past five
years, Mr. Modlin has been the President of the law firm of Weisman, Celler
Spett & Modlin, P.C. located at 445 Park Avenue, New York, New York 10022.
His law firm renders legal services to Fedders from time to time. Mr.
Modlin is also a director of General DataComm Industries, Inc. and
Trans-Lux Corporation. Mr. Modlin is currently Chairman of the Compensation
Committee and a member of the Executive and Audit Committees of Fedders.
S.A. Muscarnera has been a director since 1982. Mr. Muscarnera 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. Mr.
Muscarnera served in various capacities with Fedders over 39 years,
including human resources and legal. Mr. Muscarnera is currently Chairman
ofthe Finance Committee and a member of the Audit Committee of Fedders.
Mr. Muscarnera is the nephew of Salvatore Giordano.
Anthony E. Puleo has been a director since 1994. For the past two
and one half years Mr. Puleo has been the President of Puleo Tree Co.
located at 3620 Kennedy Road, South Plainfield, New Jersey 07080. Puleo
Tree Co. is an importer of Christmas items. Prior to that Mr. Puleo was
President of Boulderwood Corporation. Mr. Puleo is currently a member of
the Compensation and Nominating Committees.
Officers
This section sets forth the names, addresses and positions of the
current executive officers of Fedders. The following discussion summarizes any
material occupations of the current executive officers of Fedders over the past
five years and family relations.
None of the individuals named below have been convicted in a criminal
proceeding during the past five years (excluding traffic violations or similar
misdemeanors) nor were any of such individuals 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.
Each of the individuals named below is a citizen of the United States
of America.
Salvatore Giordano has been the Chairman of the Board of Fedders for
more than five years.
Sal Giordano, Jr. has been the Vice Chairman and Chief Executive
Officer of Fedders for more than five years.
Jordan Bruno was elected Vice President, Taxes of Fedders in
December 2000. Previously, Mr. Bruno was an appointed officer of Fedders
from 1999 to December 2000 and prior thereto, Director of Taxes since 1995.
Mr. Bruno has been employed by Fedders since September 1991.
Nancy DiGiovanni was elected Treasurer of Fedders in October 1998.
Prior to her election, she served as Assistant Treasurer of Fedders since
1989.
Robert N. Edwards was elected Vice President and General Counsel
of Fedders in June 2000. Mr. Edwards has been General Counsel of Fedders
since 1995. Mr Edwards has been employed by Fedders since November 1992.
Daryl G. Erbs 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, Mr. Erbs worked for Carrier Corporation for many
years, serving in a variety of engineering management positions.
Michael B. Etter was elected President and Chief Operating Officer
in June 2000. Previously, Mr. Etter was Senior Vice President of Fedders
and Chairman and Chief Executive Officer of Fedders Air Conditioning since
May 1, 1999. Mr. Etter 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. Mr. Etter has
been employed by Fedders since May 1977.
Michael Giordano was elected Executive Vice President, Finance and
Administration and Chief Financial Officer in June 2000. Previously, Mr.
Giordano was Vice President, Finance and Chief Financial Officer of Fedders
since July 1, 1999. Mr. Giordano 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. Mr. Giordano has been employed by Fedders
since June 1990. Mr Giordano is a grandson of Salvatore Giordano.
Sal Giordano III was elected Group Vice President, Engineered
Products in December 1999. Mr. Giordano was a Vice President of Fedders
since August 1996 and President of Melcor Corporation from 1995. Mr.
Giordano has been employed by Fedders since February 1983. Mr. Giordano is
a grandson of Salvatore Giordano.
Kent E. Hansen was elected Executive Vice President and Secretary
in June 2000. Previously, Mr. Hansen was Senior Vice President and
Secretary from August 1996 and, prior thereto, Vice President, Finance and
General Counsel of NYCOR, Inc.
Judy A. Katz was elected Vice President, Strategic Planning in
June 2000. Previously, Ms. Katz held the position of Vice President,
Communications and Planning since August 1998 and, prior thereto, Director,
Strategic Support since September 1995. Ms. Katz has been employed by
Fedders since September 1990.
Robert L. Laurent, Jr. is the Executive Vice President,
Acquisitions and Alliances of Fedders since January 1999. From 1995 to
January 1999, Mr. Laurent was the Executive Vice President, Finance and
Administration and Chief Financial Officers of Fedders. Mr. Laurent has
been employed by Fedders since August 1980.
Joseph B. Noselli was elected Corporate Controller in June 2000.
Previously, Mr. Noselli was with Ingersoll-Rand Co. from 1980 to 2000, most
recently as Vice President and Controller of its production equipment
group.
Marlene M. Volpe was elected Vice President, Human Resources in
June 2000. Previously, Ms. Volpe was Vice President, Recruitment and
Leadership Development since 1995. She has been employed by Fedders since
October 1971.
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.
Certain Federal Income Tax Consequences of the Recapitalization
The following discussion summarizes certain 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 for general information only and 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.
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
pursuant to the recapitalization will be treated as having received such
fractional shares pursuant to 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.
THE RECAPITALIZATION
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. Fedders' 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 key 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 amendment to the
certificate of incorporation and 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.
Fedders 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 April 10, 2001, there were 14,531,659 shares of Common Stock
outstanding 14,909,349 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 the certificate of incorporation;
o Fedders receives the required stockholder approval for 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 Hart-Scott-Rodino
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 Hart-Scott- Rodino 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 April 10, 2001, no filings will be
required under the Hart-Scott-Rodino 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.
It is anticipated 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 your board of directors, in the best
interests of the stockholders or Fedders.
Under the terms of the certificate of incorporation, the proposed
amendment 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 amendment is approved, 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 both the proposed amendment and the recapitalization. As of
April 10, 2001, these directors and executive officers were entitled to vote
approximately: (i) 101,036 shares of Common Stock, representing approximately
0.7% of the voting power of the Common Stock; (ii) 4,045,102 shares of Class A
Stock, or approximately 27.1% 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) 2,363,602 shares of Common Stock and Class B Stock representing
approximately 14.1% 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;
o all amendments to all of the foregoing deemed appropriate by
the board of directors to effect 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.
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 combination 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 Fedders.
Filing/registration fees............................. $
NYSE listing fees....................................
Printing and engraving costs.........................
Legal fees and expenses..............................
Accounting fees and expenses.........................
Financial advisory fees and expenses.................
Depositary fees and expenses.........................
Proxy solicitation fees and expenses.................
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 ________, 2001, following the special
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 Hart-Scott-Rodino
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. The following summary of appraisal rights is
qualified by the full terms of Section 262. 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.
Giordano Holding Corporation holds approximately 99.8% of the
Class B Stock. Salvatore Giordano, Fedders' Chairman, Sal Giordano, Jr.,
Fedders' Vice Chairman and Chief Executive Officer, and Joseph Giordano, a
director of Fedders, collectively hold all of the voting power of Giordano
Holding Corporation. They have unanimously indicated their intention to
cause Giordano Holding Corporation not to exercise its statutory appraisal
rights.
Any Class B stockholders who are entitled to appraisal rights
must, in order to exercise such rights, demand and perfect such rights in
accordance with Section 262. 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 special 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 Fedders 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
505 Martinsville Road
Liberty Corner, New Jersey 07938-0813
Attn: Corporate Secretary
A written demand must reasonably inform Fedders 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, Fedders
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 agreements 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. Fedders, 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 1998, 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 1998:
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.......... 666,500 655,900 $3.50 to $4.9375 $ 3.4375 to $4.9375 $ 4.10 $ 3.70
Second Quarter......... 293,000 235,500 4.6755 to 4.9657 4.05 to 4.625 4.84 4.41
FINANCIAL STATEMENTS
Fedders' Annual Report on Form 10-K for the fiscal year ended
August 31, 2000 contains the Consolidated Balance Sheets of Fedders and its
subsidiaries at August 31, 2000 and 1999, 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, 2000, 1999 and
1998, the financial statement schedule, and the related notesthereto.
Fedders' Quarterly Report on Form 10-Q for the period ended November 30,
2000 contains the unaudited Consolidated Balance Sheets, Consolidated
Statements of Operations and Comprehensive Income, and Consolidated
Statements of Cash Flows for Fedders for the periods ended November 30,
2000 and 1999. 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 as of November 30, 2000 and
for the three months ended November 30, 2000 and for the fiscal year ended
August 31, 2000 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 Fedders 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. In addition,
the results for the three months ended November 30, 2000 are not
necessarily indicative of results that may be expected for the full year.
This information should be read together with Fedders' 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 November
30, 2000. The unaudited recapitalization data is derived from the unaudited
Consolidated Balance Sheet of Fedders as of November 30, 2000. Information
is presented to reflect pro forma adjustments for the recapitalization of
the Company's 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 unaudited
Consolidated Statements of Operations and Comprehensive Income for the
three months ended November 30, 2000 and the audited Consolidated
Statements of Operations and Comprehensive Income for the fiscal year ended
August 31, 2000. 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 November 30, 2000)
(dollars in thousands, except per share amounts)
As of Pro Forma
November 30, 2000 Adjustments As Adjusted
Stockholders' Equity:
Common Stock, $1.00 par value, 80,000,000
shares authorized; 16,135,459 shares
issued and 14,901,059 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; 37,581,720
shares issued and 31,450,209 outstanding, as
adjusted. - 376(a) 376
Class A Stock, $1.00 par value, 60,000,000
shares authorized; 19,832,715 shares issued
and 15,059,044 shares outstanding, actual; no
shares issued and outstanding, as adjusted. 19,833 (19,833)(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; 2,493,046 shares issued
and outstanding, as adjusted. - 25(b) 25
Paid-in capital 30,858 37,834(c) 68,692
Retained Earnings 61,065 - 61,065
Treasury Stock, at cost, 6,008,071 shares of
Common and Class A Stock, actual;
6,131,511 shares of new Common Stock, as
adjusted. (28,259) - (28,259)
Deferred Compensation (870) - (870)
Accumulated Comprehensive loss (1,705) - (1,705)
--------------- -------------- --------------
--------------- -------------- --------------
Total stockholders' equity $99,324 - $99,324
=============== ============== ==============
Notes to the Pro Forma Consolidated Condensed Unaudited Recapitalization Table
(a) Pro forma adjustments as of November 30, 2000 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, 37,581,720 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. 2,493,700 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
Three Months Ended Fiscal Year Ended
November 30, August 31,
2000 2000
---- ----
Net income (loss) (a):
As reported $(7,512) $20,401
Pro forma $(7,512) $20,401
Earnings (loss) per share (b):
Basic as reported $(0.23) $0.58
Basic pro forma $(0.22) $0.55
Diluted as reported $(0.23) $0.57
Diluted pro forma $(0.22) $0.55
Weighted average shares (c):
Basic as reported 32,865 35,325
Basic pro forma 34,619 37,176
Diluted as reported 32,865 35,490
Diluted pro forma 34,619 37,341
Cash dividends per share (d):
As reported:
Common and Class A $0.0300 $0.120
Class B 0.0270 0.108
Pro forma:
New Common and Class B 0.030 0.120
Notes to the Unaudited Pro Forma Condensed 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 set forth the ratio of earnings to fixed charges
for each of last two fiscal and most recent interim period.
Three
Year ended Year ended Months
August 31, August 31, ended November
2000 1999 30, 2000
--------------------------------------------------
Ratio of earnings to fixed charges 2.6x 3.6x (1.6x)
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, capital interest, amortization of debt issue costs and that
portion of rental expense representative of the interest factor.
THE RECAPITALIZATION AGREEMENT
The following is a summary of the material terms of the
recapitalization agreement and plan of merger, dated ____, 2001. 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 Fedders, as soon as reasonably practicable following the
special meeting of stockholders; unless another time or place is
established by Fedders.
Restated Certificate of Incorporation
If the recapitalization proposal is 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
following summary of the terms of the capital stock is not meant to be
complete. 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 A.
Fedders' 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 April 10, 2001, Fedders had
outstanding 14,531,659 shares of Common Stock, 14,909,349 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 fuods of Fedders are divided among and paid ratably to
the holders of the Common Suock 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 the proposed amendment to the certificate of
incorporation and prior to 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 more than 15% of the shares of Common Stock outstanding on
the record date are owned beneficially by a person or group
of persons acting in concert (other than the board of
directors of Fedders) provided such nomination is not made by
one or more of the holders of Class B Stock, acting in
concert with each other, who beneficially own more than 15%
of the shares of Class B Stock outstanding on such record
date; or
o a nomination for the board of directors is made by a person
or group of persons acting in concert (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. Fedders acts as the
transfer agent and registrar for the Class B Stock.
LEGAL MATTERS
Robert N. Edwards, the Vice President and General Counsel of Fedders,
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 year ended August 31, 2000
incorporated in this prospectus by reference from the Fedders' Annual Report on
Form 10-K for the fiscal year ended August 31, 2000 have been audited by
Deloitte & 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 have been audited by BDO Seidman, 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.
STOCKHOLDER PROPOSALS FOR 2001
If any stockholder desires to submit a proposal for action at the next
regular annual meeting, it must be received by Fedders Corporation, P.O. Box
813, Liberty Corner, New Jersey 07938 on or before July 25, 2001.
OTHER MATTERS
As of the date of this proxy statement/prospectus, Fedders' board of
directors knows of no matters that will be presented for consideration at the
special 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 450 Fifth Street, N.W., Washington, D.C. 20549.
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, 20
Broad Street, New York, NY 10005. Certain of such reports, statements and
other information filed by Fedders are also available on the Internet at
the SEC's World Wide Web site at http://www.sec.gov.
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 special 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, 2000
Quarterly Report on Form 10-Q Quarter ended November 30, 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
special 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: (908) 604-8686
Fedders Corporation
505 Martinsville Road Facsimile: (908) 604-8576
Liberty Corner, NJ 07938-0813
E-mail: khansen@fedders.com
If you would like to request documents from us, please do so by
____________, 2001 to receive them before the special 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 Fedders has been supplied by
Fedders.
FORWARD-LOOKING STATEMENTS
Statements included or incorporated by reference herein may
constitute "forward looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements involve a number
of risks, uncertainties, and other factors that could cause actual results
to differ materially from those stated, 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.
For more information as to various risks relevant to Fedders' business and
results of operations see Fedders' 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 , 2001
between
FEDDERS CORPORATION
and
FC MERGER SUB, INC.
RECAPITALIZATION AGREEMENT AND PLAN OF MERGER,
dated as of , 2001 (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, par value $1.00 per share (the "Common Stock"), of which
14,531,659 are outstanding, 60,000,000 shares of Class A Stock, par value
$1.00 per share (the "Class A Stock"), of which 14,909,349 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"); 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 [___________________] 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 book entry credits 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 book entry
credits 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) a
confirmation of book entry credit for 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) a confirmation of book entry
credit for 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 Sections 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 Special 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 seperately as a class.
(b) a proposal to adopt this Agreement has been approved by the
holders of the shares of Common Stock and and Class B Stock representing a
majority of the votes entitled to be cast thereon, voting together as a
single class.
(c) 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 govern mental 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;
(d) (i) all waiting periods under the Hart-Scott-Rodino 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;
(e) 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;
(f) 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
(g) 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
505 Martinsville Road
Liberty Corner, New Jersey 07938-0813
Telecopy: 908-604-07156
Attn: Kent E. Hansen
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, Kent E. Hansen, 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 "Corporation"), 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 Delaware.
(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 153,500,000, consisting of
130,000,000 shares of Common Stock having a par value of $0.01 per share,
8,500,000 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 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 corporation;
(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 Prentice-Hall Corporation
System, Inc., 229 South State Street in the City of Dover, County of Kent,
Delaware 19901.
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: __________________________
Kent E. Hansen
Executive Vice President and
Secretary
ANNEX B
FAIRNESS OPINION OF TM CAPITAL
April __, 2001
Board of Directors
Fedders Corporation
Westgate Corporate Center
505 Martinsville Road
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.
Michael S. Goldman
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 ss.ss. 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.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of Delaware or
DGCL empowers a Delaware corporation to indemnify any persons who are,
or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of such corporation), by reason of the fact that such person was
an officer or director of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent
of another corporation or enterprise. The indemnity may include
expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such
officer or director acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the corporation's best
interests, and, for criminal proceedings, had no reasonable cause to
believe his or her conduct was illegal. A Delaware corporation may
indemnify officers and directors against expenses (including attorneys'
fees) in connection with the defense or settlement of an action by or
in the right of the corporation under the same conditions, except that
no indemnification is permitted without judicial approval if the
officer or director is adjudged to be liable to the corporation. Where
an officer or director is successful on the merits or otherwise in the
defense of any action referred to above, the corporation must indemnify
him or her against the expenses which such officer or director actually
and reasonably incurred.
In accordance with the DGCL, the restated certificate of incorporation
of Fedders contains a provision to limit the personal liability of the
directors of Fedders for violations of their fiduciary duty. This
provision eliminates each director's liability to Fedders or its
stockholders for monetary damages except (i) for any breach of the
director's duty of loyalty to Fedders 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 DGCL providing for liability of directors for unlawful payment of
dividends or unlawful stock purchases or redemptions, or (iv) for any
transaction from which a director derived an improper personal benefit.
The effect of this provision is to eliminate the personal liability of
directors for monetary damages for actions involving a breach of their
fiduciary duty of care, including any such actions involving gross
negligence.
Fedders is insured for liabilities it may incur pursuant to its
restated certificate of incorporation relating to the indemnification
of its directors, officers and employees. In addition, directors,
officers and certain key employees are insured against certain losses
which may arise out of their employment and which are not recoverable
under the indemnification provisions of Fedders' restated certificate
of incorporation.
Item 21(a). Exhibits
See Exhibit Index
Item 22. Undertakings
(a) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters in addition to the information called for by the other items
of the applicable form.
(b) The registrant undertakes that every prospectus: (i) that is
filed pursuant to paragraph (a) immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the Securities Act
of 1933, and is used in connection with an offering of securities subject
to Rule 415, will be filed as a part of an amendment to the registration
statement and will not be used until such an amendment is effective, and
that, for purposes of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, the
registrant has been informed that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act
of 1933, and is, therefore, unenforceable. In the event that a claim or
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933, and will be
governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the
prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally or more prompt means. This
includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(e) The undersigned registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein, that was not
the subject of and included in the registration statement when it became
effective.
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 Registration Statement (No. 333-_____) to be signed on
its behalf by the undersigned, thereunto duly authorized, in Liberty
Corner, New Jersey, on the 12th day of April, 2001.
FEDDERS CORPORATION
By /s/ MICHAEL GIORDANO
----------------------
Michael Giordano
Executive Vice President,
Finance and Administration
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints each of Sal Giordano, Jr., Kent E. Hansen and Robert N. Edwards
his true and lawful attorneys-in-fact with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement as well as any new registration
statement filed to register additional securities pursuant to Rule 462(b)
under the Securities Act of 1933, as amended, and to cause the same to be
filed, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby granting to
said attorneys-in-fact and agent, full power and authority to do and
perform each and every act and thing whatsoever requisite or desirable to
be done in and about the premises, as fully to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and
confirming all acts and things that said attorneys-in-fact and agents, or
their substitutes or substitute, may lawfully do or cause to be done by
virtue hereof.
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/ SALVATORE GIORDANO Chairman of the Board April 12, 2001
- ---------------------
Salvatore Giordano
/s/ SAL GIORDANO, JR. Vice Chairman and Chief Executive April 12, 2001
- --------------------- Officer and a Director (Principal
Sal Giordano, Jr. Executive Officer)
s/ WILLIAM J. BRENNAN Director April 12, 2001
- ---------------------
William J. Brennan
/s/ DAVID C. CHANG Director April 12, 2001
- ---------------------
David C. Chang
s/ MICHAEL L. DUCKER Director April 12, 2001
- ---------------------
Michael L. Ducker
/s/ JOSEPH GIORDANO Director April 12, 2001
- ---------------------
Joseph Giordano
/s/ C.A. KEEN Director April 12, 2001
- ---------------------
C.A. Keen
/s/ HOWARD S. MODLIN Director April 12, 2001
- ---------------------
Howard S. Modlin
/s/ S.A. MUSCARNERA Director April 12, 2001
- ---------------------
S.A. Muscarnera
/s/ ANTHONY PULEO Director April 12, 2001
- ---------------------
Anthony Puleo
/s/ MICHAEL GIORDANO Executive Vice President, April 12, 2001
- --------------------- Finance and Administration
Michael Giordano (Principal Financial Officer)
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
Exhibit 2.1 Recapitalization Agreement and Plan of Merger, dated as
of _____________, 2001 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 Skadden, Arps, Slate, Meagher & Flom LLP, as
to the legality of the securities registered hereunder.
Exiibit 8.1* Opinion of Skadden, Arps, Slate, Meagher & Flom LLP,
regarding tax matters.
Exhibit 12.1* Statement regarding computation of ratios.
Exhibit 23.1+ Consent of Deloitte & Touche LLP
Exhibit 23.2* Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5)
Exhibit 23.3+ Consent of BDO Seidman LLP
Exhibit 24 Powers of Attorney (see Signature Page).
Exhibit 99.1* Form of Proxy.
* To be filed by amendment
+ Filed herewith