ISSUE AND SUBSCRIPTION AGREEMENT
This issue and subscription agreement, made as of this 3rd day of April 2003 by
and between:
1. Fiat S.p.A., a company incorporated under the laws of Italy, with
corporate seat at Turin and registered office at Xxx Xxxxx 000, 00000
Xxxxx and Sicind S.p.A., a company incorporated under the laws of Italy,
with corporate seat at Turin and registered office at Xxxxx Xxxxxxxx 000
X, 00000 Xxxxx, together hereinafter called the "Subscriber"; and
2. CNH Global N.V., a company limited by shares, incorporated under the laws
of the Netherlands, with corporate seat at Amsterdam and registered office
at World Trade Centre Amsterdam Airport, Xxxxxxxx Xxxxxxxxx 000, 0000 XX
Xxxxxxxxx, hereinafter called the "Company";
WITNESSETH:
WHEREAS:
- with a resolution passed on March 31, 2003 and attached hereto as Annex A
(the "Resolution"), the Board of Directors of the Company has authorised
the issuance in a private placement (the "Private Placement") to the
Subscriber of 8,000,000 of the Company's convertible Series A preference
shares of par value Euro 2.25 per share at the issue price and with a
liquidation preference of U.S. $ 250.00 per share (the "Series A
Preference Shares") in consideration of the retirement of U.S.
$2,000,000,000 principal amount of short term and long term debt owed by
the Company to the Subscriber, the amounts, maturities and interest rates
of which have been negotiated and agreed as an arm's length transaction by
the Company's management with the Subscriber (the "Debt");
- the Board of Directors of the Company has determined the terms and
conditions of the issuance of the Series A Preference Shares as set forth
in the Resolution (the "Terms and Conditions");
- the Board of Directors of the Company has received from Standard & Poor's
Corporate Value Consulting an opinion dated March 31, 2003 that the
exchange of Debt for the Series A Preference Shares at the Terms and
Conditions determined by the Board of Directors of the Company (the
"Transaction") is fair, from a financial point of view, to the Company as
a related party transaction, in form and substance satisfactory to the
Board of Directors of the Company;
- in respect of the issuance of the Series A Preference Shares, the Board of
Directors of the Company has prepared a Description of Contribution, as
set forth in the Annex B attached hereto.
DO HEREBY AGREE AS FOLLOWS:
ISSUE AND SUBSCRIPTION
Article 1.
1.1 Subject to the Terms and Conditions and effective as of April 7, 2003
(the "Effective Date"), the Company hereby issues and the Subscriber
hereby subscribes to a first tranch of the Series A Preference
Shares, being 4,800,000 (four million eight hundred thousand) of the
Company's Series A preference shares of a par value of Euro 2.25 per
share at the issue price and with a liquidation preference per share
of U.S. $ 250.00, allocated to and subscribed to by each such
Subscriber in the manner set forth in Annex B hereto.
1.2 The Company undertakes to register the Series A Preference Shares
hereby issued in the Company's register of shareholders.
CONTRIBUTION
Article 2.
2.1 The Subscriber hereby contributes and assigns, effective as of the
Effective Date, to the Company receivables owed by the Company to the
Subscriber in the aggregate amount of U.S. $ 1,200,000,000, of which
U.S. $ 888,000,000 as specified in Annex B attached hereto is
assigned and contributed by Fiat S.p.A., and U.S. $ 312,000.000 as
specified in Annex B attached hereto is assigned and contributed by
Sicind S.p.A. (collectively the "Receivables").
2.2 The Company hereby, effective as of the Effective Date, accepts the
Receivables in full satisfaction of Subscriber's obligation to pay up
the Series A Preference Shares, which shares upon issuance in
exchange for the Receivables are fully paid and non-assessable.
2.3 The amount by which the amount of the Receivables exceeds the par
value of the Series A Preference Shares hereby issued shall be
carried to the
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Company's share premium reserve attributable to Series A preference
shares.
2.4 The parties undertake to co-operate in the completion of any
formalities under applicable law required to perfect the contribution
and assignment to the Company of the Receivables.
2.5 For the avoidance of doubt it is hereby explicitly agreed that the
Receivables will be extinguished by their contribution and assignment
to the Company and, to the extent required, the Company's obligation
to repay the Receivables is set off against the Subscriber's
obligation to pay up the Series A Preference Shares hereby issued.
GOVERNING LAW
Article 3.
3.1 This agreement shall be governed by and construed in accordance with
the laws of the Netherlands.
3.2 Any disputes arising out or in connection with this agreement shall
be submitted to the exclusive jurisdiction of the competent courts in
Amsterdam.
TRANSFERABILITY
Article 4.
4.1 The parties agree that, subject to applicable securities laws, the
Series A Preference Shares may be transferred by any Subscriber to
third parties at any time, and the Company agrees to execute (and
acknowledge, if requested) and deliver such additional documents and
instruments and to perform such additional acts as may be necessary
or appropriate to permit the transfer of any or all of the Series A
Preference Shares to third parties by any Subscriber.
4.2 Representations of the Company:
(i) Neither the Company, nor any of its Affiliates (as defined in
Rule 501(b) of Regulation D ("Regulation D") under the United States
Securities Act of 1933, as amended (the "Securities Act")), nor any
person acting on its or their behalf has made or will make, directly
or indirectly, offers or sales of any security, or solicited offers
to buy any security, under circumstances
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that would require the registration of the Securities under the
Securities Act.
(ii) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf has engaged or will engage in any form
of general solicitation or general advertising (within the meaning of
Regulation D) in connection with any offer or sale of the Securities
in the United States.
(iii) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(iv) The Company is not an "investment company" within the meaning of
the U.S. Investment Company Act of 1940 or a "passive foreign
investment company" within the meaning of Section 1297 of the U.S.
Internal Revenue Code of 1986.
ANNEXES
The attachment Annex A contains the Terms and Conditions of the Series A
Preference Shares
The attachment Annex B contains the description of the Receivables to be
exchanged for the Series A Preference Shares and the allocation thereof.
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IN WITNESS WHEREOF, this agreement has been signed and executed on the day first
above written.
Fiat S.p.A. Sicind S.p.A.
By: By:
/s/ Xxxxxxxxx Xxxxx /s/ Xxxxx Xxxx
--------------------------- ------------------------
Xxxxxxxxx Xxxxx Xxxxx Xxxx
Chief Financial Officer Director
CNH Global N.V.
By:
/s/ Paolo Monferino
---------------------------
Paolo Monferino
President and Chief Executive Officer
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ANNEX A
CNH GLOBAL N.V.
RESOLUTION OF THE BOARD OF DIRECTORS
The undersigned:
COVA, Xxxxx
XXXXX, Xxxxxxx
XXXXX, Xxxxxx X.
XXXXXX, Xxxxxxxxx X.
XXXXXX, Xxxxxxx
XXXXX, Ferruccio
MONFERINO, Paolo
MORCHIO, Xxxxxxxx
XXXXXX, Xxxxxxx X.
XXXXXX, Xxxxx X.X.
XXXXX, Xxxx-Xxxxxx Chairman
being all of the Directors of CNH GLOBAL N.V. (hereinafter the "Company")
WHEREAS
The Board of Directors of the Company has determined that it is in the best
interest of the Company to increase its issued and outstanding share capital
through the issuance in a private placement (the "Private Placement") to Fiat
S.p.A. and one or more affiliates of Fiat (together, the "Fiat Affiliates") of
up to 8,000,000 (eight million) of the Company's automatically convertible
Series A preference shares of par value Euro 2.25 per share (the "Series A
Preference Shares") in consideration of the retirement of U.S. $2,000,000,000
(two billion) face value principal amount of short term and long term debt (the
"Debt") owed by the Company to the Fiat Affiliates, the amounts, maturities and
interest rates of which have been negotiated and agreed by the Company's
management with the Fiat Affiliates (the "Transaction");
WHEREAS
The Extraordinary General Meeting of Shareholders of the Company, held in
Amsterdam on March 27, 2003 has adopted several amendments (the "Amendments") to
the Articles of Association of the Company (the "Articles of Association"),
including a new Article 3, paragraph 5, pursuant to which the Series A
Preference Shares are convertible into common shares subject to the rate of
conversion and the further terms and conditions the Board of Directors shall
determine;
WHEREAS
The Amendments will become effective on April 1, 2003 by the execution of the
notarial deed of amendment;
WHEREAS
The Board of Directors has received an opinion from a reputable independent
financial advisor that the Transaction is fair, from a financial point of view,
to the Company as a related party transaction (the "Fairness Opinion");
DO HEREBY RESOLVE
DETERMINATION OF TERMS AND CONDITIONS OF THE SERIES A PREFERENCE SHARES
o That the Series A Preference Shares consist of a total of 8,000,000 (eight
million) Series A preference shares, of par value Euro 2.25, which are
convertible into common shares of the Company, subject to the terms and
conditions hereinafter defined;
o That the issuance price (the "Issuance Price") and the liquidation
preference value (the "Liquidation Preference") of each Series A Preference
Share is U.S. $ 250 (two hundred and fifty) and that any amount in excess
of its par value of Euro 2.25 (as it will be determined by the Company's
independent auditors) is contributed to a share premium reserve relating to
the Series A Preference Shares;
o That the Series A Preference Shares are not redeemable and that they are
perpetual;
o That the dividends on the Series A Preference Shares are non-cumulative
and, if declared, are payable annually in arrears directly in cash not
later than four weeks after either the date of the Annual General Meeting
of the shareholders of the Company or such other date in which the
shareholders of the Company approve the common share dividend payable in a
financial year (corresponding to the calendar year, a "Financial Year")
with respect to the prior Financial Year ("Determination Date");
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o That the annual dividend rate is set at 0.0% upon issuance and for the
first two Financial Years (2003 and 2004) and that, with respect to the
Financial Year commencing on January 1, 2005 and thereafter, subject to the
Company being able to pay dividends out of the distributable reserves as
determined pursuant to Article 20 of the Articles of Association, the
dividend rate is reset on a cash basis as follows:
1. The dividend rate to calculate the dividend payable with respect to
each Financial Year up to, but not including, the Financial Year in
which the Company meets both of the financial performance measures
("Financial Performance Measures") described below, shall be equal to
the Prevailing Common Dividend Yield, as defined below, and shall be
applied against the Liquidation Preference; for the avoidance of
doubt, it is understood that if the Financial Performance Measures are
first met in 2006, the dividend rate to calculate the dividend payable
with respect to the 2005 Financial Year shall equal the Prevailing
Common Dividend Yield, even though such calculation and payment of the
applicable dividend shall be made in 2006;
2. The dividend rate to calculate the dividend payable with respect to
each Financial Year from and including the Financial Year in which the
Company first meets both of the Financial Performance Measures, shall
be equal, always subject to distributable reserves being available, to
the Prevailing Common Dividend Yield, plus 150 basis points (1.50%),
the sum of which shall be applied against the Liquidation Preference;
for the avoidance of doubt, it is understood that if the Financial
Performance Measures are first met in 2006, the dividend rate to
calculate the dividend payable with respect to 2006 Financial Year
(and each Financial Year thereafter) shall equal the Prevailing Common
Dividend Yield plus 150 basis points, although such calculation and
payment of the applicable dividend shall be made in 2007;
o That the Prevailing Common Dividend Yield is defined as follows:
1. For as long as the Company's common shares are listed on any
recognized securities exchange in the United States or the Netherlands
(a "Recognized Securities Exchange"), the Average Dividend Yield (as
defined below) of the common shares for the thirty Trading Days (as
defined below) up to and including the Determination Date; or
2. If the common shares are no longer listed on a Recognized Securities
Exchange, as the dividend yield of the common shares as determined in
good faith by the Board of Directors of the Company in consultation,
if it so wishes, with an independent financial advisor of its
election;
3
o That for purposes of calculating the Prevailing Common Dividend Yield
pursuant to point one above, the Average Dividend Yield of the common
shares shall mean the amount of dividend per share of the common shares
declared by the shareholders of the Company divided by the average of the
closing prices per share of the common shares on the Recognized Securities
Exchange on which the common shares are listed (which exchange as of the
date hereof is the New York Stock Exchange ("NYSE")) for each Trading Day
during the period of 30 consecutive Trading Days (as defined below) ending
on the Trading Day prior to the Determination Date (e.g., if the dividend
declared is 10 cents per share and the average of all of the closing prices
per share during the 30 Trading Day period is U.S. $5, the Average Dividend
Yield is 2%);
o That the Financial Performance Measures, to be determined by the Company's
independent auditors on a U.S. GAAP basis for the relevant Financial Year,
consist of two ratios, which both have to be achieved by the Company for
the dividend rate to be reset to 1.50% plus the Prevailing Common Dividend
Yield, as described above, and that the two ratios are:
1. Equipment Operations Total Debt/ Equipment Operations EBITDA < 2.5x
(is less than two and a half times);
2. Equipment Operations EBITDA / Equipment Operations Interest Expense
(excluding the Series A Preference Shares paid dividend) > 4.0x (is
greater than four times);
where each of the capitalized terms in paragraphs 1 and 2 above are
intended with the same definition as set forth in Schedule A-1 hereto;
o That each payment of annual dividends on the Series A Preference Shares may
be deferred by the Company for a period not exceeding five consecutive
annual periods (so that if, for example, the Company defers a dividend
otherwise payable not later than four weeks after the Determination Date in
2006 with respect to Financial Year 2005, such dividend may be paid at any
time until not later than four weeks after the Determination Date in 2011),
provided however that, as long as the payment of any dividends on the
Series A Preference Shares is being deferred, dividends on common shares
may not be paid and therefore will also be deferred for the same period;
o That for any Financial Year, other than 2003 and 2004, with respect to
which a dividend that would otherwise be payable on the Series A Preference
Shares is not declared by the Board and paid in accordance with the terms
hereof, no dividend may be declared by the Board and paid on the common
shares;
4
o That the Series A Preference Shares will automatically be converted into
common shares, at the conversion price of U.S. $ 20.00 per Series A
Preference Share (subject to the anti-dilution provisions set forth below)
(the "Conversion Price"), if the Market Price as defined below is greater
than the Contingent Conversion Price, which is defined (subject to the
anti-dilution provisions set forth below) as $ 24.00 at any time through
and including December 31, 2006 or $ 21.00 at any time on or after January
1, 2007 ("Contingent Conversion");
o That the Market Price is defined as follows:
1. for as long as the Company's common shares are listed on a Recognized
Securities Exchange, the average of the closing prices per share of
the common shares on such exchange (which exchange as of the date
hereof is the NYSE) for each Trading Day during a period of 30
consecutive Trading Days, as defined below, ending on the Trading Day
in which the Market Price becomes greater than the Contingent
Conversion Price; or,
2. if the common shares are no longer listed on a Recognized Securities
Exchange, the value of one common share as determined in good faith by
the Board of Directors of the Company in consultation, if it so
wishes, with an independent financial advisor of its election;
o That the effective date of the automatic conversion (the "Effective
Conversion Date") is, subject to Article 3, paragraph 7 of the Articles of
Association, the first Trading Day immediately following the Trading Day in
which the Market Price becomes greater than the Contingent Conversion
Price;
o That the Company shall, upon the Trading Day in which the Market Price
first exceeds the Contingent Provision Price, promptly inform the holders
of the Series A Preference Shares of the effective date of the resulting
Contingent Conversion;
o That a Trading Day is defined as any calendar day other than: (i) Saturday;
(ii) Sunday; and (iii) any other calendar day in which the Recognized
Securities Exchange on which the Company's common shares are listed is not
open for trading;
o That the rate of conversion of the Series A Preference Shares is 12.5 newly
issued common shares per Series A Preference Share, and an aggregate number
of 100,000,000 (one hundred million) common shares (both being subject to
adjustment in accordance with the anti-dilution provisions set forth below)
shall be newly issued at the time of conversion, pursuant to the procedure
set forth in Article 3, paragraphs 6 and 7, of the Articles of Association;
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o That the applicable conversion price ("Applicable Conversion Price") shall
be subject to adjustment from time to time, as follows:
1. In case at any time after the date hereof, the Company shall pay or
make a dividend or other distribution on its common shares or shall
make a dividend or other distribution on any other class of capital
stock of the Company which dividend or distribution includes common
shares (not being available on an equivalent basis to holders of the
Series A Preference Shares), the Applicable Conversion Price in effect
at the opening of business on the Trading Day following the date fixed
for the determination of stockholders entitled to receive such
dividend or other distribution shall be decreased by multiplying such
Applicable Conversion Price by a fraction of which the numerator shall
be the number of common shares outstanding at the close of business on
the date fixed for such determination and the denominator shall be the
sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such decrease to
become effective immediately after the opening of business on the
Trading Day following the date fixed for such determination. For the
purposes of this paragraph 1, the number of common shares at any time
outstanding shall not include shares held in the treasury of the
Company. If any dividend or distribution of the type described in this
paragraph 1 is declared but not so paid or made, the Applicable
Conversion Price shall again be adjusted to be the Applicable
Conversion Price which would then be in effect if such dividend or
distribution had not been declared;
2. In case at any time after the date hereof, the Company shall pay or
make a dividend or other distribution on all of its common shares
consisting of, or shall otherwise issue to all holders of its common
shares, rights, warrants or options (not being available on an
equivalent basis to holders of the Series A Preference Shares upon
conversion) entitling the holders of its common shares to subscribe
for or purchase common shares at a price per share less than the
current market price per share (determined as provided in paragraph 8
below) of the common shares on the date fixed for the determination of
stockholders entitled to receive such rights, warrants or options
(other than pursuant to a dividend reinvestment plan) or convertible
securities, the Applicable Conversion Price in effect at the opening
of business on the Trading Day following the date fixed for such
determination shall be decreased by multiplying such Applicable
Conversion Price by a fraction of which the numerator shall be the
number of common shares outstanding at the close of business on the
date fixed for such determination plus the number of common shares
which the aggregate of the offering price of the total number of
common shares so offered for subscription or purchase would purchase
at such current market price and the denominator shall be
6
the number of common shares outstanding at the close of business on
the date fixed for such determination plus the number of common shares
so offered for subscription or purchase, such decrease to become
effective immediately after the opening of business on the Trading Day
following the date fixed for such determination. For the purposes of
this paragraph 2, the number of common shares at any time outstanding
shall not include shares held in the treasury of the Company. The
Company is not capable of issuing any rights, warrants or options in
respect of common shares held in the treasury of the Company. In the
event that such rights, warrants or options are not so issued, or that
they expire unexercised, the Applicable Conversion Price shall again
be adjusted to be the Applicable Conversion Price which would then be
in effect if such date fixed for the determination of stockholders
entitled to receive such rights, warrants or options had not been
fixed. In determining whether any rights, warrants or options entitle
the holders to subscribe for common shares at less than such current
market price, and in determining the aggregate offering price of such
common shares, there shall be taken into account any consideration
received for such rights, warrants or options. The value of such
consideration, if other than cash, shall be determined in the
reasonable good faith judgment of the Board of Directors of the
Company, whose determination shall be conclusive;
3. In case at any time after the date hereof, all or any portion of the
common shares outstanding shall be subdivided into a greater number of
common shares, the Applicable Conversion Price in effect at the
opening of business on the Trading Day following the Trading Day upon
which such subdivision becomes effective shall be proportionately
reduced, and, conversely in case at any time after the date hereof,
all or any portion of the common shares outstanding shall each be
combined into a smaller number of common shares, the Applicable
Conversion Price in effect at the opening of business on the Trading
Day following the Trading Day upon which such combination becomes
effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately after
the opening of business on the Trading Day following the Trading Day
upon which such subdivision or combination becomes effective;
4. In case at any time after the date hereof, the Company shall, by
dividend or otherwise, distribute to all holders of its common shares
evidences of its indebtedness or assets (including securities, rights,
warrants or options, but excluding any rights, warrants, or options
referred to in paragraph 2 above) (not being available on an
equivalent basis to holders of the Series A Preference Shares),
entitling the holders of common shares to subscribe for or purchase
common shares at a price per share less than the current market price
(as determined in paragraph 8 below), any dividend or distribution
paid exclusively in cash, any dividend or distribution referred to in
paragraph 1 above and any dividend or distribution upon a merger or
consolidation
7
referred to in paragraph 5 below, the Applicable Conversion Price
shall be decreased so that the same shall equal the rate determined by
multiplying the Applicable Conversion Price in effect immediately
prior to the close of business on the date fixed for the determination
of stockholders entitled to receive such distribution by a fraction of
which the numerator shall be the current market price per share
(determined as provided in paragraph 8 below) of the common shares on
the date fixed for such determination less the then fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive) of the portion of the assets or evidence of indebtedness
so distributed applicable to one share of common shares and the
denominator shall be such current market price per share of the common
shares, such adjustment to become effective immediately prior to the
opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such distribution.
If any dividend or distribution of the type described in this
paragraph 4 is declared but not so paid or made, the Applicable
Conversion Price shall again be adjusted to the Applicable Conversion
Price which would then be in effect if such dividend or distribution
had not been declared;
5. In case at any time after the date hereof, the Company shall, by
dividend or otherwise, make a distribution to all holders of its
common shares consisting exclusively of cash (excluding any cash that
is distributed upon a Merger (as defined below) or as part of a
distribution referred to in paragraph 4 above) (not being available on
an equivalent basis to holders of the Series A Preference Shares) in
an aggregate amount that, combined together with (i) the aggregate
amount of any other distributions to all holders of its common shares
made exclusively in cash within the 12 months preceding the date of
payment of such distribution and in respect of which no adjustment
pursuant to this paragraph 5 has been made and (ii) the aggregate of
any cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive) of consideration
payable in respect of any tender offer by the Company or any of its
subsidiaries for all or any portion of the common shares concluded
within the 12 months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant to
paragraph 6 below has been made, exceeds 10% of the product of the
current market price per common share (determined in accordance with
paragraph 8, below) on the date for the determination of holders of
common shares entitled to receive such distribution times the number
of common shares outstanding on such date, then, and in each such
case, immediately after the close of business on such date for
determination, the Applicable Conversion Price shall be decreased so
that the same shall equal the rate determined by multiplying the
Applicable Conversion Price in effect immediately prior to the close
of business in the date fixed for determination of the stockholders
entitled to receive such distribution by a fraction (A) the numerator
of which shall be equal to the current market price per common
8
share (determined as provided in paragraph 8 below) on the date fixed
for such determination less an amount equal to the quotient of (x) the
excess of such combined amount over such 10% and (y) the number of
common shares outstanding on such date for determination and (B) the
denominator of which shall be equal to the current market price per
common share (determined as provided in paragraph 8 below) on such
date for determination. If any dividend or distribution of the type
described in this paragraph 5 is declared but not so paid or made, the
Applicable Conversion Price shall again be adjusted to the Applicable
Conversion Price which would then be in effect if such dividend or
distribution had not been declared;
6. In case a tender or exchange offer made by the Company or any
subsidiary for all or any portion of the common shares (not open to
holders of the Series A Preference Shares) shall expire and such
tender or exchange offer (as amended upon the expiration thereof)
shall require the payment to stockholders (based on the acceptance (up
to any maximum specified in the terms of the tender offer) of
Purchased Shares (as defined below)) of an aggregate consideration
having a fair market value (as determined by the Board of Directors,
whose determination shall be conclusive) that combined together with
(i) the aggregate of the cash plus the fair market value (as
determined by the Board of Directors, whose determination shall be
conclusive) as of the expiration of such tender or exchange offer, of
consideration payable in respect of any other tender or exchange
offer, by the Company or any subsidiary of the company for all or any
portion of the common shares expiring within the 12 months preceding
the expiration of such tender or exchange offer and in respect of
which no adjustment, pursuant to this paragraph 6 has been made and
(ii) the aggregate amount of any distributions to all holders of the
Company's common shares made exclusively in cash within 12 months
preceding the expiration of such tender or exchange offer and in
respect of which no adjustment pursuant to paragraph 5 above has been
made, exceeds 10% of the product of the current market price per share
of the common shares (determined as provided in paragraph 8 below) as
of the last time (the "Expiration Time") tenders or tenders could have
been made pursuant to such tender or exchange offer (as it may be
amended) times the number of common shares outstanding (including any
tendered or exchanged shares) on the Expiration Time, then, and in
each such case, immediately prior to the opening of business on the
day after the date of the Expiration Time, the Applicable Conversion
Price shall be decreased so that the same shall equal the rate
determined by multiplying the Applicable Conversion Price immediately
prior to the close of business on the date of the Expiration Time by a
fraction (A) the numerator of which shall be equal to (1) the product
of (x) the current market price per common share (determined as
provided in paragraph 8 below) on the date of the Expiration
9
Time and (y) the number of common shares outstanding (including any
tendered or exchanged shares) on the date of the Expiration Time less
(2) the amount of cash plus the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders
based on the acceptance (up to any maximum specified in the terms of
the tender offer) of Purchased Shares, and (B) the denominator of
which shall be equal to the product of (x) the current market price
per share of the common shares (determined as provided in paragraph 8
below) as of the Expiration Time and (y) the number of common shares
outstanding (including any tendered or exchanged shares) as of the
Expiration Time less the number of all shares validly tendered or
exchanged and not withdrawn as of the Expiration Time (the shares
deemed so accepted up to any such maximum, being referred to as the "
Purchased Shares"). In the event that the Company is obligated to
purchase shares pursuant to any such tender offer, but the Company is
permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Applicable
Conversion Price shall again be adjusted to be the Applicable
Conversion Price which would then be in effect if such tender offer
had not been made;
7. The reclassification of common shares into securities other than
common shares (other than any reclassification upon a Merger (as
defined below)) shall be deemed to involve (i) a distribution of such
securities other than common shares to all holders of common shares
(and the effective date of such reclassification shall be deemed to be
"the date fixed for the determination of stockholders entitled to
receive such distribution" and "the date fixed for such determination"
within the meaning of paragraph 2 above) and (ii) a subdivision or
combination, as the case may be, of the number of common shares
outstanding immediately prior to such reclassification into the number
of common shares outstanding immediately thereafter (and the effective
date of such reclassification shall be deemed to be "the day upon
which such subdivision becomes effective," as the case may be, and
"the day upon which such subdivision or combination becomes
effective," within the meaning of the paragraph 3 above);
8. For the purpose of any computation under paragraphs 2, 4, 5, or 6
above, the current market price per common share on any date shall be
deemed to be the average of the daily closing prices per share for the
five consecutive Trading Days immediately preceding the earlier of the
Trading Day in question and the Trading Day before the "ex date" with
respect to the issuance or distribution requiring such computation.
For purposes of this paragraph, the term "ex date," when used with
respect to any issuance or distribution, means the first date on which
the common shares trades regular way on the applicable securities
exchange or in the applicable securities market without the right to
receive such issuance or distribution;
9. The Company may make such reductions in the Applicable Conversion
Price, in addition to those required by paragraphs 1, 2, 3, 4, 5, 6
and 7 above, as it
10
considers to be advisable to avoid or diminish any income tax to
holders of common shares or rights to purchase common shares resulting
from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes;
10. Notwithstanding the foregoing paragraphs 1-9, no adjustment to the
Applicable Conversion Price shall reduce the Applicable Conversion
Price below the then par value per share of the common shares, and any
such purported adjustment shall instead reduce the Applicable
Conversion Price to such par value. The Company hereby covenants not
to take any action (following the one-for-five reverse stock split
authorized by the amendment to the Articles of Association that will
become effective on April 1, 2003): (1) to increase the par value per
share of the common shares unless a proportionate adjustment is made
to the Series A Preference Shares; or (2) that would or does result in
any adjustment in the Applicable Conversion Price that would cause the
Applicable Conversion Price to be less than the then par value per
share of the common shares;
11. Notwithstanding the foregoing paragraphs 1-9, no adjustment in the
Applicable Conversion Price need be made until all cumulative
adjustments amount to 1% or more of the Applicable Conversion Price as
last adjusted. Any adjustments that are not made shall be carried
forward and taken into account in any subsequent adjustment;
12. Whenever the Applicable Conversion Price is adjusted as herein
provided:
o the Company shall compute the adjusted conversion price and shall
prepare a certificate signed by an officer of the Company setting
forth the adjusted Applicable Conversion Price and showing in
reasonable detail the facts upon which such adjustment is based,
and such certificate shall be deposited with the office of the
Trade Register where the Company has its seat; and
o a notice stating that the Applicable Conversion Price has been
adjusted and setting forth the adjusted Applicable Conversion
Price shall as soon as practicable be mailed by the Company to
all registered holders of the Series A Preference Shares at their
last addresses as they shall appear upon the register of
shareholders of the Company;
13. In any case in which an adjustment described above shall become
effective immediately after a record date for an event, the Company
may defer until the occurrence of such event (x) issuing to the holder
of any Series A Preference Shares converted after such record date and
before the occurrence of such event the additional common shares
issuable
11
upon such conversion by reason of the adjustment required by such
event over and above the common shares issuable upon such conversion
before giving effect to such adjustment and (y) paying to such holder
any amount in cash in lieu of any fractional share as described below;
14. In any instance in which an Applicable Conversion Price is adjusted
pursuant to paragraphs 1 through 9, the same adjustment that is made
to such Applicable Conversion Price shall be made to the applicable
Market Price, and notice of such adjustment to the Market Price shall
be included in the notice described in paragraph 12 above;
o That as the Company is not capable of issuing fractional shares
upon conversion of Series A Preference Shares, it shall instead
pay a cash adjustment based upon the Market Price of the common
shares on the Trading Day immediately preceding the date of
conversion;
o That in the event that the Company shall be a party to any
transaction, including without limitation any (i)
recapitalization or reclassification of the common shares (other
than a change in par value, or as a result of a subdivision or
combination of the common shares), (ii) any merger of the Company
into, any other entity, any merger of another entity into the
Company (other than a merger which does not result in a
reclassification, conversion, exchange or cancellation of
outstanding common shares of the Company), (iii) any sale or
transfer of all or substantially all of the assets of the Company
or (iv) any compulsory share exchange, pursuant to which the
common shares are converted into any other class of capital stock
((i) through (iv) together, a "Merger"), then lawful provision
shall be made as part of the terms of such transaction whereby
the holder of each Series A Preference Share then outstanding
shall have the right thereafter to convert such share into the
kind and amount of securities, cash and other property receivable
upon such Merger by a holder of the number of common shares into
which such Series A Preference Share might have been converted
immediately prior to such Merger;
o That notwithstanding the foregoing provisions, the issuance of
any common shares of the Company pursuant to any plan providing
for the reinvestment of dividends or interest payable on
securities of the Company and the investment of dividends or
interest payable on securities of the Company and the investment
of additional optional amounts in common shares under any such
plan and the issuance of any common shares or options or rights
to purchase such shares pursuant to any employee benefit plan or
program of the Company, including but not limited to the
Company's 401(k) Plan, or pursuant to any option, warrant, right
or exercisable, exchangeable or convertible security outstanding
as of the issue date of the Series A Preference Shares, shall not
be deemed to constitute an issuance of common shares or
securities exercisable, exchangeable or convertible into common
shares by the Company to which any of the adjustment provisions
described above applies so long as the size or extent of
12
the plan or plans are customary for plans of the same type relating to
corporations similar to the Company;
o That if any action would require adjustment of the Conversion Price
pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of
adjustment which has the greatest absolute value;
o That with respect to the payment of dividends and amounts payable upon
liquidation, the Series A Preference Shares will rank as follows:
1. Subordinate to all senior and subordinated indebtedness of the
Company; and
2. Senior to the common shares;
o That the Company shall not, without the affirmative vote or consent of
the holders of a majority of the Series A Preference Shares then
outstanding:
1. Authorize, create (by way of reclassification or otherwise) or
issue any other class of capital stock or series of preference
shares the terms of which expressly provide that such class or
series will rank senior to or on a parity with the Series A
Preference Shares as to dividend distributions and distributions
upon the liquidation, winding-up and dissolution of the Company,
or any obligation or security convertible into or evidencing the
right to purchase any such class of capital stock or series of
preference shares; or
2. Amend or otherwise alter the Articles of Association, in any
manner that adversely affects the rights, privileges and
preferences of the Series A Preference Shares described herein or
therein;
o That each Series A Preference Share is entitled to one vote on all
matters submitted to the Company's shareholders as required by Dutch
law;
o That the Series A Preference Shares may be listed on any recognized
securities exchange, if so required for any reason favorable to the
Company or to the holders;
o That the Series A Preference Shares and the underlying common shares
(as defined below) are going to be registrable with the U.S.
Securities and Exchange Commission (the "SEC") upon written demand
addressed by the holder/s from time to time thereof to the Company and
that therefore the Company will enter into a Registration Rights
Agreement with the
subscriber/s of the Series A Preference Shares concurrently with the
closing of the Transaction;
13
o That the Series A Preference Shares will be fully and freely
transferable by their holder/s in compliance with Article 10 of the
Articles of Association, subject to applicable securities laws;
ISSUANCE OF SERIES A PREFERENCE SHARES AND OF THE UNDERLYING COMMON SHARES
o That, the Board of Directors having received the Fairness Opinion and
being satisfied therewith and subject to the Amendments becoming
effective, the Company is hereby authorized to issue up to 8,000,000
(eight million) Series A Preference Shares at the Issuance Price and
Liquidation Preference of U.S. $ 250 per Series A Preference Share, in
exchange for the retirement of short term and long term debt in the
total face value principal amount of U.S. $2,000,000,000 (two billion)
owed by the Company to the Fiat Affiliates (the "Debt"), and that when
so issued, all such Series A Preference Shares shall be duly and
validly issued, fully paid and nonassessable shares;
o That the right of preference of existing shareholders is hereby
excluded in respect of the issuance of the Series A Preference Shares
and the underlying common shares (as defined below);
o That the Company is hereby authorized to issue as many underlying
common shares as are to be issued upon automatic conversion of the
Series A Preference Shares pursuant to a Contingent Conversion and
according to the procedure set forth in Article 3, paragraph 6, of the
Articles of Association of the Company ("Underlying Common Shares")
and that the conversion date of the Series A Preference Shares shall,
subject to Article 3.7 of the Articles of Association, take place on
the Effective Date;
o That the Company is hereby authorized to enter into a Registration
Rights Agreement with the Fiat Affiliates whereby the holder/s of the
Series A Preference Shares will be entitled (subject to the terms and
conditions set forth therein) to request the Company, at the Company's
expense, to file four registration statements with respect to the
Series A Preference Shares and the Underlying Common Shares with the
SEC, and that pursuant to such Registration Rights Agreement the
Company is hereby authorized to execute and file with the Commission
the above said registration statements (the "Registration Statements")
relating to the registration of the Series A
14
Preference Shares and the Underlying Common Shares under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), through the
Directors or Officers of the Company, in the name and on behalf of the
Company, together with such exhibits thereto and other documents, as
may be necessary or advisable for the purpose of registering the
Series A Preference Shares and the Underlying Common Shares under the
Securities Act and any amendments thereto and with such changes,
additions or deletions as may be approved by the Directors or Officers
executing the same, the execution and filing thereof to have been
conclusive evidence of such approval;
o That each Officer and Director that may be required to sign and
execute the Registration Statements or any and all amendments thereto
(including post-effective amendments) or documents in connection
therewith (whether for or on behalf of the Company, or as an Officer
or Director of the Company, or otherwise) be, and hereby is,
authorized to execute a power of attorney appointing the then
Chairman, Chief Executive Officer, Chief Financial Officer, Company
Secretary, Assistant Company Secretary, General Counsel and Senior
Counsel Corporate Governance, individually and severally, his or her
attorneys-in-fact, each with power of substitution, in their names and
in their capacities as Directors and/or Officers of the Company, to
sign the Registration Statements, any and all amendments (including
post-effective amendments) and supplements thereto and documents in
connection therewith, any registration statement relating to the
Series A Preference Shares and the Underlying Common Shares that is to
be effective upon filing pursuant to Rule 462(b) or otherwise under
other applicable rules under the Securities Act and any related
acceleration requests and to file the same, with exhibits thereto and
other documents in connection therewith, with the SEC, each of said
attorneys to have power to act with or without the other, and to have
full power and authority to perform, in the name of and on behalf of
each of said Officers and Directors who shall have executed such a
power of attorney, every act whatsoever which such attorneys, or any
of them, may deem necessary, appropriate or advisable to be done in
connection therewith as fully for all intents and purposes as such
Officers or Directors could do in person;
o That upon conversion of the Series A Preference Shares into Underlying
Common Shares and upon the issuance thereof in accordance with the
procedure provided for in Article 3, paragraphs 5, 6, 7, 8 and 9 of
the Articles of Association of the Company, such Underlying Common
Shares shall be duly and validly issued, fully paid and nonassessable
shares;
o That the consideration to be received by the Company for the par value
of the Series A Preference Shares and, upon conversion, of the
Underlying Common Shares, shall constitute stated capital and shall be
credited to the Company's
15
stated capital account and the remainder shall be considered share
premium and carried to the Company's share premium reserve relating
respectively to the Series A Preference Shares and, upon conversion,
to the Company's common shares;
o That each Director, the Chief Financial Officer, the Secretary, the
Assistant Secretary, the General Counsel and the Senior Counsel
Corporate Governance of the Company be, and each of them hereby is,
individually and severally, authorized and directed, in the name and
on behalf of the Company to execute certificates evidencing the Series
A Preference Shares and at the appropriate time, the Underlying Common
Shares, deliver such certificates to the Transfer Agent and Registrar
for the Company's shares for its countersignature, if required, and to
deliver respectively the certificates evidencing the Series A
Preference Shares to the subscribers against the retirement of the
Debt as provided for in the Issue and Subscription Agreement between
the Company and the Fiat Affiliates, and the certificates evidencing
the Underlying Common Shares to the then current holders, and the
signature of such Directors and Officers may, but need not, be a
facsimile signature imprinted or otherwise reproduced thereon;
o That the Company reserve such number of Underlying Common Shares (as
may be adjusted from time to time pursuant to the anti-dilution
provisions set forth above) of its authorized but unissued shares as
may be required for issuance;
o That Xxxxxxx Xxxxxx, Senior Vice President, General Counsel and
Secretary of the Company and Xxxx Xxxxxxx, Senior Counsel Corporate
Governance and Assistant Secretary of the Company be, and hereby are,
individually and severally, appointed as agent for service of process
of the Company in connection with the Registration Statements and any
and all amendments (including without limitation, post-effective
amendments) and supplements thereto, with all powers incident to such
appointment;
LISTING
o That the Officers of the Company be, and each of them hereby is,
authorized to execute and cause to be filed a listing application and
any amendments thereto for the listing of the Series A Preference
Shares and of the Underlying Common Shares on any recognized
securities exchange where the Company's other shares are listed or the
Company believes it appropriate;
o That the Officers of the Company be, and each of them hereby is,
authorized to appear before the officials or any committee or other
similar body of the NYSE or of any other recognized securities
exchange to execute such papers
15
and agreements (including, without limitation of the foregoing, the
listing agreement), to make such changes in and to execute such
amendments to said listing application, to pay such fees to the NYSE
or to such other stock exchange such Officer shall deem necessary or
advisable to effect such listing and to do or cause to be done all
such acts or things in the name and on behalf of the Company as such
Officer may deem necessary, advisable or appropriate in order to
effect the listing of the Series A Preference Shares and the
Underlying Common Shares;
"BLUE SKY" AUTHORIZATION
o That it is desirable and in the best interests of the Company that the
Series A Preference Shares and the Underlying Common Shares be
qualified or registered for sale under the securities or "blue sky"
laws of the various states of the United States; that any Officer of
the Company is authorized to determine the states in which appropriate
action shall be taken to qualify or register for sale all or such part
of the Series A Preference Shares and the Underlying Common Shares as
said Officers may deem advisable; that said Officers are authorized to
perform on behalf of the Company any and all such acts as they may
deem necessary or advisable in order to comply with the applicable
laws of any such state and in connection therewith to execute and file
all requisite papers and documents, including, but not limited to,
applications, reports, surety bonds, irrevocable consents and
appointments of attorneys for service of process; and the execution by
such Officers of any such paper or document or the doing by them of
any act in connection with the foregoing matters shall conclusively
establish their authority therefor from the Company and the approval
and ratification by the Company of the papers or documents so executed
and the action so taken;
o That the Officers of the Company are authorized and directed to pay
any and all expenses and fees arising in connection with the issuance
of the Series A Preference Shares and the Underlying Common Shares,
the registration of such securities under the securities or "blue sky"
laws of the various states and jurisdictions of the United States or
otherwise in connection with the offer and sale of such securities,
including, without limitation, the reasonable fees and disbursements
of the Company's counsel and accountants, filing fees of the SEC and
the filing and examination fees under state securities laws, and such
other fees and expenses as may be reasonably incurred by the Company
for the registration, approval and issuance of the Series A Preference
Shares and the Underlying Common Shares under various "blue sky" laws,
and such other fees and expenses as may be reasonably incurred by the
Company for the registration, approval and sale of the Series A
Preference Shares and the
00
Xxxxxxxxxx Xxxxxx Shares pursuant to any applicable Registration
Statement;
DOCUMENTATION
o That the Issue and Subscription Agreement and the Registration Rights
Agreement, as executed and delivered on behalf of the Company, and any
other documents, agreements or certificates as the Fiat Affiliates may
reasonably request (hereinafter referred to as the "Closing
Agreements") may be entered into with such parties as may be necessary
by Xxxx-Xxxxxx Xxxxx, Paolo Monferino, Xxxxxx Xxxxxxx and Xxxxxxx
Xxxxxx (each, an "Authorized Officer"), which Closing Agreements shall
provide for the issuance of the Series A Preference Shares and the
retirement of the Debt, as well as the granting of registration rights
upon demand by the holders from time to time of the Series A
Preference Shares and the Underlying Common Shares;
o That each Authorized Officer is hereby authorized to execute and
deliver the Closing Agreements for and on behalf of the Company, with
such changes therein as shall be approved by such Authorized Officer
executing the same, his approval to be evidenced conclusively by his
execution and delivery thereof, and that each of the Authorized
Officers is hereby authorized and directed to take all steps he deems
necessary or proper for the purposes of carrying out the Company's
obligations under the Closing Agreements;
o That each Authorized Officer is hereby authorized and directed to
cause to be issued on behalf of the Company the number of Series A
Preference Shares to the Fiat Affiliates in exchange for the
retirement of the Debt in accordance with the terms of the Issue and
Subscription Agreement;
o That when certificates for the Series A Preference Shares shall have
been issued, recorded, countersigned, and registered as provided in
this resolution, each Authorized Officer is authorized, empowered and
directed, for and in the name and on behalf of the Company, to (i)
deliver said certificates to the Fiat Affiliates pursuant to and in
accordance with the Issue and Subscription Agreement and (ii)
otherwise to execute and deliver such documents and do such other acts
as any such Officer may deem necessary or desirable to perform and
carry out the obligations of the Company under the Issue and
Subscription Agreement;
GENERAL AUTHORITY
o That the Officers of the Company are hereby authorized to take all
such actions as they or any of them shall deem necessary or advisable
to proceed with the Transaction and the issuance of the Series A
Preference Shares including,
18
but not limited to, the making of any and all payments, the making and
execution of any necessary or advisable instruments, certificates,
affidavits, or other documents in connection therewith, the signing or
endorsement of any checks, the posting of any bonds, and the payment
of any fees in such connection, and from time to time to take any and
all action to make, execute, verify and file all applications,
certificates, documents, or other instruments and to take such other
actions as any one or more of them shall deem necessary or advisable
or appropriate to carry out the intent and purpose of any and all of
the foregoing resolutions; and
o That all actions taken and things heretofore done by or on behalf of
the Company by any of its Officers, whether or not specifically
authorized, in connection with the Transaction and the issuance of the
Series A Preference Shares be, and they hereby are, in all respects
ratified and approved.
19
Executed this 31th day of March, 2003.
----------------------- --------------------------
XXXXX XXXX PAOLO MONFERINO
----------------------- --------------------------
XXXXXXX XXXXX XXXXXXXX XXXXXXX
----------------------- --------------------------
XXXXXX X. XXXXX XXXXXXX X. XXXXXX
----------------------- --------------------------
XXXXXXXXX X. XXXXXX XXXXX X.X. XXXXXX
----------------------- --------------------------
XXXXXXX XXXXXX XXXX-XXXXXX XXXXX
-----------------------
XXXXXXXXX XXXXX
20
Schedule A-1
DEFINITIONS
As used in the CNH Global N.V. Resolution of the Board of Directors, dated March
31, 2003, setting forth the terms of the Series A Preference Shares, the
following terms shall have the meanings for the relevant financial period as set
forth below:
"Equipment Operations Total Debt" shall mean debt of the Company's Equipment
Operations excluding (i) intersegment notes receivables and (ii) cash and cash
equivalents.
"Equipment Operations EBITDA" shall mean net income of the Company's Equipment
Operations excluding (i) net interest expense, (ii) income tax provision
(benefit), (iii) depreciation and amortization and (v) restructuring costs.
"Equipment Operations Interest Expense" shall mean interest expense of the
Company's Equipment Operations, inclusive of wholesale interest compensation to
the Company's Financial Services segment, less intersegment notes receivables
and finance and interest income.
The foregoing measures and all components thereof shall be calculated in
accordance with U.S. generally accepted accounting principles ("GAAP").
ANNEX B
1st Closing (3rd April 2003 - value 7th April 2003)
$/(euro)Exchange rate 1.07020
of which FIAT SpA (74%) of which SICIND SpA (26%)
-----------------------------------------------------------------------------------------------------------------------------------
Loan Principal Loan Principal Interest Current Loan Principal Loan Principal Loan Principal Loan Principal
US$ Equivalent Rate Maturity US$ Equivalent US$ Equivalent
(%)
-----------------------------------------------------------------------------------------------------------------------------------
$600,000,000.00 $600,000,000.00 7.8125 2/Oct/05 $444,000,000.00 $444,000,000.00 $156,000,000.00 $156,000,000.00
-----------------------------------------------------------------------------------------------------------------------------------
$100,000,000.00 $100,000,000.00 7.9225 5/Oct/04 $74,000,000.00 $74,000,000.00 $26,000,000.00 $26,000,000.00
-----------------------------------------------------------------------------------------------------------------------------------
$100,000,000.00 $100,000,000.00 4.6875 25/Nov/03 $74,000,000.00 $74,000,000.00 $26,000,000.00 $26,000,000.00
-----------------------------------------------------------------------------------------------------------------------------------
$200,000,000.00 $200,000,000.00 4.6875 13/Nov/03 $148,000,000.00 $148,000,000.00 $52,000,000.00 $52,000,000.00
-----------------------------------------------------------------------------------------------------------------------------------
$199,120,000.00 $199,120,000.00 3.95 14/Oct/03 $147,348,800.00 $147,348,800.00 $51,771,200.00 $51,771,200.00
-----------------------------------------------------------------------------------------------------------------------------------
(euro)822,276.21 $880,000.00 3.593 8/Apr/03 (euro)608,484.40 $651,200.00 (euro) 213,791.81 $228,800.00
-----------------------------------------------------------------------------------------------------------------------------------
total USD $1,200,000,000.00 total USD $ 888,000,000.00 total USD $312,000,000.00
----------------------------------------------- --------------------------------- ---------------------------------
equal to EUR (euro) 1,121,285,740 equal to EUR(euro) 829,751,448.33 equal to EUR (euro) 291,534,292.65
----------------------------------------------- --------------------------------- ---------------------------------
N. of Shares 4,800,000 N. of Shares 3,552,000 N. of Shares 1,248,000
----------------------------------------------- --------------------------------- ---------------------------------
