Exhibit 37
TERM SHEET
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Parties Pirelli S.p.A. ("PIRELLI"), Edizione Holding
S.p.A. ("EDIZIONE"), IntesaBCI S.p.A.
("INTESABCI"), Unicredito Italiano S.p.A.
("UNICREDITO ITALIANO") (jointly, the "PRESENT
OLIMPIA SHAREHOLDERS"), Olimpia S.p.A.
("OLIMPIA") and Xxxx S.p.A. ("HOPA"). It is
agreed that Parties shall be understood to mean
every party, even if acting through controlled
firms, trustees, or intermediaries.
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Structure of the Transaction It shall be executed as follows:
- Holy S.p.A., a firm in which Hopa holds 100%
control (the "CONTROLLED COMPANY"), as of the
effective date of the merger covered by a
subsequent point, shall own: (i) 163,558,339
million Olivetti 2001 - 2010 1.5% bonds
convertible to Olivetti shares, issued by
Olivetti (the "OLIVETTI BONDS") and 99,941,661
million Olivetti shares for a total book value
of 476,935,000 Euros, free of any encumbrances
of any type or nature; (ii) a 19.999% equity
stake in the capital stock of Holinvest, free of
any encumbrances of any type or nature, for a
total book value of 385.4 million Euros
(Holinvest shall have the characteristics
indicated infra); (iii) net cash of 98.8 million
Euros, plus any dividends for the 98,975,110
Olivetti shares possibly distributed by Olivetti
during the period between the Date of this
Agreement and the effective date of the merger
described hereinafter. The Controlled Company
shall therefore have a net worth of no less than
961,135,000 million [sic] Euros and shall have
no debt or liabilities.
- the Controlled Company shall be merged by
absorption into Olimpia; Olimpia's assets and
liabilities prior to the merger shall
substantially conform to those indicated in the
balance sheet in ATTACHMENT A, with the
exception of the impact of the normal passage of
time on the routine management of the company,
and they shall include the interest charges
accrued on the financial debt of Xxxxxxx
indicated in the statement of financial position
contained in Attachment A. It is anticipated
that the merger procedure shall be completed by
April 30, 2003 and that, due to the share
exchange rate, the equity stake in Olimpia held
by Hopa shall be 16% after the merger.
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Olimpia Shareholders Following the above-described transaction,
Olimpia should have the following shareholders:
Pirelli (50.40%), Edizione (16.80%), Hopa
(16.00%), Unicredito Italiano (8.40%), IntesaBCI
(8.40%).
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Holinvest S.p.A. Shareholders Following the above-described transaction,
Holinvest S.p.A. ("HOLINVEST") should have the
following shareholders: Hopa (80.001%), Olimpia
(19.999%).
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Suspensive Condition The validity and effectiveness of this agreement
(the "AGREEMENT") among the Parties covering the
entire transaction is conditional upon the fact
that no later than February 15, 2003 (a)
Holinvest, Hopa, Fingruppo Holding S.p.A., Banca
Monte dei Paschi di Siena S.p.A., Compagnia
Assicuratrice Unipol S.p.A., Banca Popolare di
Lodi S.c.a x.x. and other private parties, as
parties to a pool agreement regarding Hopa (the
"HOPA CONTROLLING COMPANIES"), will have sold
all the Olivetti S.p.A. ("OLIVETTI") shares
held, except as provided infra with respect to
the Hopa Controlling Companies, and it is agreed
that in any case all of the Olivetti shares held
by Xxxxxxx, the Present Olimpia Shareholders,
Hopa, Holinvest, the Controlled Company, the
other firms controlled by Hopa, and the Hopa
Controlling Companies may not exceed 30% of the
Olivetti capital stock with voting rights and
that (b) Holinvest will have company assets
consisting of 134,721,109 Olivetti Bonds,
163,558,339 1.5% Olimpia 2001-2007 bonds
redeemable as Olivetti shares/bonds ("XXXXXXX
XXXXX"), as well as other financial instruments,
including derivatives pertaining to Olivetti
shares, the value of which shall be indexed to
the value of 486,502,431 Olivetti shares (said
instruments, with the exception of Olivetti
shares, shall have the characteristics set forth
in ATTACHMENT B and shall be referred to
hereinafter as "OLIVETTI INSTRUMENTS"), and a
net worth (corrected for the contractual
Olivetti share value of 1.20 Euros) of no less
than 220,000,000.00 Euros, without prejudice to
the fact that Holinvest's debt/equity ratio
shall not exceed 1/1 (with the understanding
that for the purposes of calculating this ratio
under this Agreement, the book values determined
on the basis of Italian accounting principles
currently in effect shall be utilized, and must
also include financial obligations, even if not
entered on the accounting system, which are in
the nature of a debt but only a potential debt
such as, for example, forward contracts, put
options assigned to third parties, prepaid
swaps, etc.). Holinvest shall have a maximum
financial debt level (net after cash or liquid
credits considered to be cash equivalents and
interest charges accrued between the date of
this Agreement and the merger effective date and
maintaining unchanged the minimum adjusted
contractual Olivetti share value indicated
hereinabove) which must not exceed 721,750,000
Euros.
It is agreed that Hopa shall have the right to
hold Olivetti Instruments pertaining to a
maximum number of 40 million Olivetti shares and
the Hopa Controlling Companies shall have the
obligation to (i) promptly notify
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all the Parties of its current Olivetti share
holdings prior to signing the pertinent
contractual provisions which shall reflect the
content of the Agreement (in accordance with the
paragraph on "Other Agreements"; (ii) divest, by
February 15, 2003, every Olivetti share held in
excess of the 1 million Olivetti shares for each
of the Hopa Controlling Companies and (iii) by
February 15, 2003, amend, effective immediately
upon the signing of the contractual provisions
in question, the pool agreement regarding Hopa
that currently is binding upon them, so that any
of said companies holding for any reason and on
any basis Olivetti shares in excess of 1 million
units shall automatically result in
cancellation, on the basis of an express
cancellation clause in the pool agreement, with
respect to a party which is confirmed to have
holdings in excess of 1 million Olivetti shares.
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Olimpia Shareholder Agreements Hopa signs a shareholder agreement with the
Present Olimpia Shareholders, the subject of
which is reciprocal relationships as Olimpia
shareholders with respect to the provisions set
forth in this Agreement and, specifically:
(a) Xxxx shall have the right to appoint a
single Olimpia director, and the Present
Olimpia Shareholders obligate themselves
to do everything in their power so that
Hopa may appoint its designated director
at Olivetti, Telecom Italia S.p.A.
("TELECOM ITALIA"), Telecom Italia
Mobile S.p.A ("XXX"), Seat-Pagine Gialle
S.p.A. ("SEAT"). The first directors
designated are indicated in ATTACHMENT C
to the Agreement. In the event of the
replacement or the expiration of the
term of each director so designated by
Xxxx, Xxxx shall have the right to
appoint a successor with the consent of
Pirelli, which consent may not be
unreasonably denied;
(b) The director appointed by Xxxx shall
have the right to object and oppose,
without that impeding the determination
of the will of the governing body (but
thereby resulting in a deadlock
situation ("Deadlock") with a dispute
resolution mechanism similar to that
currently existing between Pirelli and
Edizione, and a provision for a
verification of a Deadlock situation by
an arbitration board which can be
initiated by the parties), in regard to
the following Reserved Matters: (A)
within the Olimpia Board of Directors:
(i) a recommendation with respect to a
vote at an Olivetti special shareholder
meeting; (ii) purchases, sales and acts
of disposition of any nature pertaining
to equity stakes with a value in excess
of 100,000,000 Euros per individual
transaction or for multiple transactions
carried out within the same calendar
year, without prejudice to the fact
that, should the ratio between internal
capital and third-party capital in
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the company (the debt/equity ratio under
this Agreement is defined in the
"SUSPENSIVE CONDITION" paragraph) be
more favorable than the ratio set forth
in point (iii) hereinafter, that limit
shall not apply in instances of the sale
by Olimpia of Olivetti shares or
Olivetti convertible bonds or equivalent
Olivetti financial instruments as long
as and provided that ratio, even after
such sales, is less than 1/1; (iii) the
determination of the ratio between the
Company's internal capital and third
party capital ("DEBT/EQUITY") (which in
any case must not exceed 1/1) and the
modalities, terms, and conditions for
the use of external sources of
financing; (iv) proposals for decisions
to be submitted to a Company special
shareholder meeting; (B) at an Olimpia
Special Shareholder Meeting: in relation
to any matter falling within its
authority and responsibility (provided
that it involves deciding against the
proposals referred to in point (iv)
hereinabove in regard to which there is
an agreement between Hopa and the
Present Olimpia Shareholders);
(c) in the event of a public purchase offer
for Olivetti shares, Hopa obligates
itself, in the event of a request by the
Present Olimpia Shareholders, to ensure
that its director does not oppose
Olimpia's agreement to the public
purchase offer;
(d) Hopa as well as its own controlled
firms, the Hopa Controlling Companies,
the Present Olimpia Shareholders, and
their respective controlling and/or
controlled firms (with the understanding
that in the instance of the Hopa
Controlling Companies the possible
holding of Olivetti shares in excess of
1 million units each shall result in
automatic cancellation, with respect to
the party causing the event, of the pool
agreement regarding Hopa, as previously
amended), obligate themselves not to
acquire Olivetti shares, with the
exception, in the instance of Pirelli,
of the exercise of rights existing prior
to the signing of the Agreement with
regard to the exercise of call options
and swap contracts whose purpose is to
acquire Olivetti shares and bonds
described in detail in Attachment D; and
also with the exception of the purchase
of Olivetti shares already allowed by
the current shareholder agreement
regarding Olimpia, UniCredito, and
Intesa BCI and the second amendment of
the agreement between the shareholders
of Pirelli and Edizione dated February
13, 2002; it is agreed that the purchase
of convertible bonds and/or warrants
that grant the right to subscribe to
convertible bonds and the exercise of
the resulting rights shall be allowed
only pursuant to consent by the other
party, which consent shall not be
unreasonably denied, with the exception,
however, of Xxxxxxxxx's freedom [to do
so], within the limits
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of the provisions of this term sheet;
(e) the Present Olimpia Shareholders
obligate themselves not to alter
Xxxxxxx's company purpose, to ensure
that Olimpia does not hold equity stakes
and financial investments other than the
Equity Stake in Olivetti (as defined and
described hereinafter), Olivetti Bonds
and Olivetti Instruments, and ensure
that Olimpia's debt/equity ratio does
not exceed 1/1, without prejudice to the
provisions of the "Accelerated Deadlock"
paragraph;
(f) Xxxx and the Present Olimpia
Shareholders obligate themselves to vote
to change to 83.5% the special
shareholder meeting decision-making
quorum provided by the bylaws;
(g) the Present Olimpia Shareholders shall
ensure that, on the occasion of the
partial spin-off of Olimpia (the
"SPIN-OFF", please see infra), Hopa
shall be allocated a proportional share
of Olimpia assets and liabilities as of
the dates indicated hereinafter: in the
event of a Deadlock, the date provided
by the "Deadlock Under Olimpia
Shareholder Agreements" paragraph set
forth hereinafter, or the expiration
date of the shareholder agreements as
provided by the "Expiration of
shareholder agreements regarding Olimpia
and Holinvest" paragraph hereinafter, or
in the event of an Accelerated Deadlock,
the date of the 3rd day following the
event that resulted in the Accelerated
Deadlock within the meaning of the
"Accelerated Deadlock" paragraph set
forth hereinafter (each of which dates
is a "RELEVANT DATE"). This is without
prejudice to the fact that (x) the
assets of the spin-off firm prior to the
Relevant Date must show (A)
alternatively, (i) in the absence of
Extraordinary Transactions (as defined
infra) an equity stake (in shares or
equivalent financial instruments) of no
less than 25% of the capital stock of
Olivetti; or (ii) the equity stake
consisting of Olivetti shares or
equivalent financial instruments
resulting from the exchange rate for
Olivetti shares resulting for any
possible merger or spin-off transactions
completed prior to the Relevant Date the
parties to which are Olivetti, on the
one hand, and one or more companies
directly or indirectly controlled by
Olivetti, on the other hand, without
prejudice to the fact that for the
purpose of calculating the Olimpia
equity stake in Olivetti result from the
aforementioned merger or spin-off
transactions, the relevant Olimpia
equity stake in Olivetti shall be
considered to be 25% of the capital
stock of Olivetti, even should that
equity stake in reality be greater
("EXTRAORDINARY TRANSACTIONS"; in both
instances set forth in (i) and (ii) said
equity stake in Olivetti shall be
referred to as the "EQUITY STAKE IN
OLIVETTI"); (B) 19.999% (or Olimpia's
different percentage equity stake in
Holinvest) of Holinvest or the
proportional share of Holinvest assets
and liabilities and
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that (Y), as of the Relevant Date, the
debt/equity ratio must not exceed 1/1;
(h) the Present Olimpia Shareholders
obligate themselves to ensure that
Olimpia does not sell or transfer its
own Equity Stake in Olivetti to parties
controlled by Olimpia or that are
members of groups in which the Present
Olimpia Shareholders are parent firms,
without prejudice to the provisions of
the "Accelerated Deadlock" paragraph;
(i) joint sale rights and obligations
pertaining to Hopa's equity stake in
Olimpia in favor of and binding upon
Xxxx, taking into account the provisions
of the "Accelerated Deadlock" paragraph;
(j) the provisions of the "Deadlock Under
Olimpia Shareholder Agreements,"
"Accelerated Deadlock," "Expiration of
Shareholder Agreements Regarding Olimpia
and Holinvest" and "Penalty" paragraphs
.
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Deadlock Under Olimpia
Shareholder Agreements In the event of a Deadlock at Olimpia caused by
a disagreement regarding the Reserved Matters
referred to in the paragraph under point (b)
hereinabove, that has occurred at any point in
time during the term of the agreement, beginning
with the thirty-sixth month following the
adoption of shareholder agreements ("INITIAL
TERM EXPIRATION"), Hopa shall have to right to
have Olimpia and the Present Olimpia
Shareholders adopt a decision for the Spin-off
within the cognizant corporate governing bodies
of Olimpia. In that event, Xxxxxxx and Xxxxxxxxx
shall decide upon, with the consent of all the
shareholders, which hereby obligate themselves
to so consent, the Spin-off and the partial
spin-off of Holinvest (the "HOLINVEST SPIN-OFF")
which shall allocate to Hopa and Olimpia,
respectively, a proportional share of the assets
and liabilities of Olimpia and Holinvest,
respectively, employing the most appropriate
procedures and technical methodologies, in order
to ensure that:
(i) Hopa is assigned a proportional share of the
Olimpia assets and liabilities existing as of
the Initial Term Expiration, without prejudice
to the fact that (a) the assets of the spin-off
firm prior to the aforementioned date must show
at least the Equity Stake in Olivetti, (b) the
number of shares or equivalent financial
instruments pertaining to Olivetti shares
resulting from the Extraordinary Transactions
that are to be allocated to Hopa on the occasion
of the Spin-off shall be equal to a percentage
of the Olivetti shares or equivalent financial
instruments owned by Olimpia representing Hopa's
percentage equity stake in Olimpia, (c), as of
the Initial Term Expiration, the debt/equity
ratio must not exceed 1/1, and (d) Hopa must
also be allocated 16% (or the different Hopa
percentage equity stake in Olimpia) of 19.999%
(or the different Olimpia percentage equity
stake in Holinvest) of Holinvest assets and
liabilities;
(ii) Hopa is paid, according to the terms and
modalities to be determined, an additional
amount of cash representing the equivalent value
of a premium of 0.60 Euros per
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Olivetti share or equivalent financial
instrument included in the proportional share of
the Equity Stake in Olivetti resulting from the
Spin-off, excluding in all instances the
Holinvest proportional share and the
proportional share of the Olivetti shares or
equivalent financial instruments underlying the
Holinvest shares allocated to Hopa under the
Spin-off;
(iii) Xxxxxxx is assigned a proportional share
of Holinvest assets and liabilities as of the
Initial Term Expiration, without prejudice to
the fact that (x) Holinvest's debt/equity ratio
as of said date may not exceed 1/1 and (y)
Holinvest assets as of that same date shall not
include financial instruments other than
Olivetti Bonds or other Olivetti Instruments.
Should the Deadlock situation be submitted for
verification by an arbitration board, which must
render a decision regarding whether Xxxx's
opposition or objection is in good faith,
Olimpia and the Present Olimpia Shareholders may
in no event delay the Spin-off procedures and
Hopa shall be paid in cash, according to terms
and modalities to be agreed, the premium
referred to in point (ii) hereinabove, at the
rate of 0.35 Euros per Olivetti share or
equivalent financial instrument included in the
proportional share of the Equity Stake in
Olivetti resulting from the Spin-off (excluding,
in all instances, the proportional share of
Holinvest and the proportional share of Olivetti
shares or equivalent financial instruments
underlying the Holinvest shares allocated to
Hopa under the Spin-off); the difference of 0.25
Euro (computed like the aforementioned 0.35 Euro
premium) shall be adjusted according to those
same terms and modalities should the arbitration
procedure result in a favorable outcome for
Hopa. In all instances, the Spin-off must be
completed in Xxxx's interest within 6 months
following the Initial Term Expiration, without
prejudice to the provisions of the "Penalty"
paragraph.
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Accelerated Deadlock Should any of the following events occur at any
time during the term of the Olimpia shareholder
agreement:
(a) a decision to merge Olimpia and/or
Olivetti with companies other than the
companies directly or indirectly
controlled;
(b) Olimpia ceases to hold an equity stake
in Olivetti that is at least equal to
the Equity Stake in Olivetti, including
as a result of the and/or contribution
of all or part of the Equity Stake in
Olivetti to companies that are members
of groups in which the Present Olimpia
Shareholders are members or parent
firms, or the sale, in part or in toto,
of the Equity Stake in Olivetti to third
parties for an in-kind consideration
(for example, through an exchange or
non-cash investment);
(c) the debt/equity ratio at Olimpia is
altered so
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as to exceed 1/1 and that ratio is not
restored within 45 days following the
date of the response that Xxxxxxx has
sent to Hopa within 5 days of each
request by the latter regarding the
ratio as of the date of the request;
(d) the Present Olimpia Shareholders decide
to contribute all or part of the equity
stake in Olimpia to companies belonging
to groups in which they are parent
firms;
(e) provisions are made for the sale, in
part or in toto, of the Present Olimpia
Shareholders' equity stake in Olimpia to
companies that are members of groups in
which they are the parent firms, for a
consideration that is less than the
market value of the Olimpia equity stake
in Olivetti plus 0.60 Euros per share or
equivalent financial instrument
pertaining to Olimpia's Olivetti shares,
without prejudice to the fact that Hopa
shall not be subject to a drag along
requirement. Nevertheless, the sale or
the contribution referred to in letter
(d) hereinabove by one of the Present
Olimpia Shareholders of its equity stake
in Olimpia to companies that are and
remain controlled by it within the
meaning of Article 2359, 1) of the Civil
Code, or, in the instance of Intesa BCI
and Unicredito Italiano, to companies
subject to the joint control of same
within the framework of the respective
bank group to which they belong for as
long as said membership in the group
should last, shall not constitute a
relevant event for the purposes of
Accelerated Deadlock, without prejudice
to the fact that in that event Hopa
shall not be subject to a drag along
requirement. Likewise, the sale of
IntesaBCI's and/or Unicredito Italiano's
equity stakes in Olimpia to Pirelli in
implementation of the Existing Agreement
(as defined and described infra), with
Pirelli succeeding to the obligations
vis-a-vis Hopa assumed by an individual
selling bank under the Agreement and the
contractual provisions that shall be
signed, as provided infra, by January
31, 2003, shall not constitute relevant
events;
(f) provisions are made for the sale, in
part or in toto, of the Present Olimpia
Shareholders' equity stake in Olimpia to
third parties for an in-kind
consideration (for example, through an
exchange or non-cash investment), should
the third party not assume vis-a-vis
Hopa the same obligations as the Present
Olimpia Shareholders under the Olimpia
shareholder agreements, without
prejudice to the fact that in that event
Hopa shall not be subject to the drag
along requirement.
In all such instances, Xxxx shall have the right
to have Xxxxxxx and the Present Olimpia
Shareholders adopt a decision for a Spin-off
within the cognizant Olimpia corporate governing
bodies as soon as possible, and said Spin-off
shall be carried out and completed within a
period of 6 months following the occurrence of
the event. The provisions of the "Deadlock under
Xxxxxxx Shareholder Agreements" paragraph shall
be applied to said Spin-off (with the
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exception of (x) the different initial term
expiration which, in the event of an Accelerated
Deadlock, shall be the date of the occurrence of
the relevant event (without prejudice to the
fact that the Parties shall ensure, with respect
to matters falling under their authority and
responsibility, that the effects of the relevant
event, in the above-indicated circumstances
other than a change in the debt/equity ratio set
forth in point (c) and the sale for a cash
payment provided by point (b), are made to be
such as not to harm or prejudice the Spin-off)
and with the exception of the date of the
determination of the proportional share of the
assets and liabilities, which shall not coincide
with the Initial Term Expiration, but with the
date of the 3rd day following the date on which
the relevant event occurred and (y) the
non-applicability of the dispute resolution
mechanism, because Accelerated Deadlock shall
enter into effect as a result of the mere
occurrence of any of the events provided
hereinabove) and Xxxx must proceed to decide
upon and implement within that same period of
time the Holinvest Spin-off as provided
hereinabove (likewise with the exception, as
provided supra, of a different initial term
expiration and a different Relevant Date).
As an exception to the foregoing, the premium
(calculated using the same modalities and
procedures provided in the event of a Deadlock)
due Hopa in the event that that provided in
point (b) hereinabove should occur, shall be
increased from 0.60 Euros to 0.70 Euros.
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Holinvest Shareholder
Agreements Olimpia signs a shareholder agreement with Hopa
covering their reciprocal relationships as
Holinvest shareholders, including the provisions
of this term sheet, and specifically:
(a) Xxxxxxx's right to designate a director
for election to the board;
(b) Hopa shall ensure that, should it
request the Spin-off in the instances
provided hereinabove, the Holinvest
Spin-off shall also be carried out (and
the Present Olimpia Shareholders shall
have the right to obtain same) and, on
that occasion, (see infra), Olimpia
shall receive a proportional share of
Olivetti Instruments owned by it as of
the Relevant Date, without prejudice to
the provisions of point (e) hereinafter
or, should an event occur that results
in a Deadlock or an Accelerated
Deadlock, as of the pertinent Relevant
Date, with the precondition that as of
said date Holinvest's debt/equity ratio
may not exceed 1/1;
(c) preemptive rights (structured similarly
to the preemptive right provided by the
Olimpia bylaws) and joint sale rights;
(d) lock-up obligation, for a 20-month
period following the effective date of
the agreement, binding upon Hopa with
respect to the equity stake it holds in
Holinvest;
(e) lock-up obligation, for a 20-month
period following the effective date of
the agreement, binding upon Holinvest
with respect to all the Olivetti
Instruments it owns, without prejudice
to Holinvest's right to
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freely dispose of Olivetti Instruments
throughout the term of the shareholder
agreements (without applying the
preemptive right referred to in point
(f) hereinafter), provided Holinvest
maintains throughout the lock-up period
ownership of a number of securities
representing no less than 65% and no
more than 125% of the securities
contained in Attachment (B), without
prejudice to the fact that the shares of
companies controlled directly or
indirectly by Olivetti may not exceed
10% of the assets of Holinvest from time
to time, without prejudice to the
provisions regarding the composition of
the assets of Holinvest in the event of
a Holinvest Spin-off;
(f) following the lock-up period provided by
point (e) hereinafter, in regard to
transactions involving sales of Olivetti
Instruments, Olivetti shall be allowed
to divest provided that Olimpia is
granted a preemptive right under equal
conditions. Such right may be exercised
by Xxxxxxx within a period of 48 hours
following receipt of the pertinent
communication;
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Holinvest Bylaws The provisions of the shareholder agreement
regarding preemption and joint sale shall also
be incorporated into the Holinvest bylaws.
Holinvest's company purpose shall be amended to
allow the company to operate as a holding
company and financial company whose sole purpose
is holding Olivetti shares, Olivetti convertible
bonds, derivative financial instruments
pertaining to Olivetti shares or shares in
companies directly or indirectly controlled by
Olivetti. The Parties each obligate themselves,
with respect to the matters falling within their
authority and responsibility, not to exercise
with respect to Hopa the drag-along right
provided by the bylaws, in all instances in
which such right is excluded under the
provisions of the "Accelerated Deadlock"
paragraph.
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Joint Sale of Holinvest and
Olimpia Equity Stakes Without prejudice to the provisions of the
"Accelerated Deadlock" paragraph hereinabove,
until such time as the Spin-off has taken place,
in the event of a reduction in Pirelli's equity
stake in Olimpia, including through a non-cash
investment in third parties and in the event of
a sale to third parties, including in several
tranches, Hopa/Holinvest shall have the right to
sell to the purchasing third party or to the
third party receiving a non-cash investment, at
their discretion and depending on the
circumstances: (A) should Pirelli, as a result
of such a reduction, whether in conjunction with
Unicredito and Intesa BCI (or not), retain a
total equity stake in the capital stock of
Olimpia in excess of 50% of the capital stock
plus one share: (i) a percentage share of its
own equity stake in Holinvest equal to the
percentage invested or sold by Pirelli in
relation to the 50.4% stake or (ii) a percentage
stake of Olivetti Instruments held by Holinvest
equal to the percentage invested or sold by
Pirelli in relation to the 50.4% stake; or (iii)
a
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percentage stake of its own equity stake in
Olimpia equal to the percentage invested or sold
by Pirelli in relation to the 50.4% stake; (B)
in any other instance, its entire equity stake
in Olimpia and/or its entire equity stake in
Holinvest; In the event Hopa exercises the
above-indicated rights, the transfers must be
completed, without prejudice to the provisions
specified infra, at a value equal to the Olimpia
share price or at a value equal to the Olivetti
share price or the price of the Olivetti
equivalent financial instrument utilized to
determine Olimpia's NAV. In the above-indicated
instances, the Present Olimpia Shareholders
shall have the obligation to execute the sale in
accordance with the above-specified terms at the
same value indicated hereinabove and Hopa,
should the joint sale right be exercised, shall
have the obligation to assure that sale.
------------------------------- ------------------------------------------------
Term of the Olimpia
Shareholder Agreement The Olimpia shareholder agreement shall have a
three-year term, unless there is an agreed
extension, where there has not been a notice of
termination communicated by one of the parties
within 3 months of the expiration date.
------------------------------- ------------------------------------------------
Term of the Holinvest
Shareholder Agreement The Holinvest shareholder agreement shall have a
three-year term, and shall have the same
expiration date as the Olimpia agreement.
Regardless of the absence of a renewal of the
Olimpia shareholder agreement and the Holinvest
shareholder agreement, upon the expiration of
the three-year term of said agreements, with the
exception of an instance of an Accelerated
Deadlock (in which case this paragraph shall not
apply), Hopa obligates itself and it obligates
itself to ensure that Holinvest grants to
Olimpia, by adopting the appropriate agreements,
effective on the date of the expiration of the
three-year term of the shareholder agreements in
question, a preemptive right with a two-year
term, covering the Olivetti Instruments owned by
Holinvest as well as a proportional share of the
equity stake in Olivetti allocated to Hopa under
the Spin-off, either directly or indirectly
(said Olivetti Instruments and said proportional
share shall be referred to in their entirety as
the "Post-Spin-off Equity Stake in Olivetti") as
of the expiration for said three-year term,
which [preemptive right] may be exercised by
Olimpia within 15 days following the pertinent
notice, solely in the circumstance that it
pertains to the sale of a percentage of the
Post-Spin-off Equity Stake in Olivetti such
that, as a result of said sale, Hopa and
Holinvest have total holdings of (i) 65% of the
proportional share of the equity stake in
Olivetti allocated from the Spin-off or (ii) 65%
of the Olivetti instruments owned by Holinvest
as of the Relevant Date, whichever is less.
------------------------------- ------------------------------------------------
Expiration of the Olimpia and
Holinvest Shareholder
Agreements Upon the expiration of the Olimpia and Holinvest
shareholder agreements (as possibly extended by
mutual
------------------------------- ------------------------------------------------
11
------------------------------- ------------------------------------------------
consent), Olimpia and Holinvest, as the case may
be, shall decide, with the consent of all the
shareholders, who hereby obligate themselves to
provide such consent, to carry out the Spin-off
as well as the Holinvest Spin-off which shall
allocate to Hopa and Olimpia, respectively, a
proportional share of the assets and liabilities
of Olimpia and Holinvest, respectively,
determined with reference to the expiration date
of the pertinent shareholder agreements, in
accordance with the most appropriate procedures
and technical methodologies, in order to ensure
that: (i) Hopa is allocated the proportional
share of Olimpia assets and liabilities, as
indicated hereinabove; (ii) Hopa is paid or
allocated, according to terms and procedures to
be agreed, cash equal to the equivalent value of
an Olivetti share premium equal to the pro forma
majority premium allocable to Olivetti shares or
equivalent financial instruments at Olimpia and
in any case no less than 0.35 Euros per share or
equivalent financial instrument included in
Olimpia's proportional share of Olivetti shares
or equivalent financial instruments to be
allocated to Hopa on the occasion of the
Spin-off, not including, in all instances, the
proportional share of Holinvest and the
proportional share of Olivetti shares or
equivalent financial instruments underlying the
Holinvest shares allocated to Hopa from the
Spin-off ("MAJORITY PREMIUM PER SHARE"); (iii)
Olimpia is to be allocated a proportional share
of Olivetti Instruments existing at Holinvest in
addition to any shares/bonds/warrants generated
by transactions in the Olivetti capital stock as
of the expiration date of the shareholder
agreements and a proportional share of the
Holinvest liabilities as of that same date,
consistent with a debt/equity ratio which may
not exceed 1/1 as of the Relevant Date and
without prejudice to Holinvest assets as of that
date, which shall not include anything but
Olivetti convertible bonds issued by Olivetti
and bonds convertible into Olivetti shares or
other financial instruments, including
derivatives, pertaining to Olivetti shares.
The Majority Premium per Share shall be jointly
determined by the parties to the Olimpia
shareholder agreement or, failing agreement by
even a single one of the latter, by two
investment banks of international standing, one
selected by the Present Olimpia Shareholders and
one selected by Xxxx, without prejudice to the
fact that the Majority Premium per Share shall
in any event be either 0.35 Euros as indicated
hereinabove or the premium determined by the
aforementioned investment banks, whichever is
greater.
In any event, the Spin-off must be completed in
Xxxx's interest within 6 months following the
expiration of the shareholder agreements,
without prejudice to the provisions of the
"Penalty" paragraph.
------------------------------- ------------------------------------------------
Provisions Applicable in the
Event of a Spin-off and
a Holinvest Spin-off In the event of a Spin-off and a Holinvest
Spin-off, the Parties shall observe and apply
the following principles. Within the framework
of a uniform plan:
------------------------------- ------------------------------------------------
12
------------------------------- ------------------------------------------------
(1) The Holinvest Spin-off must be carried out
and enter into effect prior to the effective
date of the Spin-off, and must allocate to a
beneficiary in which Xxxxxxx holds a 100%
interest a proportional share of Holinvest
assets and liabilities as provided hereinabove,
without prejudice to the possibility of the
alternative of a cash settlement, at the request
of Hopa, which is equal to the spread,
calculated at market prices, between the
difference between the assets and liabilities
that would have belonged to the beneficiary in
the event of a spin-off;
(2) Subsequently, and without interruption,
Xxxxxxx shall carry out the Spin-off, and
allocate to a beneficiary in which Hopa holds a
100% interest a proportional share of the
Olimpia assets and liabilities as provided
hereinabove, without prejudice to the
possibility of the alternative of a cash
settlement, at the request of the Present
Olimpia Shareholders, equal to the spread,
calculated at market prices, between the
difference between the assets and liabilities
that would have belonged to the beneficiary in
the event of a spin-off, plus the majority
premium applicable as agreed in this term sheet;
(3) simultaneously with or immediately after the
foregoing, in accordance with the terms and
procedures that shall be agreed, Hopa shall be
paid or allocated cash representing, as the case
may be, the majority premium applicable in the
event of a Deadlock or an Accelerated Deadlock
(and provided said premium has not already been
paid at the time of the cash settlement provided
hereinabove).
(4) the adoption of a spin-off agreement
covering the Spin-off shall be conditional upon
the adoption by Holinvest/Hopa of the agreements
regarding the granting of the preemptive rights
to Xxxxxxx provided in the "Term of the
Holinvest Shareholder Agreement" paragraph,
which in turn has the Suspensive condition of
the completion of the Spin-off.
------------------------------- ------------------------------------------------
Provisions Applicable in the
Event of Failure to Complete
the Holinvest and Xxxxxxx
Xxxx-offs within the
Established Time Frames.
Penalty. In the event of the failure to complete the
Spin-off (and provided that it is not a function
of the failure to complete the Holinvest
Spin-off) within a period of 6 months following
the pertinent request (in the instance of an
Accelerated Deadlock) or within a period of 6
months following the Initial Term Expiration (in
the instance of a Deadlock), or within a period
of 6 months following the expiration of the
Olimpia shareholder agreements (should a
Deadlock or an Accelerated Deadlock not be
declared by Xxxx), the Present Olimpia
Shareholders obligate themselves to pay Hopa
promptly total compensation of 0.70 Euros per
Olivetti share or equivalent financial
instrument owned by Olimpia to which Xxxx would
have been entitled under the Spin-off (according
to the provisions of the "Deadlock under the
Olimpia Shareholder Agreements" paragraph),
without prejudice to the fact that, should the
Spin-off be completed
------------------------------- ------------------------------------------------
13
------------------------------- ------------------------------------------------
within the next 6-month period (the "SECOND
PERIOD"), without prejudice to all the terms and
conditions and reference dates applicable to the
Spin-off as provided hereinabove and with the
payments provided hereinabove, said compensation
shall be returned by Hopa simultaneously with
the delivery of the securities to which Hopa is
entitled and the applicable premium plus accrued
interest at an annual rate of the 3 month
Euribor for the period between the time frame
within which the Spin-off should have been
completed and the Second Period.
During the Second Period, the compensation
payment shall be retained on a provisional basis
and shall become final upon the expiration of
said period of time, should the Spin-off not be
completed.
------------------------------- ------------------------------------------------
Other Agreements I- No later than January 31, 2003, the Parties
shall reflect the content of the Agreement in
the appropriate contractual provisions and shall
negotiate possible penalties in the event of
nonperformance, without prejudice to the
penalties provided hereinabove.
II- Pirelli, Edizione and Xxxx formally note and
acknowledge that the provisions of this
Agreement do not prevail over and in any event
do not prejudice the validity and effectiveness
of the agreements contained in the shareholder
agreement adopted on September 14, 2001 (amended
on September 26, 2001) by Pirelli, Unicredito
Italiano and Intesa BCI (the "EXISTING
AGREEMENT"). Specifically, the performance of
obligations or the exercise of the rights and
prerogatives provided for Unicredito Italiano
and/or Intesa BCI under the Existing Agreement
shall not in any way constitute nonperformance
with respect to this Agreement and/or the final
contractual provisions, nor shall they create
liability for Unicredito Italiano and/or Intesa
BCI.
------------------------------- ------------------------------------------------
LIST OF ATTACHMENTS - Attachment A: Olimpia Balance Sheet
- Attachment B: Olivetti Instruments
Characteristics
- Attachment C: First Designated Directors
- Attachment D: Allowed Transactions
------------------------------- ------------------------------------------------
Milan, December 19, 2002
Pirelli S.p.A. Edizione Holding S.p.A. IntesaBCI S.p.A.
---------------- ------------------ -------------------
Unicredito Italiano S.p.A. Xxxxxxx S.p.A Hopa S.p.A.
---------------- ------------------ -------------------
14
OLIMPIA S.P.A ATTACHMENT A
Head office of record - Xxxxx Xxxxx , 000, Xxxxx
Capital Stock of 1,562,596,150 Euros, fully paid-in
Tax Identification code, VAT file number, and
Milan Companies Registry No. 03232190961
R.E.A. No. 1659224
Figures stated in Euros
BALANCE SHEET
September 30, 2002
A S S E T S
A) CREDITS WITH SHAREHOLDERS FOR PAYMENTS DUE
------------------------------------
0
------------------------------------
B) FIXED ASSETS
------------------------------------
I) - INTANGIBLE 0
------------------------------------
------------------------------------
II) - TANGIBLE 0
------------------------------------
III) - FINANCIAL
Equity stakes in affiliated companies 7,989,930,645
Other securities 620,000,360
------------------------------------
8,609,931,005
------------------------------------
------------------------------------
------------------------------------
TOTAL FIXED ASSETS 8,609,931,005
====================================
C) WORKING CAPITAL
------------------------------------
I) - INVENTORY 0
------------------------------------
II) - CREDITS
With others due within 12 months 118,404
------------------------------------
118,404
------------------------------------
III) - FINANCIAL ASSETS THAT DO NOT
------------------------------------
CONSTITUTE CAPITALIZATIONS 0
------------------------------------
IV) - LIQUIDITIES
Bank and postal deposits 1,261,207
------------------------------------
1,261,207
------------------------------------
------------------------------------
TOTAL WORKING CAPITAL 1,379,611
====================================
D) ACCRUED INCOME AND PREPAID EXPENSES
Accrued income 15,054,866
Prepaid expenses 62,939,139
------------------------------------
TOTAL ACCRUED INCOME AND PREPAID EXPENSES 77,994,005
====================================
------------------------------------
T O T A L A S S E T S 8,689,304,621
====================================
OLIMPIA S.P.A ATTACHMENT A
Head office of record - Xxxxx Xxxxx , 000, Xxxxx
Capital Stock of 1,562,596,150 Euros, fully paid-in
Tax identification code, VAT file number, and
Milan Companies Registry No. 03232190961
R.E.A. n. 1659224
FIGURES STATED IN EUROS
L I A B I L I T I E S SEPTEMBER 30, 2002
A) CAPITAL AND RESERVES
I) - CAPITAL STOCK 1,562,596,150
II) - SHARE PREMIUM RESERVE 3,637,403,874
VIII) - PROFIT (LOSS) CARRIED FORWARD (31,371,787)
IX) - FISCAL YEAR PROFIT (LOSS) (132,949,165)
-------------------------------------
TOTAL CAPITAL AND RESERVES 5,035,679,072
-------------------------------------
-------------------------------------
B) RISK AND CHARGE RESERVES 0
-------------------------------------
C) EMPLOYEE SEVERANCE PAY
-------------------------------------
0
-------------------------------------
D) DEBT Bond indebtedness
a) convertible beyond the 12 month period 753,826,639
Debt with banks
a) due within 12 months 206,500,000
b) due beyond 12 months 2,574,684,449
Debt with suppliers
a) due within 12 months 140,872
Debt with controlling companies
a) due within 12 months 75,000
Tax indebtedness
a) due within 12 months 16,706
Other debt
a) due within 12 months 67,404
-------------------------------------
TOTAL DEBT 3,535,311,070
-------------------------------------
E) ACCRUED EXPENSES AND DEFERRED INCOME
Accrued expenses 118,314,479
-------------------------------------
TOTAL ACCRUED EXPENSES AND DEFERRED INCOME 118,314,479
=====================================
-------------------------------------
T O T A L L I A B I L I T I E S 8,689,304,621
=====================================
SUSPENSE ACCOUNTS
SECURITY:
- Pledging of securities 2,755,202,375
OTHER SUSPENSE ACCOUNTS
- Purchase of securities futures 360,653,768
-------------------------------------
TOTAL SUSPENSE ACCOUNTS 3,115,856,143
=====================================
ATTACHMENT (B) OLIVETTI INSTRUMENTS
- 134,721,109 1.5% Olivetti 2001-2010 convertible bonds
- 163,558,339 1.5% Olimpia 2001-2007 bonds
- 486,502,431 instruments indexed to the performance of Xxxxxxxx shares
issued by a leading financial institution, with the following
approximate characteristics:
- 5-year maturity;
- exclusive discretionary right of the issuer to pay for the
instrument at maturity by physical delivery of 486,502,431
Olivetti shares or the equivalent in cash, at the market price
at the time of maturity, of 486,502,431 Olivetti shares;
- in the event of a request for early payment of the instrument by
the bearer, the issuer shall pay only the cash equivalent, at
the market price at the time of the early redemption, of
486,502,431 Olivetti shares, except in very extraordinary
instances of low market liquidity (established in advance in the
terms of the financial instrument: in that event the issuer,
also at its sole and complete discretion, may deliver a mix of
cash and Olivetti shares);
- payment to the bearer of periodic interest equal to 85% of the
dividends for 486,502,431 Olivetti shares.
ATTACHMENT (C) FIRST DESIGNATED DIRECTORS
--------------------------------------- ------------------------------------
COMPANY DESIGNATED PERSON
--------------------------------------- ------------------------------------
Olimpia S.p.A. Xxxxxx Xxxxxx
--------------------------------------- ------------------------------------
Olivetti S.p.A. Xxxxxx Xxxxxxx
--------------------------------------- ------------------------------------
Telecom Italia S.p.A. Xxxxxxxx Xxxxxxxx
--------------------------------------- ------------------------------------
Telecom Italia Mobile S.p.A. Xxxxxxxx Xxxxxxxx
--------------------------------------- ------------------------------------
Seat-Pagine Gialle S.p.A. Xxxxxx Xxxxxxx
--------------------------------------- ------------------------------------
Attachment D
Derivatives Contracts on Olivetti Shares/Convertible Bonds
----------------------------------------------------------
1) Share Swap Transaction with XX Xxxxxx Xxxxx Bank covering 100,000,000
shares of Olivetti common stock or, in certain situations, a similar
number of Olivetti 1.5% 2001-2010 convertible bonds:
o effective date: February 8, 2001;
o reference price: 1.4213 Euros per share of Olivetti common
stock;
o maturity date: December 2006
o number of securities: 100,000,000;
o settlement: physical delivery of the securities or cash
settlement of the spreads
2) Call Option with XX Xxxxxx Xxxxx Bank on 100,000,000 shares of Olivetti
common stock or 100,000,000 Olivetti 1.5% 2001-2010 convertible bonds:
o effective date: November 7, 2001, amended on December 9, 2002
o strike price: 1 Euro per share of Olivetti common stock; 1 Euro
(plus any interest possibly accrued) for each Olivetti 1.5%
2001-2010 convertible bond;
o maturity date: 35 business days prior to October 5, 2007;
o settlement: physical delivery of the securities or cash
settlement of the spreads
3) Convertible Bond Asset-Swap with Credit Agricole Xxxxxx XX Bank on
200,000,000 Olivetti 1.5% 2001-2010 convertible bonds:
o effective date: November 14, 2001, amended on November 27, 2002
o strike price: 1 Euro
o maturity date: November 23, 2006
o settlement: physical delivery of the securities or cash
settlement of the spread
