[HSBC LOGO]
Date: 13th June 2006
To: Edizione Holding Spa
Calmaggiore 00
00000 Xxxxxxx
Xxxxx
Attn: Xx. Xxxxxx Xxxx
Fax: 00 00 0000 000000
Cc: Xx. Xxxxx Xxxxxxxx
Fax: 00 00 0000 000000
From: HSBC Bank Plc, London
Our Reference: 15/365/DER/ST TTT 2.15EP 9636242 - 67477417
Confirmation of OTC Equity Share Option Transaction (Physical Settlement)
Dear Sir
The purpose of this letter agreement (this "Confirmation") is to confirm the
terms and conditions of the Transaction entered into between us on the Trade
Date specified below (the "Transaction"). This Confirmation constitutes a
"Confirmation" as referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (the "Equity Definitions") as published by the International Swaps
and Derivatives Association Inc. are incorporated into this Confirmation. In
the event of any inconsistency between the Equity Definitions and this
Confirmation, this Confirmation will govern.
1. This Confirmation evidences a complete binding agreement between you ("Party
B") and us ("Party A") as to the terms of the Transaction to which this
Confirmation relates. "ISDA Form" means a 1992 ISDA Master Agreement
(Multicurrency-Cross Border) as published by ISDA but without a Schedule. You
and we agree that this Confirmation, together with all other documents referring
to the ISDA Form (each a "Confirmation") confirming transactions (each a
"Transaction") entered into between us (notwithstanding anything to the contrary
in a Confirmation), shall form a single agreement and shall supplement, form a
part of, and be subject to the provisions of Sections 1 to 14 inclusive of the
ISDA Form (together the "Agreement") as if we had executed an ISDA Master
Agreement in such form (but without any Schedule) on the Trade Date of the first
such Transaction between us. All provisions contained or incorporated by
reference in the Agreement shall govern this Confirmation except as expressly
modified below. The following elections (a) to (g) of this Section 1 of this
Confirmation shall apply to this Transaction:
(a) "Market Quotation" and "Second Method" as defined in the ISDA Form
in respect of the provisions relating to Event of Default and Termination
Events pursuant to Section 5 thereof and the right to terminate following
Events of Default and Payments on Early Termination pursuant to Section 6
thereof;
(b) "Cross Default": Not Applicable;
(c) "Threshold Amount": Not Applicable;
(d) The "Credit Event Upon Merger" provisions of Section 5 (b) (iv) of
the ISDA Form will apply to both parties;
(e) The "Automatic Early Termination" provisions of Section 6 (a) of the
ISDA Form will not apply to both parties;
(f) The ISDA Form and this Confirmation will be governed by and
construed in accordance with English law; and
(g) In the event of any inconsistency between the 2002 ISDA Equity
Derivatives Definitions (the "Equity Definitions") and the provisions
contained in the ISDA Form, the provisions contained in the ISDA Form will
prevail and, in the event of any conflict between the provisions of the
ISDA Form or the Equity Definitions and this Confirmation, the provisions
of this Confirmation will prevail for the purpose of this Transaction.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
General Terms:
Trade Date: 9th June 2006
Trade Time: Available on request
Option Style: European
Option Type: Put
Seller: Party B
Buyer: Party A
Shares: Telecom Italia SpA (ISIN: IT003497168)
Number of Options: 10,000,000
and subsequently increased to
20,000,000 on the 12th June 2006
Option Entitlement: 1 Share(s) per Option
Strike Price: EUR 2.15
Premium: EUR 0.00 (Premium per option: EUR 0.00)
Premium Payment Date:
Exchange: Milan Stock Exchange
Related Exchange: All Exchanges
Procedure for Exercise:
Expiration Time: At the close of trading on the Exchange
Expiration Date: 15th December 2006
Multiple Exercise: Not Applicable
Automatic Exercise: Not Applicable
Procedure for Exercise: No later than 5 Currency Business Days
before the Expiration Date Party B can
elect either Physical or Cash Settlement.
For the avoidance of doubt if this
election is not made the settlement
method shall be Physical Settlement
Telephone or Facsimile
Number and Contact Details for
Purpose of Giving Notice: HSBC Bank Plc, London
Tel: 00 00 00 0000 0000
Fax: 00 00 00 0000 0000
Valuation:
Averaging: Applicable
Averaging Dates: The three Exchange Business Days before
and including the Expiration Date.
Relevant Price: The "prezzo ufficiale" which means the
price as published by the Exchange at the
close of trading having the meaning
ascribed thereto in the Rules of the
Markets organised and managed by the
Italian Stock Exchange.
Settlement Terms (in respect of Cash Settlement):
Cash Settlement: Applicable
Settlement Currency: EUR
Cash Settlement Payment Date: In respect of each Exercise Date, 3
Currency Business Days after the relevant
Valuation Date
Settlement Terms (in respect of Physical Settlement):
Physical Settlement: Applicable
Settlement Currency: EUR
Adjustments:
Method of Adjustment: Calculation Agent Adjustment
Extraordinary Events:
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation
(b) Share-for-Other: Modified Calculation Agent Adjustment
(c) Share-for-Combined: Modified Calculation Agent Adjustment
Tender Offer: Applicable
Consequences of Tender Offers:
(a) Share-for-Share: Modified Calculation Agent Adjustment
(b) Share-for-Other: Modified Calculation Agent Adjustment
(c) Share-for-Combined: Modified Calculation Agent Adjustment
Composition of Combined Consideration: Inapplicable
Nationalisation or Insolvency or
Delisting: Cancellation and Payment
Additional Disruption Events
Change in Law: Applicable
Failure to Deliver: Applicable
Insolvency Filing: Not Applicable
Hedging Disruption: Not Applicable
Increased Cost of Hedging: Not Applicable
Loss of Stock Borrow: Not Applicable
Increased cost of Stock Borrow: Not Applicable
Non Reliance: Applicable
Agreements and Acknowledgements
Regarding Hedging Activities: Applicable
Additional Acknowledgements: Applicable
3. Calculation Agent: Party A or any successor Calculation
Agent appointed by Party A. Party B may
challenge any determination or
calculation by the Calculation Agent
within three Exchange Business Days
following the receipt by Party B of such
determination or calculation. If the
parties are unable to agree on a
particular determination or
calculation, a mutually acceptable third
party (the "Substitute Calculation
Agent") will be appointed within 24 hours
following the challenge by Party B to
make a determination as to the disputed
matter. If either party determines that
the parties cannot agree on a Substitute
Calculation Agent, then each party shall
select an independent leading dealer in
the relevant market, which dealers shall
agree on a third party independent,
leading dealer, which dealer shall be the
Substitute Calculation Agent. The
calculations and determinations of the
Substitute Calculation Agent, shall be
binding and conclusive. Subject to the
foregoing, all determinations and
calculations by the Calculation Agent
will be binding and conclusive in the
absence of manifest error.
4. Account Details:
Account for payments to Party A: HSBC Bank plc, London (XXXXXX00)
A/C 00000000
Account for payments to Party B: Banca Intesa S.p.A. - Treviso
SWIFT XXXXXXXX000
Account: XX00 X000 0000 0000 0000 0000 000
5. Offices:
The office of HSBC Bank Plc London for the Transaction is London.
The office of Edizione Holding S.P.A. for the Transaction is Treviso
6. Governing law: English law
Please conform that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter or telex substantially
similar to this letter, which letter or telex sets forth the material terms of
the Transaction to which this Confirmation relates and indicates your agreement
to those terms.
Fax Number: x00 00 0000 0000
Telephone number for Confirmation Queries: x00 00 0000 0000
Yours sincerely,
HSBC Bank Plc London
By: /s/
---------------------
Name:
Title:
Confirmed as of the date
first above written:
Edizione Holdings
By: /s/ Xxxxxx Xxxx
---------------------------
Name: Xxxxxx Xxxx
Title: Managing Director
