Pirelli - IntesaBci & Unicredito: the new agreement
Milan, September 14th, 2001 - Following the approval by the Meeting of the Board of Directors of Intesa-BCI (hereinafter referred to as " BCI" ) held today, Pirelli SpA have stipulated with Unicredito (hereinafter referred to as " UCI" ) and BCI a shareholders' agreement. For convenience, the key details of the pact are summarised below.
Participation
- Acquisition by BCI and UCI of 10% each of the share capital of Olimpia.
- Increase in the share capital of Olimpia for a total that, including premiums, shall be equal to approximately 5.2 billion and which all the partners shall underwrite pro quota.
- Financing by the partners Pirelli (80%) and Edizione (20%) for approximately 800 million at the same interest rate conditions that Olimpia shall obtain from the pool of banks.
Company Organs
- BCI and UCI shall each have the right, for as long as they shall possess more than 10% of Olimpia, to nominate one member of the Boards of Directors of Olimpia, Olivetti, Telecom, Seat and Tim.
- Upon the expiry of the current board of auditors of Olimpia, the parties shall evaluate the possibility of nominating an auditor to be commonly designated by BCI and UCI.
Puts by UCI and BCI
UCI and BCI shall each have the right to cede to Pirelli (put) their own holding in Olimpia in the following three cases and subject to the following conditions:
1. Deadlock
A case of deadlock shall arise in the event of an irremediable dispute between UCI and BCI and Pirelli as regards the following issues:
- resolutions of the Extraordinary General Meeting of Olimpia
- resolutions of the Board of Directors of Olimpia regarding:
1. Indications as to the vote to be cast: a) in the Ordinary General Meeting of Olivetti as regards key matters related to the application of articles 104 or 107 of T.U. 58 dated February 24th, 1998 (OPA) and as regards the acquisition of own shares; b) in the Extraordinary General Meeting of Olivetti;
2. The acquisition, sale and dispositions of whatsoever nature of (i) own shares (ii) participations (including shares and financial instruments of whatsoever type issued by Olivetti and/or by Olivetti Companies) of a value per single operation greater than 100 million;
3. The establishment of the relationship between own resources and third party resources of Olimpia and the means, terms and conditions applicable to recourse to external sources of financing ;
4. Proposals for resolutions to be put before the Extraordinary General Meeting of Olimpia
- resolutions of the Boards of Directors of Olivetti and of Telecom regarding:
1. Individual investments greater than 300 million;
2. The acquisition, sale and dispositions of whatsoever nature of (i) own shares for whatsoever sum and (ii) controlling or connected participations (including shares and other financial instruments of whatsoever type issued by Olimpia, Olivetti, Telecom, Tim and Seat) for a joint value in excess of 300 million;
3. dispositions of whatsoever nature of companies or their branches individually greater than 300 million;
4. Proposals for the convening of the Extraordinary General Meeting for resolutions concerning modifications of the business purpose, capital operations of whatsoever nature, mergers, scissions, transformations and dissolution;
5. Operations between Olivetti, Telecom, Tim, Seat and the Pirelli Group for values individually greater than 50 million;
6. Operations with correlated parties;
In such situations the price of the put participation shall be determined by the parties, or, in the event of disagreement, by investment banks and shall correspond to the sum of the economic value of the participation (" Price" ) and an increase (" Premium" ), as if the participation were the expression of the control of Olivetti and of the companies controlled by Olivetti.
Furthermore it is agreed that the price owed by Pirelli shall not be inferior to the sum paid by BCI and UCI for acquisitions and share subscriptions made in Olimpia, minus any dividends that may be received (" Floor" ), nor greater than a sum that implies, in respect of those same sums, minus any dividends received, an annual IRR, gross of tax, equal to 15% (" Cap" ).
2. Expiry of the Pact
The pact shall be valid for three years save tacit renewals of additional periods of two years on each occasion of expiry.
In the event of the withdrawal of Pirelli at each expiry, UCI and BCI shall each have the right to cede their participation at the price stipulated as per Point 1.
In the event of the withdrawal of UCI and BCI at the first date of expiry, Pirelli shall have the right to acquire the respective participations at a price corresponding to the sole economic value.
Upon subsequent two-yearly expiries UCI and BCI shall have the option of ceding their participation on the basis of the same price formula stipulated as per Point 1.
3. Change of control of Pirelli and of Olimpia
In the event of Pirelli & C ceasing to control Pirelli S.p.A., UCI and BCI shall have the right to cede their participation at the same price stipulated as per Point 1.
In the event of Pirelli ceasing to hold the majority share in Olimpia because of sale to third parties, UCI and BCI shall have the right to cede to Pirelli their participation or, alternatively, shall be obliged to sell it to the third buyer at the same conditions offered by said buyer. The put price shall be established as per Point 1, and furthermore without any cap in favour of Pirelli, in relation to the existence of an obligatory co-sale.
Penalties
In the event of failure to comply with the commitments undertaken, the non-compliant party shall be obliged to pay the compliant party/parties a lump sum equal, for each failure to comply, to 5% of the amounts invested in Olimpia by said non-compliant party.