I.NET S.P.A. Via Darwin Settimo Milanese (MI) Share Capital 4,100,000 euros. Tax Code

Transcription

1 I.NET S.P.A. Via Darwin Settimo Milanese (MI) Share Capital 4,100,000 euros Tax Code Register of Companies of Milan n *** Board of Directors Explanatory Report on the proposals listed in point 2 of the Agenda of the Ordinary Meeting called on 13 July 2005 (first call) and on 20 July 2005 (second call) Shareholders, We have prepared this report in accordance with Legislative Decree n. 58 dated February , Ministry of Justice Decree n. 437 dated November and articles 73, 93 and Annex 3 A of Consob Resolution n dated May The resolutions made by the Board of Directors today included a resolution to call an Ordinary Shareholders Meeting to be held at law firm NCTM offices, Via Agnello 12, Milan, first call on 13 July 2005, at 3:00 p.m. and, if necessary, on second call on 20 July 2005, same place and same time, to discuss and resolve the following point on the agenda:

2 2. authorization to purchase and dispose of own shares pursuant to article 2357 and ter of the Italian civil code; granting of powers and inherent and consequent resolutions. Regarding point 2 on the agenda, we propose that you resolve to authorize the purchase and sale, in one or more instalments, of a rotating maximum of 10,000 (tenthousand) ordinary company shares under the following terms and conditions. Below we provide the information required under legislation in force, in accordance with the information sheet provided for Annex 3 A to Consob Resolution n dated May Reasons why we are asking for authorisation to purchase and sell the company s own shares We are requesting your authorisation to purchase and sell the company s own shares for the reason to perform an action of stabilization of the trend of the company s shares on the stock market, also in relation to stocklending transactions with duly authorized intermediaries, and intervene in share trends in relation to contingent situations on the market, facilitating trading of shares at times when liquidity on the market is low and promoting the regular progress of trading negotiations; to the extent that it is not necessary to utilize the entire amount of own shares, of which the purchase is suggested for the above expressed purpose, it is requested the authorization to authorize the use of such own shares for operations consistent with current management, business plans or other investments in line with the company s strategic guidelines, in connection to which investment opportunities may be carried out through exchange, barter, contribution, transfer or another act of disposal of the company s own shares conducted in the context of participations in other companies, acquisition of shareholdings or other extraordinary financial transactions comporting assignment or disposal of the company s own shares (such as, by way of example, mergers, divisions, issuing of convertible bonds or warrants, etc.).

3 The right to carry out own shares transactions, represents an important tool for trading activities, where specific and contingent market conditions favour these actions directly or indirectly through authorized intermediaries for the purpose of reducing fluctuations in the price of shares which are a result of any eventual temporary market slumps, to sustain the company s share price. Not withstanding the above, the proposal to the assembly is to utilize the own shares, resulting in excess in terms of trading operations, also for buy back investing, should the stock market trend or company liquidity render these operations convenient. 2. Maximum number, category and nominal value of the shares to which the authorization refers The request for authorization to buy and sell shares refers to a rotating maximum number of 10,000 (tenthousand) ordinary shares with a nominal unitary value of 1 (one) euro and therefore falls within the limit specified by art of the civil code. 3. Information of use for complete assessment of compliance with the provisions of article 2357, comma 3 of the civil code As of today s date, neither the company nor any of its subsidiaries hold any of the company s own shares in their portfolio. If necessary, subsidiary companies will be given specific instructions to provide prompt notification should they purchase any company s shares. In no case may the nominal value of the company s own shares which the company may buy, even taking into account any shares which may be owned by its subsidiaries, exceed one tenth of the company s share capital. As of today s date, the company s duly approved financial statements as at 31 March 2004 reveal the presence of a share premium reserve amounting to euro 144,808,000 (onehundredfortyfourmillioneighthundredeightthousand). The draft financial statements as at 31 March 2005 submitted to this Shareholders Meeting for approval identify the amount of the share premium reserve as euro 144,808,000

4 (onehundredfortyfourmillioneighthundredeightthousand). As a result, the purchase of own shares for which authorization is requested falls within the limits of art of the civil code. Pursuant to 2357-ter of the civil code, the company will set up a restricted reserve in its financial statements ( reserve for own shares in portfolio ) equal to the amount of the shares purchased and held in the portfolio at the time, by withdrawing the same amount from the share premium reserve. These reserves shall be corrected in each instance, taking into account purchases and sales of the company s own shares performed in execution of the authorisation which we are requesting here. 4. Term for which authorisation is requested Authorisation to purchase the company s own shares is requested, and if approved will therefore go into effect, for a period of 18 (eighteen) months beginning on the date the resolution is passed. Authorisation to sell any of the company s own shares which may be purchased is requested with no time limit. 5. Minimum and maximum payment, and assessment of the market on the basis of which they have been determined The unit price for purchases of the company s own shares may be no more than 10% more or less than the reference price registered by the share in the stock exchange trading session prior to each individual purchase. In the event that company shares previously purchased are sold, the unit price for the sale may be no more than 10% lower than the reference price registered by the share in the stock exchange trading session prior to each individual sale. This limit on payment does not apply in the event of a transfer other than sale, for instance in the case of exchange, barter, contribution, transfer or another act of disposal of the company s own shares conducted in the context of acquisition of shares or implementation of industrial projects or other extraordinary financial transactions involving assignment or disposal of the company s own shares (such as, by way of

5 example, mergers, divisions, issuing of convertible bonds or warrants, etc.). In these cases criteria in line with the best international practice may be applied. The amount paid for each purchase and sale shall be determined in each individual case in accordance with the criteria set forth above by the Board of Directors, which may delegate this task to one or more individual directors. The criteria for determination of the purchase and sale price set forth above have been determined in line with practice on the market and with the recommendations of Borsa Italiana S.p.A. (the Italian stock exchange). Merely for the sake of completeness, please note that, exclusively in the case of activities aimed at supporting the liquidity and stability of listings of the company s own shares, the general operative guideline contained in Consob memorandum dated July recommending that companies issuing stock exchange listed shares to buy their own shares to counteract market trends remains in effect, meaning that the company shall buy its own shares at a price which does not exceed the official listed price for the previous day; sales must be made in line with the day s prices on the stock exchange and, if conducted on the stock exchange, against the trend on the market, and therefore with a sale price no lower than the previous day s official listed price. In addition, in the same memorandum Consob recommended that the number of shares negotiated each month not exceed 25% of the average number of shares traded monthly, in the previous six months, on the stock exchange on which the share is listed. In line with the requirements of Consob memorandum n DME/94375 dated December , these operative limits are in no case binding upon stock exchange transactions in the company s own shares conducted for purposes other than the above-mentioned functions of supporting the liquidity and, generally speaking, stability of its shares. Purchases and/or sales of the company s own shares conducted for purposes other than stabilisation of trading, such as improving the efficiency of the company s assets, are therefore exempt from application of these provisions. As a result, the provisions of article 132 of Legislative Decree n 58/98 regarding purchases of

6 own shares remaining in effect, the company s own shares may be sold outside of the stock exchange, provided they are sold at prices which on the whole are no lower than stock market prices. 6. How the company s own shares shall be bought and sold Purchases shall be made on the market, in one or more instalments and on a rotary basis within the limits set by law, in accordance with methods agreed on with Borsa Italiana S.p.A., which permit respect for equal treatment of shareholders pursuant to article 132 of Legislative Decree n. 58 dated February Resort to public offers of sale and trade must be resolved by the Board of Directors in accordance with legislation in force. In addition, please note that, under the provisions of article of the New Market Regulations adopted by Borsa Italiana S.p.A., negotiation of company stocks on the New Market shall be conducted with the intervention of a specialised broker appointed by the issuer of the shares and committed to supporting the liquidity of the shares and to conducting financial analysis. In compliance with this provision, the Company has stipulated a special agreement with a primary authorised stockbroker qualified as Specialist. In accordance with the terms and conditions of this agreement, the company may not trade its own shares itself, including all purchases and sales of its own shares for which authorisation is being requested, without the Specialist s prior written consent, which shall not be denied without reason. Sales may also be conducted before purchases have all been completed, and may take place once or more than once on the market, in blocks or through offers to shareholders or employees, or as compensation in an exchange, barter, contribution, transfer or other act of disposal of own shares conducted in the context of acquisition of shares or implementation of industrial projects or other extraordinary financial transactions comporting assignment or disposal of the

7 company s own shares (such as, by way of example, mergers, divisions, issuing of convertible bonds or warrants, etc.). 7. Additional information, where the purchase serves a reduction in the company s share capital by annulment of the own shares after purchase Purchases shall not be used to serve a reduction in the company s share capital. *** Shareholders, in view of the above, we are asking you to pass the following resolution: The I.Net S.p.A. ordinary shareholders meeting, on the basis of the Board of Directors report, having heard the favourable opinion of the Board of Auditors, in view of article2357 and seq. of the civil code, article 132 of Legislative Decree n. 58 dated February and the regulations issued by Consob and by Borsa Italiana S.p.A. hereby resolves 1. to authorise, pursuant to article 2357 of the civil code and for the purposes thereof, the purchase, in one or more instalments, of a rotating maximum (that is, a maximum number of own shares held in the company s portfolio at any one time), of n. 10,000 (tenthousand) ordinary company s own shares, also taking into account any shares which may be owned by the company s subsidiaries at the time and within the limits set by law, for the pursuit of the aims identified in the Board of Directors Report and subject to the following terms and conditions: - shares may be purchased within 18 (eighteen) months beginning on the date of this resolution; - purchases may be made on the market, in one or more instalments and on a rotary basis within the limits set by the law, in accordance with methods agreed upon with Borsa Italiana S.p.A. permitting compliance with the principle of equal treatment of shareholders pursuant to article 132 of Legislative Decree n.

8 58 dated February The Board of Directors may resolve to resort to public offers of sale and trade, in accordance with legislation in force; - the unit price paid for purchases of the company s own shares may be no more than 10% more or less than the reference price registered by the share in the trading session of the stock exchange prior to each individual purchase; 2) to authorise, pursuant to article 2357-ter of the civil code and for the purposes thereof, sale of the company s own shares purchased and held in the portfolio at the time in one or more instalments, in compliance with the limits set by the law, for the pursuit of the aims identified in the Board of Directors report and subject to the following terms and conditions: - shares may be sold at any time with no time limits; - shares may be sold even before all purchases have been completed, and may take place in one or more instalments on the market, in blocks or by offers to shareholders and employees, or as compensation in exchange, barter, contribution, transfer or another act of disposal of the company s own shares conducted in the context of acquisition of shareholdings or implementation of industrial projects or other extraordinary financial transactions comporting assignment or disposal of the company s own shares (such as, by way of example, mergers, divisions, issuing of convertible bonds or warrants, etc.); - the unit price for sale of shares may be no more than 10% lower than the reference price registered for the share in the stock exchange trading session prior to each individual sale. This limit on the payment shall not apply to forms of disposal other than sale, particularly exchange, barter, contribution, transfer or another act of disposal of the company s own shares conducted in the context of acquisition of shareholdings or implementation of industrial projects or other extraordinary financial transactions comporting assignment or disposal of the

9 company s own shares (such as, by way of example, mergers, divisions, issuing of convertible bonds or warrants, etc.); 3) to authorise the constitution of a restricted reserve ( reserve for own shares in portfolio ) pursuant to article 2357-ter of the civil code, equal in amount to the value of the shares purchased and held in the company s portfolio at the time, by withdrawal of the same amount from the share premium reserve ; 4) to give the Board of Directors a mandate to determine purchase and sale prices in accordance with the criteria set forth above, with the express faculty of delegating this power to one or more individual directors; 5) to give the Board of Directors and, on behalf of the Board of Directors, its Chairman, with the express faculty of delegating this power, all the broadest powers necessary and appropriate for the purpose of execution of this resolution. Settimo Milanese, 24 th May 2005 For the Board of Directors The Chairman Prof. Eng. Roberto Galimberti