-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PcS8KMd76K+jb14mC6KGGAuppswCCZao7xn2VxxMTGyf6uy39xNdNAVO+Jo8D80c PVpdrFmoCrvE2CkslonLiQ== 0001104659-07-078612.txt : 20071101 0001104659-07-078612.hdr.sgml : 20071101 20071031212614 ACCESSION NUMBER: 0001104659-07-078612 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20071101 DATE AS OF CHANGE: 20071031 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TELECOM ITALIA S P A CENTRAL INDEX KEY: 0000948642 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATION SERVICES, NEC [4899] IRS NUMBER: 000000000 STATE OF INCORPORATION: L6 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-61827 FILM NUMBER: 071204319 BUSINESS ADDRESS: STREET 1: PIAZZA DEGLI AFFARI 2 CITY: 20123 MILAN STATE: L6 ZIP: L6 BUSINESS PHONE: 011-39-02-8595-1 MAIL ADDRESS: STREET 1: PIAZZA DEGLI AFFARI 2 CITY: 20123 MILAN STATE: L6 ZIP: L6 FORMER COMPANY: FORMER CONFORMED NAME: STET SOCIETA FINANZIARIA TELEFONICA PA DATE OF NAME CHANGE: 19950727 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Intesa Sanpaolo S.p.A. CENTRAL INDEX KEY: 0001374384 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 799960158 STATE OF INCORPORATION: L6 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: PIAZZA SAN CARLO 156 CITY: TURIN STATE: L6 ZIP: 00000 BUSINESS PHONE: 39-011-555-1 MAIL ADDRESS: STREET 1: PIAZZA SAN CARLO 156 CITY: TURIN STATE: L6 ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: Banca Intesa DATE OF NAME CHANGE: 20060831 SC 13D 1 a07-27464_1sc13d.htm SC 13D

	UNITED STATES	OMB APPROVAL
	SECURITIES AND EXCHANGE COMMISSION	OMB Number: 3235-0145
	Washington, D.C. 20549	Expires: February 28, 2009
	SCHEDULE 13D	Estimated average burden hours per response. . 15

Under the Securities Exchange Act of 1934
(Amendment No. )*

TELECOM ITALIA S.p.A.

(Name of Issuer)

Ordinary Shares of euro 0.55 par value each

(Title of Class of Securities)

87927W10

(CUSIP Number)

Amedeo Nodari

Merchant Banking Department

Intesa Sanpaolo S.p.A.

(formerly known as Banca Intesa S.p.A.)

Piazza Scala, 6

20121 Milan, Italy

(+39) 02 8794 1852

With a copy to:

Michael S. Immordino, Esq.

Latham & Watkins

99 Bishopsgate

London EC2M 3XF

England

(+44) 207-710-1076

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

October 23, 2007 and October 25, 2007

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

^* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 87927W10

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Intesa Sanpaolo S.p.A. (formerly known as Banca Intesa S.p.A.)

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			x
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) WC, BK

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Republic of Italy

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 51,442,958

			8.	Shared Voting Power 3,157,172,623 (See Item 5)

			9.	Sole Dispositive Power 31,887,968

			10.	Shared Dispositive Power 3,157,172,623 (See Item 5)

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 3,208,615,581 (See Item 5)

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 24.0% (See Item 5)

	14.	Type of Reporting Person (See Instructions) CO, BK

Introduction.

On April 28, 2007, a group of investors made up of Intesa Sanpaolo S.p.A. (“Intesa Sanpaolo”), Assicurazioni Generali S.p.A. (“AG” and, together with the AG group companies (Alleanza Assicurazioni S.p.A., INA Assitalia S.p.A., Volksfürsorge Deutsche Lebenversicherung A.G., Generali Vie S.A.) that became investors on October 25, 2007 pursuant to the Amendment (as defined below), “Generali”), Sintonia S.A., Mediobanca S.p.A. (“Mediobanca” and, together with Generali, Sintonia S.A. and Intesa Sanpaolo, the “Italian Investors”) and Telefónica S.A., the Spanish-based telecommunications operator (“Telefónica” and, together with the Italian Investors, the “Investors”), entered into a co-investment agreement (as subsequently amended by an amendment agreement on October 25, 2007 (the “Amendment”), the “Co-Investment Agreement”) to establish the terms and conditions for their participation in Centotrenta 4/6 S.r.l., an Italian company with registered office at Galleria del Corso 2, Milan, Italy, fiscal code n. 05277610969 subsequently transformed into an Italian joint stock company and renamed Telco S.p.A. (“Telco”), an Italian corporation through which they have purchased the entire share capital (the “Transaction”) of Olimpia S.p.A. (“Olimpia”), which currently holds approximately 18% of the ordinary share capital of Telecom Italia S.p.A. (“Telecom Italia”), from Pirelli & C. S.p.A. (“Pirelli”) and Sintonia S.p.A. and Sintonia S.A. (together, “Sintonia”). The Co-Investment Agreement also covers the capitalization and funding of Telco in connection with the Transaction and the general framework of the investment obligations of each of the Investors. Among other things, pursuant to the Amendment, the AG group companies became Investors for purposes of the Co-Investment Agreement and the Shareholders’ Agreement (as hereinafter defined). In addition to Telco’s participation in Telecom Italia’s ordinary share capital through its interest in Olimpia, pursuant to the Co-Investment Agreement, on October 25, 2007 Generali and Mediobanca contributed to Telco ordinary shares of Telecom Italia they held on that date. These shares amount to 5.6% of Telecom Italia’s ordinary share capital, with the individual contributions of Generali and Mediobanca amounting to 4.06% and 1.54%, respectively, of Telecom Italia’s ordinary share capital, bringing Telco’s direct and indirect participation in Telecom Italia’s ordinary share capital to approximately 23.6%. A copy of the Co-Investment Agreement is filed as Exhibit 1 and a copy of the Amendment is filed as Exhibit 2.

On April 28, 2007, the Investors also entered into a shareholders’ agreement (as subsequently amended by the Amendment, the “Shareholders’ Agreement”), pursuant to which the Investors set out, among other things, the principles of corporate governance of Telco and Olimpia, respectively, the transfer of Telco’s shares and any Olimpia Shares or Telecom Shares (each as defined below) directly or indirectly owned by Telco and the principles of designation, among the Investors, of candidates to be included in a common list for the appointment of directors of Telecom Italia under the voting list mechanism provided for by Telecom Italia’s by-laws. A copy of the Shareholders’ Agreement is filed as Exhibit 3 and an unofficial English translation of the by-laws of Olimpia S.p.A. is filed as Exhibit 4.

On May 4, 2007, the Investors entered into a sale and purchase agreement with Pirelli and Sintonia (the “Share Purchase Agreement”) to purchase the entire share capital of Olimpia of euro 4.6 billion divided into 4,630,233,510 ordinary shares (the “Olimpia Shares”). Olimpia in turn owns 2,407,345,359 ordinary voting shares of Telecom Italia, or approximately 18% of the ordinary share capital of Telecom Italia. A copy of the Share Purchase Agreement is filed as Exhibit 5.

The closing of the purchase of the Olimpia Shares pursuant to the Share Purchase Agreement occurred on October 25, 2007, following the issuance of the announcement of forthcoming governmental approvals from the Brazilian antitrust authority on October 23, 2007 (the “Announcement”), an unofficial English translation of which is attached here as Exhibit 6. Pursuant to the Amendment, the Investors acknowledged the content of the Announcement and each of the Investors undertook to implement the content thereof through appropriate actions.

Item 1.

Security and Issuer

This statement on Schedule 13D relates to the ordinary shares, euro 0.55 par value per share, of Telecom Italia (“Telecom Shares”), a company incorporated under the laws of the Republic of Italy. According to Telecom Italia's Annual Report on Form 20-F for the fiscal year ended December 31, 2006, the principal executive offices of Telecom Italia are located at Piazza degli Affari 2, 20123 Milan, Italy.

Item 2.	Identity and Background
This statement on Schedule 13D is being filed by Intesa Sanpaolo (formerly known as Banca Intesa S.p.A. prior to its merger with Sanpaolo IMI S.p.A. as of January 1, 2007), a corporation organized under the laws of the Republic of Italy. Intesa Sanpaolo is making an individual filing on Schedule 13D in accordance with Rule 13d-1(k)(2) under the Securities Exchange Act of 1934, as amended. Intesa Sanpaolo is a bank within the meaning of Italian law and is the parent company of the Intesa Sanpaolo Banking Group. The principal business of Intesa Sanpaolo is providing, both directly and through its Italian and foreign subsidiaries, retail and corporate banking, investment banking and other financial services. Intesa Sanpaolo is involved in commercial banking, consumer credit, investment management, stock and bond brokerage and other financial services. Intesa Sanpaolo’s principal office is located at Piazza San Carlo 156, Turin, Italy. The names, citizenship, business addresses and principal occupations or employments of the executive officers and directors of Intesa Sanpaolo are set forth in Annex A, which is incorporated herein by reference. During the last five years, neither Intesa Sanpaolo nor, to the best of Intesa Sanpaolo’s knowledge, any of the persons listed in Annex A, have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

Item 3.	Source and Amount of Funds or Other Consideration
The closing of the purchase of the Olimpia Shares pursuant to the Share Purchase Agreement occurred on October 25, 2007, following the receipt of the Announcement on October 23, 2007. At the closing of the Share Purchase Agreement, Telco paid total consideration of euro 2.82 per Telecom Share held by Olimpia multiplied by 2,407,345,359 Telecom Shares, less Olimpia’s total net debt (as defined under the Share Purchase Agreement) as of the closing date. The purchase price for 100% of Olimpia’s share capital was approximately euro 4.161 billion. Telco paid 80% of the consideration to Pirelli and 20% of the consideration to Sintonia. It is expected that the Investors will merge Olimpia into Telco.
Pursuant to the Co-Investment Agreement, Telco has been initially capitalized with euro 5.145 billion, in the following manner:
· Generali contributed to Telco 543.4 million Telecom Shares for total consideration of euro 1.375 billion, based on a share price of euro 2.53 per Telecom Share; · Mediobanca contributed to Telco 206.5 million Telecom Shares for total consideration of euro 522 million, based on a share price of euro 2.53 per Telecom Share; · Intesa Sanpaolo contributed to Telco euro 522 million in cash; · Sintonia S.A. contributed to Telco euro 412 million in cash; and · Telefónica contributed to Telco euro 2.314 billion in cash.
In addition, prior to the closing of the Share Purchase Agreement, Telco borrowed from Mediobanca and Intesa Sanpaolo approximately euro 925 million (the “Facility”) Such Facility was made available on an arm’s length basis. Immediately after the closing of the Share Purchase Agreement, Telco resolved to increase its share capital by euro 900 million (the “Fifth Capital Increase”) for purposes of financing the repayment of the Facility. Telco shareholders look favorably on the potential for further contributions of Telecom Shares in Telco (up to an amount not exceeding 30% of the ordinary share capital of Telecom Italia), provided that in such an event the right to subscribe further capital increases in cash shall be granted to the other existing shareholders in order to avoid possible dilution. See the joint press release announcing the closing of the Transaction, dated October 25, 2007, issued by Generali, Intesa Sanpaolo, Mediobanca, Sintonia S.A. and Telefónica filed as Exhibit 7.

Item 4.	Purpose of Transaction
For the Investors, the principal objective of the transaction is the creation of value over time for all shareholders, by accompanying Telecom Italia’s business growth strategies which will be defined in full

autonomy by the board of directors and the management of Telecom Italia. A fundamental assumption of the Co-Investment Agreement and the Shareholders’ Agreement is that the Telecom Italia and Telefónica groups will be managed autonomously and independently. See the joint press release, dated April 28, 2007, issued by Generali, Intesa Sanpaolo, Mediobanca, Sintonia S.A. and Telefónica filed as Exhibit 8, the joint press release requested by Consob (the Italian financial market authority), dated May 2, 2007, issued by Generali, Intesa Sanpaolo, Mediobanca, Sintonia S.A. and Telefónica filed as Exhibit 9 and the joint press release announcing the closing of the Transaction, dated October 25, 2007, issued by Generali, Intesa Sanpaolo, Mediobanca, Sintonia S.A. and Telefónica filed as Exhibit 7. In addition, the information contained in Items 5 and 6 below is incorporated herein by reference.
Item 5.	Interest in Securities of the Issuer
The Investors purchased Olimpia through Telco pursuant to the Share Purchase Agreement. Olimpia currently holds 2,407,345,359 ordinary Telecom Shares, or approximately 18% of the ordinary share capital of Telecom Italia. In addition to this purchase by Telco, pursuant to the Co-Investment Agreement, Generali and Mediobanca contributed Telecom Shares they previously owned directly to Telco totaling approximately 5.6% of Telecom Italia’s ordinary share capital (4.06% of which was owned by Generali, and 1.54% of which was owned by Mediobanca), bringing Telco’s total participation in Telecom Italia’s ordinary share capital to 23.6%.
As a result of the Transaction, the Italian Investors currently hold a total of 57.7% of Telco’s share capital, divided in the following manner:
• Generali, 28.0%; • Mediobanca, 10.6%; • Intesa Sanpaolo, 10.6%; and • Sintonia S.A., 8.4%. Telefónica holds the remaining 42.3% of Telco’s share capital.
In connection with the Fifth Capital Increase, in accordance with the Co-Investment Agreement and the Shareholders’ Agreement, Intesa Sanpaolo may select new Italian investors, other than telecom operators, to subscribe newly issued shares in Telco for cash consideration of up to 5% of Telco’s share capital for each new investor, provided that such selection is made in agreement with the other Italian Investors and is accepted by Telefónica, such agreement and acceptance not to be unreasonably withheld.
The preceding summary of certain material provisions of the Share Purchase Agreement, the Co-Investment Agreement and the Shareholders’ Agreement does not purport to be a full and complete description of such documents and is entirely qualified by reference to the full text of such documents attached as Exhibits 5, 1 and 3 to this filing, respectively.
According to publicly available information reported by Consob (the Italian financial market authority), as of October 25, 2007, 13,380,751,344 Telecom Shares were outstanding (the “Outstanding Telecom Shares”).
Intesa Sanpaolo may be deemed to beneficially own 3,208,615,581 Telecom Shares, representing approximately 24.0% of the Outstanding Telecom Shares. Intesa Sanpaolo may be deemed to have shared power to vote or to direct the vote and shared power to dispose or direct the disposition of 3,157,172,623 Telecom Shares indirectly owned through Telco. In addition, Intesa Sanpaolo may be deemed to have sole power to vote or direct the vote of 51,442,958 Telecom Shares and sole power to dispose or direct the disposition of 31,887,968 Telecom Shares through its direct holdings and the holdings of various subsidiaries. These shares are not currently expected to be contributed to Telco. Except as described in Annexes B-1 and B-1 hereto, Intesa Sanpaolo and the persons named in Annex A have not effected any transaction in the Telecom Shares during the past 60 days.
The beneficial ownership of Telecom Shares by the persons listed in Annex A to this Schedule 13D, if any, is indicated next to such person’s name in such Annex A. To the best of Intesa Sanpaolo’s knowledge, such persons have sole voting and dispositive power over the Telecom Shares that they beneficially own.

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

SHARE PURCHASE AGREEMENT

The following summary of certain material provisions of the Share Purchase Agreement does not purport to be a full and complete description of such document and is entirely qualified by reference to the full text of such document attached as Exhibit 5 to this filing.

The Investors, Pirelli and Sintonia entered into the Share Purchase Agreement to establish the terms and conditions for the transfer of the ordinary share capital of Olimpia from Pirelli and Sintonia to the Investors. The Share Purchase Agreement required, among other things, that the Olimpia Shares be purchased and sold with the right of the Investors to receive any dividends distributed by Olimpia after the closing of the transaction, even if accrued prior to the closing. The Share Purchase Agreement also required Olimpia, Pirelli, Sintonia and the relevant Investors to terminate all existing shareholders agreements concerning Olimpia and Telecom Italia upon the closing of the Sale and such existing shareholders agreements among themselves have been terminated as of October 25, 2007.

The description of the Share Purchase Agreement in the Introduction and Item 3 are incorporated herein by reference.

CO-INVESTMENT AGREEMENT

The following summary of certain material provisions of the Co-Investment Agreement does not purport to be a full and complete description of such document and is entirely qualified by reference to the full text of such document attached as Exhibit 1 to this filing.

The Investors entered into the Co-Investment Agreement to establish the terms and conditions for (i) their participation in Telco, (ii) the acquisition through Telco from Pirelli and Sintonia of 100% of the share capital of Olimpia, which in turn holds a stake of approximately 18% of the ordinary share capital of Telecom Italia, (iii) the capitalization and funding of Telco in connection with the acquisition, (iv) the division of Telco’s share capital into two classes of shares (“Class A” and “Class B” shares), (v) the corporate scope of Telco, and (vi) the general framework of the respective obligations of the Investors under the Co-Investment Agreement.

The description of the Co-Investment Agreement in the Introduction and Item 3 are incorporated herein by reference.

SHAREHOLDERS’ AGREEMENT

The following summary of certain material provisions of the by-laws of Telco, the Shareholders’ Agreement does not purport to be a full and complete description of such documents and is entirely qualified by reference to the full text of such documents attached as Exhibit 10 and 3 to this filing, respectively. The 51,442,958 Telecom Shares for which Intesa Sanpaolo maintains sole voting power were not contributed to Telco and are not generally subject to the Shareholders Agreement or the Co-Investment Agreement, although the Shareholders’ Agreement does prevent Intesa Sanpaolo from acquiring additional Telecom Shares if such acquisition would cause the holdings of the Investors taken as a whole to exceed 30% of the Telecom Shares. See “―Provisions Relating to Telecom Italia.”

Classes of Shares

The share capital of Telco is divided into Class A and the Class B shares. Telefónica holds and will acquire (through share capital increases or exercise of the pre-emption right set forth in the Telco’s by-laws and as described below) only Class B shares or Class A shares to be converted into Class B shares, while the Italian Investors hold Class A shares, and have the possibility to acquire Class B shares in case of exercise of the pre-emption right to be converted into Class A shares, which is described more fully below. Class B shares will have exactly the same economic and administrative rights as the Class A shares, save as provided for in the Shareholders’ Agreement and in the Telco by-laws.

In the event of an increase of capital of Telco, the shareholders who hold Class A shares shall have the right to receive and subscribe Class A shares and the shareholders of Telco who hold Class B shares shall have the right to receive and subscribe for Class B shares.

In the event that any holders of Class A shares have not fully exercised their pre-emption right, the other holders of Class A shares shall have the preferred right to exercise the pre-emption of the Class A shares that have not been opted for by the other shareholders. Similarly, in the event that any holders of Class B shares have not fully exercised their pre-emption right, the other holders of Class B shares shall have the preferred right to exercise the pre-emption of Class B shares that have not been opted for by the other shareholders. In the event that after the offer of such Class A shares has been made to the holders of Class A shares (whether or not such pre-emption rights have been exercised), there remain Class A shares not purchased by the other Class A shareholders, such shares will be offered to the holders of Class B shares in proportion to their shareholding of the total number of Class B shares issued by Telco, subject to the automatic conversion of the aforesaid Class A shares at the rate of one newly issued Class B share (having the same characteristics as the Class B shares in circulation) for each Class A share purchased. In the event that after the offer of such Class B shares has been made to the holders Class B shares (whether or not such pre-emption rights have been exercised), there remain Class B shares not purchased by the other Class B shareholders, such shares will be offered to holders of Class A shares in proportion to their shareholding of the total number of Class A shares issued by Telco, subject to the automatic conversion of the aforesaid Class B shares at the rate of one newly issued Class A share (having the same characteristics as the Class A shares in circulation) for each Class B share purchased.

Shareholders Meetings

The shareholders’ meeting of Telco will resolve with the vote of (i) at least 75% of the entire share capital on (x) share capital increases with the exclusion of the option right pursuant to article 2441, 4^th and 5^th paragraph of the Italian Civil Code, (y) mergers and de-mergers (except for the merger between Olimpia and Telco) determining a dilution of the shareholders, and (z) amendments to the provisions of the Telco by-laws regarding the appointment of the board of directors and the quorum of board of directors and shareholders meetings; and (ii) at least 65% of the entire share capital on the following matters:

• any other matter pertaining to the extraordinary shareholders meeting of Telco; and

• the dividend policy of Telco.

However, in cases where one or more shareholders holding more than 30% of the entire share capital abstain from voting or remain absent from the relevant meeting, the quorum will be reduced to the vote of at least 50% plus one share of the entire share capital.

In accordance with Telco’s by-laws, acceptance by Telco’s board of directors of any tender offers having as their subject the shares of Telecom Italia will be subject to the approval of the shareholders meeting. In case of any such approval, any dissenting shareholders shall become entitled to purchase all of the shares of Telco held by the approving shareholders.

Board of Directors

The board of directors of Telco is comprised of ten members. The Italian Investors, as holders of Class A shares have appointed, and for so long as they hold more than 50% of the share capital of Telco, shall be entitled to appoint, six directors, including the Chairman. Of the six Telco directors appointed by holders of Class A shares, two directors have been indicated by Generali, one director has been indicated by each of Intesa Sanpaolo, Sintonia S.A. and Mediobanca and one director has been indicated unanimously. Telefónica, as holder of Class B shares has appointed, and so long as it holds a percentage of at least 30% of the share capital of Telco shall be entitled to appoint, four directors, including the Vice-Chairman. So long as Telefónica holds a percentage of at least 20% of the share capital of Telco, Telefónica shall be entitled to appoint two directors. Should (x) the holders of Class A shares hold less than 50% plus one share, and/or (y) Telefónica as holder of Class B shares holds more than 50% plus one share, the Investors shall appoint the directors of Telco in a manner that grants the majority of the directors to the class of shares representing at least 50% plus one share of the entire share capital of Telco and seven out of ten directors to the class of shares representing more than 70% of the entire share capital of Telco.

The board of directors of Telco will pass resolutions by vote of a majority of its members, except that, subject to certain exceptions, it will decide by vote of at least seven directors on the following matters:

• the acquisition, disposal and encumbrance (directly or indirectly in any form or manner) of Olimpia’s or Telecom Italia’s shares or any rights attached thereto;

• the carrying out of investments other than in Olimpia and in Telecom Italia;

• capital expenditure and financial structure decisions for amounts in excess of euro 75 million;

• decisions on the vote to be exercised in (x) the extraordinary shareholders' meeting of Telecom Italia convened pursuant to Italian law to approve resolutions on transactions of extraordinary nature and (y) the shareholders’ meeting of Olimpia; and

• approval and amendments of the budget of Telco.

Deadlock

The Shareholders’ Agreement contains provisions on the resolution of deadlocks at the level of the board of directors and shareholders’ meetings of Telco with regard to the following matters:

a) at the level of Telco board of directors: (i) acquisition, disposal and encumbrance of Olimpia or Telecom Italia’s shares, (ii) decision on the vote to be exercised in the extraordinary shareholders’ meeting of Telecom Italia to approve resolutions on transactions of extraordinary nature and (iii) decision on the vote to be exercised in the shareholders’ meeting of Olimpia; and

b) at the level of Telco shareholders’ meeting, matters pertaining to the extraordinary shareholders’ meeting of Telco;

In case of deadlock with regard to the matters referred to above under letters a) and b) the Investors shall try to find an amicable compromise failing which a new meeting shall be convened and at such meeting the decision will be passed with a simple majority, provided however that dissenting shareholder(s) shall have the right to request the demerger of its stake in Telco and the pro quota assignment of Telco assets and liabilities.

Call Option

In the event that a decision to dispose, directly or indirectly, in any form or manner (including through measures with equivalent effect, such as mergers and demergers of Telco or Olimpia) or encumber Telecom Shares or Olimpia Shares or any rights attached thereto, including but not limited to voting rights, is taken by the board of directors of Telco by simple majority and Telefònica is the dissenting party, then Telefónica shall have the right to buy from Telco or Olimpia, as the case may be, the Olimpia or Telecom Shares at the same price and conditions offered by the third party offering to acquire such Telecom Shares or Olimpia Shares or the right to proceed with the demerger.

Restrictions on Transfers of Telco Shares

Transfer of Class A and Class B shares to potential third party acquirers, including shareholder of Telco are subject to pre-emptive rights of the other Investors, upon the terms and conditions and pursuant to the procedures set forth in the Shareholders’ Agreement.

The Shareholders’ Agreement contains co-sale rights whereby if one or more Investors intend to transfer a number of shares representing more that 30% of the aggregate share capital of Telco, the other Investors, upon the terms and conditions included thereof, will have the right to transfer their Telco shares in the same proportion to the purchaser.

Provisions Relating to Telecom Italia

The board of directors of Telco or Olimpia, as the case may be, shall approve the list of candidates to be submitted to the shareholders’ meeting of Telecom Italia for the appointment of the directors of Telecom Italia pursuant to the following criteria: (i) Telefónica, to the extent holding at least 30% of Telco’s share capital, shall have the right vis-à-vis the other Investors to designate two directors of Telecom Italia (x) to be included as

designees for appointment in the board of Telecom Italia in the list presented by Olimpia or Telco, as the case may be, and (y) to the extent feasible, the replacement of directors pursuant to Article 2386, first paragraph, of the Italian Civil Code; and (ii) the Italian Investors which are a party to the Shareholders’ Agreement, to the extent holding at least 50% plus one share of Telco’s share capital, shall designate the other members of the list as follows: (x) three members unanimously and (y) the remaining members on a proportional basis as set out in the Shareholders’ Agreement. The directors designated by Telefónica in Telco, Olimpia and Telecom Italia shall be directed by Telefónica to neither participate, nor vote at the board of directors meetings (and Telefónica, to the extent applicable, shall neither attend nor vote, at any shareholders’ meetings of Telco or the entity resulting from the merger of Olimpia with Telco, as the case may be) at which there will be discussed and proposed resolutions relating to the policies, management, and operations of companies directly or indirectly controlled by Telecom Italia providing their services in countries where regulatory and legal restrictions or limitations for the exercise of voting rights by Telefónica (as indirect and ultimate shareholder of such companies) are in force. In the event of (i) any transfer in whatever form of any of the foreign assets held directly or indirectly by Telecom Italia having a value of more than euro 4 billion per transaction, or series of transactions occurring within a period of 12 months for the same assets, or (ii) Telecom Italia entering into a significant strategic alliance with any “Telecom Operator” (to be construed as to include any person, company or entity operating in the telecom sector and any person, company or entity holding (a) a controlling stake in any non-listed company operating in the telecom sector or (b) a stake in a listed company operating in the telecom sector which exceeds 10% of the share capital or which, even though is below 10% of the share capital, enables the holder to appoint one or more members of the board of directors of the listed company), then Telefónica, within the following thirty calendar days, will have the right to deliver notice to the other Investors, which will cause the Investors to implement, adopt and vote, and cause their directors designated by them to implement adopt and vote, all and any actions, documents and resolutions necessary to complete a de-merger within a reasonably short time period, but in any case no later than 6 months following such notice or, if the transaction is subject to any authorizations by law or contract, within 6 months following the obtaining of such authorizations. The Investors agreed not to execute or take part, directly or indirectly, in any agreement whatsoever concerning Telecom Shares that may cause the holding by the Investors, Telco and their respective affiliates, taken as a whole, of a number of Telecom Italia voting shares exceeding 30% of the total voting share capital of Telecom Italia. Term of the Shareholders’ Agreement The Shareholders’ Agreement will last three years, at the end of which, without prejudice to renewal, each shareholder, provided that it has submitted such request no later than 6 months prior to the expiry date, may obtain the de-merger of its stake in Telco and the pro quota assignment of Telco assets and liabilities. The exiting shareholder(s) shall be permitted, to the extent the remaining shareholders decide to execute a new shareholders’ agreement, to take part to and execute such new shareholders’ agreement, provided such existing shareholders contribute their existing shares. The description of the Shareholders’ Agreement in the Introduction is incorporated herein by reference. AMENDMENT Pursuant to the Amendment, the Investors acknowledged the content of the Announcement and each of the Investors undertook to implement the content thereof through appropriate actions. The preceding summary of certain material provisions of the Amendment does not purport to be a full and complete description of such document and is entirely qualified by reference to the full text of such document filed as Exhibit 2 hereto.
Item 7.	Material to Be Filed as Exhibits
Exhibit 1:		Co-Investment Agreement, dated as of April 28, 2007, by and among Generali, Intesa Sanpaolo, Mediobanca, Sintonia S.A. and Telefónica.
Exhibit 2:		Amendment to the Co-Investment Agreement and the Shareholders’ Agreement, dated October 25,

	2007, by and among Generali, Intesa Sanpaolo, Mediobanca, Sintonia S.A. and Telefónica.
Exhibit 3:	Shareholders’ Agreement, dated as of April 28, 2007, by and among Generali, Intesa Sanpaolo, Mediobanca, Sintonia S.A. and Telefónica.
Exhibit 4:	By-laws of Olimpia S.p.A. (unofficial English translation).
Exhibit 5:	Share Purchase Agreement, dated May 4, 2007, by and among the Investors, Pirelli and Sintonia.
Exhibit 6:	The Announcement of the Board of Commissioners of the Brazilian National Telecommunications Agency (Anatel) related to the Transaction, dated October 23, 2007 (unofficial English translation).
Exhibit 7:	Joint Press Release announcing the closing of the Transaction, dated October 25, 2007, issued by Generali, Intesa Sanpaolo, Mediobanca, Sintonia S.A. and Telefónica.
Exhibit 8:	Joint press release, dated April 28, 2007, issued by Generali, Intesa Sanpaolo, Mediobanca, Sintonia S.A. and Telefónica.
Exhibit 9:	Joint press release requested by Consob (the Italian financial market authority), dated May 2, 2007, issued by Generali, Intesa Sanpaolo, Mediobanca, Sintonia S.A. and Telefónica.
Exhibit 10:	By-laws of Telco S.p.A. (unofficial English translation).

Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

	October 31, 2007
	Date
	INTESA SANPAOLO S.p.A.
	Signature
	Marco Cerrina Feroni Head of Merchant Banking Department
	Name/Title

ANNEX A

DIRECTORS AND EXECUTIVE OFFICERS OF INTESA SANPAOLO

The name, title, present principal occupation or employment of each of the directors and executive officers of Intesa Sanpaolo are set forth below. The business address of each director and executive officer is Intesa Sanpaolo’s address. Unless otherwise indicated, each occupation set forth opposite an individual’s name refers to Intesa Sanpaolo. All of the persons listed below are citizens of the Republic of Italy, except Antoine Bernheim who is a French citizen.

In addition to the Telecom Shares listed below with respect to Antoine Bernheim, Mr. Bernheim owns Telecom Italia convertible bonds that are convertible into 95,021 Telecom Shares on any business day between January 22, 2002 and December 15, 2009 (the date of conversion to be the last day of trading on the Borsa Italiana for the month in which the option to convert is exercised).

In addition to the Telecom Shares listed below with respect to Giuseppe Fontana, Mr. Fontana owns 362,141 options to buy Telecom Shares.

Name and surname	Position with Intesa Sanpaolo	Present Principal Occupation (if different from Position with Intesa Sanpaolo)	Telecom Shares Beneficially Owned
Enrico SALZA	Chairman of Management Board	—	—
Orazio ROSSI	Deputy Chairman of Management Board	Commercial and industrial entrepreneur and Chairman, Cassa di Risparmio di Padova e Rovigo S.p.A.	—
Corrado PASSERA	Member of Management Board, Managing Director and CEO	—	—
Elio Cosimo CATANIA	Member of Management Board	Chairman and Managing Director, Azienda Trasporti Milanesi S.p.A.	1,886
Giuseppe FONTANA	Member of Management Board	Businessman, head of the Fontana Group holding company	160,124
Gian Luigi GARRINO	Member of Management Board	Chairman, Fondaco SGR S.p.A.	—
Giovanni Battista LIMONTA	Member of Management Board	Entrepreneur and Chairman, Limonta S.p.A.	—
Virgilio MARRONE	Member of Management Board	Managing Director and General Manager, IFI S.p.A.	1,545
Emilio OTTOLENGHI	Member of Management Board	Businessman and Chairman, La Petrolifera Italo Rumena S.p.A.	103,000
Giovanni PERISSINOTTO	Member of Management Board	Managing Director, Assicurazioni Generali S.p.A.	53,049
Marcello SALA	Member of Management Board	—	—

Name and surname	Position with Intesa Sanpaolo	Present Principal Occupation (if different from Position with Intesa Sanpaolo)	Telecom Shares Beneficially Owned
Giovanni Bazoli	Chairman of Supervisory Board	—	60,934
Antoine Bernheim	Deputy Chairman of Supervisory Board	Manager - Chairman Assicurazioni Generali Group	189,934
Rodolfo Zich	Deputy Chairman of Supervisory Board	Professor	—
Carlo Barel di Sant’Albano	Member of Supervisory Board	Manager - CEO IFIL Investments S.p.A.	—
Pio Bussolotto	Member of Supervisory Board	—	40,000
Rosalba Casiraghi	Member of Supervisory Board	Consultant	—
Giovanni Costa	Member of Supervisory Board	Professor	15,110
Franco Dalla Sega	Member of Supervisory Board	Professor	—
Gianluca Ferrero	Member of Supervisory Board	Chartered Accountant	—
Angelo Ferro	Member of Supervisory Board	Professor	—
Pietro Garibaldi	Member of Supervisory Board	Professor	5,000
Fabrizio Gianni	Member of Supervisory Board	Entrepreneur	—
Giulio Stefano Lubatti	Member of Supervisory Board	Consultant	—
Giuseppe Mazzarello	Member of Supervisory Board	CEO P. Ferrero & C. S.p.A.	10,000
Eugenio Pavarani	Member of Supervisory Board	Professor	—
Gianluca Ponzellini	Member of Supervisory Board	Chartered Accountant	—
Gianguido Sacchi Morsiani	Member of Supervisory Board	—	—
Ferdinando Targetti	Member of Supervisory Board	Professor	6,000
Livio Torio	Member of Supervisory Board	Lawyer	—

ANNEX B-1

TRANSACTIONS IN TELECOM ITALIA ORDINARY SHARES EFFECTED BY DIRECTORS AND EXECUTIVE OFFICERS OF INTESA SANPAOLO IN THE PAST SIXTY DAYS

All transactions listed below were open market purchases or sales effected on the Milan Stock Exchange (Italy).

Name of Director or Executive Officer Effecting the Transaction		Date		Type of Transaction [Purchase/Sale]		Number of Telecom Italia Shares		Price per Share (euro)
Pio Bussolotto		October 23, 2007		Purchase		40,000		€2.11

ANNEX B-2

TRANSACTIONS IN TELECOM ITALIA ORDINARY SHARES EFFECTED BY THE INTESA
SANPAOLO BANKING GROUP IN THE PAST SIXTY DAYS

The following describes transactions during the past 60 days by Intesa Sanpaolo in Telecom Shares. These transactions were all ordinary course broker-dealer activities engaged in by Intesa Sanpaolo or its affiliates consistent with its usual practices and unrelated to the Transaction. Substantially all of these transactions consisted of index arbitrage; index rebalance trading; program trading relating to baskets of securities; creation, redemption and balancing of exchange traded funds; facilitation of customer trades; model-driven trading and error correction.

Name of
Intesa
Sanpaolo
entity or
affiliate

Number of
Buys

Buy Volume

High/Low
Buy Prices
(in €)

Number of
Sells

Sell Volume

High/Low Sell
Prices
(in €)

Banca IMI

870

34,485,171

2.50/3.0

789

92,930,465

2.50/1.95

Intesa Sanpaolo S.p.A.

2,100,000

2.18/2.06

1,500,000

2.10/1.95

EXHIBIT INDEX

Exhibit No.

99.1		Co-Investment Agreement, dated as of April 28, 2007, by and among Generali, Intesa Sanpaolo, Mediobanca, Sintonia S.A. and Telefónica.

99.2		Amendment to the Co-Investment Agreement and the Shareholders’ Agreement, dated October 25, 2007, by and among Generali, Intesa Sanpaolo, Mediobanca, Sintonia S.A. and Telefónica.

99.3		Shareholders’ Agreement, dated as of April 28, 2007, by and among Generali, Intesa Sanpaolo, Mediobanca, Sintonia S.A. and Telefónica.

99.4		By-laws of Olimpia S.p.A. (unofficial English translation).

99.5		Share Purchase Agreement, dated May 4, 2007, by and among the Investors, Pirelli and Sintonia.

99.6		The Announcement of the Board of Commissioners of the Brazilian National Telecommunications Agency (Anatel) related to the Transaction, dated October 23, 2007 (unofficial English translation).

99.7		Joint Press Release announcing the closing of the Transaction, dated October 25, 2007, issued by Generali, Intesa Sanpaolo, Mediobanca, Sintonia S.A. and Telefónica.

99.8		Joint press release, dated April 28, 2007, issued by Generali, Intesa Sanpaolo, Mediobanca, Sintonia S.A. and Telefónica.

99.9		Joint press release requested by Consob (the Italian financial market authority), dated May 2, 2007, issued by Generali, Intesa Sanpaolo, Mediobanca, Sintonia S.A. and Telefónica.

99.10		By-laws of Telco S.p.A. (unofficial English translation).

EX-99.1 2 a07-27464_1ex99d1.htm CO-INVESTMENT AGREEMENT, DATED AS OF APRIL 28, 2007

Exhibit 99.1

CO-INVESTMENT AGREEMENT

This agreement (the “CO-INVESTMENT AGREEMENT”) is entered into on 28 April, 2007

BY AND BETWEEN

• TELEFONICA S.A., a Spanish company with registered office at 28013, Madrid, Gran Via n. 28, Spain (“TE”);

• ASSICURAZIONI GENERALI S.p.A., an Italian company with registered office at Piazza Duca degli Abruzzi n. 2, Trieste, Italy (“AG”);

• SINTONIA S.A., a Luxembourg company with registered office at 1, Place d’Armes, L-1136 Luxembourg (“SI”);

• INTESA SANPAOLO S.p.A., an Italian company with registered office at Piazza San Carlo n. 156, Torino, Italy (“IS”);

• MEDIOBANCA S.p.A., an Italian company with re gistered office at Piazzetta Cuccia n. 1, Milano, Italy (“MB”);

(collectively the “PARTIES” and each, individually, a “PARTY”)

WHEREAS

1. With the execution of this Co-investment Agreement the Parties wi sh to establish the terms and conditions for (I) their participation into Centotrenta 4/6 S.r.l., an Italian company with registered office at Galleria del Corso 2, Milan, Italy, fiscal code n. 05277610969 to be subsequently transformed and renamed “Telco S.p.A.”, an Italian joint stock corporation (“TELCO” or “NEWCO”), and (II) the presentation by the Parties, also on behalf of Newco, of an offer (the “OFFER”) for the acquisition by Newco from Pirelli & C. S.p.A. (“PC”) and Sintonia S.p.A. and Sintonia S.A. (together “SINTONIA”) (the “ACQUISITION”) of 100% of the share capital of a holding company named Olimpia S.p.A. (“O” and such shares, the “OLIMPIA SHARES”), which in turn holds a stake of 17.99% of the ordinary share capital of Telecom Italia S.p.A. (“TI”).

2. AG and MB are already shareholders of TI in which they respectively hold (I) as regards AG, approximately No. 543,40 million ordinary shares equal to 4.06% of TI’s ordinary share capital; and (II) as regards MB, approximately No. 206,46 million ordinary shares equal to 1.54% of TI’s ordinary share capital.

3. On 18 October 2006, AG and MB executed together with P C, SI and O a shareholders’ agreement (the “CURRENT SHAREHOLDERS’ AGREEMENT”), attached hereto as Annex A, which, upon the sale by PC and SI of the Olimpia Shares shall cease to have any effect.

4. Therefore, subject to PC and SI deciding to accept the Offer, the Parties wish to fund and to manage Newco in accordance with the terms and conditions of this Co-investment Agreement, the Shareholders’ Agreement (as defined below) and relevant attachments.

&# 160; 5. A fundamental assumption of this Co-investment Agreement is that the TI and TE groups will be managed autonomously and independently, without prejudice however to the Parties’ rights and prerogatives resulting from this Co-investment Agreement and the Shareholders’ Agreement.

NOW, THEREFORE, in consideration of the foregoing, the Parties hereby,

AGREE AND COVENANT

AS FOLLOWS.

1. TELCO

The Parties acknowledge and agree that (I) Newco is currently a dormant company named Centrotrenta 4/6 S.r.l., having the by-laws attached hereto as Annex B, (II) the Parties will acquire the entire share capital of Newco currently equal to Euro 10.000,00 , (III) Newco, which is currently incorporated in the form of a SOCIETA A RESPONSABIL ITA LIMITATA, shall be transformed into a SOCIETA PER AZIONI, (IV) Newco shall adopt the new by-laws attached hereto as Annex C (the “NEWCO’S BY-LAWS”), which, to the maximum possible extent, contains the principles of governance of Newco, while the remaining agreements among the shareholders as to the governance of Newco and O (which it has

not been possible to insert in the Newco’s By-Laws) are contained in the shareholders’ agreement attached as Annex D to this Co-Investment Agreement (the “SHAREHOLDERS’ AGREEMENT”).

2. OFFER

The Parties agree that the Offer shall be submitted to PC and Sin tonia in the text attached hereto as Annex E.

The Parties hereby agree that (A) if the acceptance of the Offer by PC and Sintonia (the “ACCEPTANCE”) were not received by the Parties within the relevant acceptance period indicated in the Offer, or (B) one or more of the Parties’ competent corporate body were not to approve the Acquisition within the 20 Business Days period indicated in the Offer, unless the other Parties agree to proceed with the Acquisition and they agree to the adjustments to be done in the relevant documents, or (C) one or more of the necessary anti-trust or other regulatory approvals indicated in the Offer were not obtained as indicated in the Offer, then the Parties would carry out - and hereby undertake to do so - all the activities necessary and requ ired to unwind the actions and transactions already executed or put in place on the basis of this Co-investment Agreement.

The Parties agree that as soon as practicable following receipt of the Acceptance, they shall complete the acquisition of Newco and shall cause the adoption of the Newco’s resolutions to implement the undertaking of this Co-investment Agreement and the connected Shareholders’ Agreements.

3. FUNDING AND CAPITALISATION OF NEWCO

The Parties agree that, in order to carry out the acquisition of the Olimpia Shares, Newco shall be funded as provided for in this Article 3 (and numerically illustrated in the chart attached hereto as Annex F), it being however hereby agreed and understood (XX) that the following calculations are based on the assumption that each share of Newco will have par value of Euro 1,00, (YY) that, in the event the par value of each of the Newco’s share were increased or reduced, the split indicated herein between

nominal value and share premium shall vary accordingly and (ZZ) that the price to be paid for the Acquisition corresponds to the price indicated in the Offer, with the consequence that, in case such a price were increased or reduced in accordance with the terms and conditions of the Offer, the following calculations shall be amended accordingly.

The Parties agree that, prior to acquiring the Olimpia Shares, the extraordinary shareholders’ meeting of Newco shall resolve upon:

(I) a first share capital increase reserved as follows:

(X) an amount of Euro 1.375m (corresponding to Euro 2,53 per share), of which Euro 543m of nominal value and Euro 831m of share premium, to be subscribed for and paid in by AG which undertakes to fully subscribe for through the contribution in kind of its direct shares in TI free of any charges, options and rights in favour of third parties, pledges and encumbrances; and

(Y) an amount of Euro 522m (corresponding to Euro 2,53 per share), of which Euro 206m of nominal value and Euro 316m of share premium, to be subscribed for and paid in by MB which undertake to fully subscribe for through the contribution in kind of its direct shares in TI free of any charges, options and rights in favour of third parties, pledges and encumbrances(together, the “FIRST SHARE CAPITAL INCREASE”).

(II) upon resolution to transform Newco as provided for in Article 1(iii) above, a second share capital increase reserved to TE, which TE undertakes to fully subscribe and pay in, for an amount of Euro 2,314m (corresponding to Euro 2,82 per share), of which Euro 821m of nominal value and Euro 1 .493m of share premium, to be subscribed for and paid in by TE in cash through immediately available funds or through the conversion of the shareholder’s loan granted by TE (the “SECOND SHARE CAPITAL INCREASE”);

(III) a third share capital increase reserved to IS, which IS undertakes to fully subscribe and pay in, for an amount of Euro 522m (corresponding to Euro 2,53 per share), of which Euro 206m of nominal value and Euro 316m of share premium, to be subscribed for and paid in by IS in cash through immediately available funds or through the conversion of the shareholder’s loan granted by IS (the “THIRD SHARE CAPITAL INCREASE”);

(IV) a fourth share capital increase reserved to SI, which SI undertakes to fully subsc ribe and pay in, for an amount of Euro 412m (corresponding to Euro 2,53 per share), of which Euro 163m of nominal value and Euro 249m of share premium, to be subscribed for and paid in by SI in cash through immediately available funds or through the conversion of the shareholder’s loan granted by SI (the “FOURTH SHARE CAPITAL INCREASE”).

Consequently, after completion in full of the First Share Capital Increase, Second Share Capital Increase, Third Share Capital Increase and Fourth Share Capital Increase (the “SHARE CAPITAL INCREASES”) the stakes in the share capital of Newco shall be the following: (I) AG will hold a stake of 28,0%, (II) MB will hold a stake of 10,6%, (III) TE will hold a stake of 42,3%, (IV) IS will hold a stake of 10,6% and (V) SI will hold a stake of 8,4%.

The Parties agree that the extraordinary shareholders’ meeting of Newco resolving on the Share Capital Increases shall delegate the board of directors of Newco to carry out and execute all the actions and formalities relating to the Share Capital Increases required by law and provided for under this Co-investment Agreement.

The Parties acknowledge that (AA) the Share Capital Increases shall be resolved upon during the same shareholders’ meeting of Newco, provided that (X) the transformation of Newco into a SOCIETA PER AZIONI pursuant to artic le 1.(iii) and (Y) the subsequent appointment of the new board of directors as provided in Article 1.1(a) and (b) of the Shareholders’ Agreement, shall be resolved after the resolution relating to the First

Share Capital Increase, and in any case in order to ensure that the resolutions listed under points from (i) to (iv) above shall be completed in the shortest possible timeframe, being they linked one to each other, (BB) such extraordinary shareholders’ meeting shall be held following the Acceptance and the satisfaction of the relevant conditions and delivery of the appraisal made by an expert on the value of the TI shares owned by AG and MB (which the Parties trust may be obtained prior to Closing (as defined in the Offer) and in any case timely for the purpose of Closing, (CC) upon the resolution having been adopted, (X) the subscription of all the Share Capital Increases shall occur and (Y) the contribution in kind relating to the First Share Capital Increase and the contribution in cash relating to the other Share Capital Increases shall be completed and fully paid in; (DD) in partial derogation to points (AA) through (CC) above, in the event that completion of the First Share Capital Increase were delayed because of the appointed expert’s appraisal is not delivered before Closing, then each of TE, IS and SI shall provide, respectively and severally, to Newco a shareholder’s loans (with no compensation) for a term not exceeding 20 calendar days (the “SHAREHOLDERS’ LOAN TERMS”) and for an amount equal to the sum of the Second Share Capital Increase, Third Share Capital Increase and Fourth Share Capital Increase respectively, and which TE, IS and SI shall convert into share capital in execution of the Share Capital Increases respectively reserved to them at the earlier of AAA) the delivery of the appraisal and the completion of the First Share Capital Increase, or BBB) the elapse of the Shareholders’ Loan Term, provided that, in the e vent under BBB), the First Capital Increase will take place as soon as possible thereafter.

The Parties further acknowledge and agree that:

• on or before the Closing Date (as defined in the Offer), Newco shall borrow at market conditions from MB, IS or other primary financial institutions appointed by MB and IS, subject to acceptance in writing by TE, a loan for a n amount of approximately Euro 1.000 m (the “FACILITY”).

• immediately after the Closing Date (as defined in the Offer), the extraordinary shareholders’ meeting of Newco shall resolve a fifth share capital increase for an amount up to Euro 900m, at an issue price of Euro 2,53 per share, which shall be open for subscription (to be fully paid in cash upon subscription) for a maximum term of six months as follows, and which purpose will be to finance the total or partial reimbursement of the Facility (the “FIFTH SHARE CAPITAL INCREASE”):

(i) a portion of the Fifth Share Capital Increase in Class B shares, equal to the percentage corresponding to the stake held at that time by TE in the entire share capital of Newco, reserved to TE for a maximum period of 6 (six) months with the issue of Class B shares it being hereby agreed and understood that if any part of such portion of the Fifth Share Capital Increase has not been subscribed for by TE within such period of 6 (six) months, then this portion of the Fifth Share Capital Increase shall be deemed subscribed up to the amount of the subscriptions actually made by TE;

(ii) a portion of the Fifth Share Capital Increase equal to the percentage corresponding to the stake held at that time by the existing Class A shareholders’ in the entire share capital of Newco, reserved to the Fifth Share Capital Investors (as defined below) with the issue of Class A shares - bearing PRO-QUOTA the same rights and duties pertaining to the already existing Class A shareholders (and it being understood that no shareholder will be granted additional or special rights, unless granted to the relevant Class of Shares under the Shareholders’ Agreement, the Co-investment Agreement and the By-Laws) - to be offered for subscription, for a maximum period of 5 (five) months, to one or more of such Fifth Share Capital Investors (as defined below), under the following conditions:

[X] the amount to be contributed in cash by each Fifth Share Capital Investor in exchange for the shares subscribed under the Fifth Share Capital Increase shall be higher than Euro 100 million, and

[X] the shares subscribed under the Fifth Share Capital Increase by each Fifth Share Capital Investor shall represent less than 5% of the entire share capital of Newco immediately after c ompletion of the Fifth Share Capital Increase;

it being hereby agreed and understood that if any part of such portion of the Fifth Share Capital Increase has not been subscribed for by such Fifth

Share Capital Investors, then this portion of the Fifth Share Capital Increase shall be deemed subscribed up to the amount of the subscriptions actually made by the Fifth Share Capital Investors;

(iii) a portion equal to the difference between (X) the portion of the Fifth Share Capital Increase reserved to the Fifth Share Capital Investors pursuant to point (ii) above and (Y) the portion of such Fifth Share Capital Increase actually subscribed for by such Fifth Share Capital Investors, reserved to the existing Class A shareholders (i.e. IS, AG, SI and MB), with the issue of Class A shares to be offered for subscription, for a maximum period of 1 (one) month following the expiration of the 5 (five) month-period under point (ii) above, it being hereby agreed and understood that (AA) the Class A shareholders shall have the right to subscribe any unopted part of this portion of the Fifth Share Capital Increase not subscribed for by other Class A shareholders, and (BB) if any part of such portion of the Fifth Share Capital Increase has not been subscribed for by the Class A shareholders, then this portion of the Fifth Share Capital Increase shall be deemed subscribed up to the amount of the subscriptions actually made by the Class A shareholders.

For the purposes of this Fifth Share Capital Increase: (i) “FIFTH SHARE CAPITAL INVESTOR” shall mean any company or person, other than a Telecom Operator (as defined below), which is a reputable qualified Italian institutional or private investor, to be selected by IS in agreement with the other Class A shareholders - such agreement not to be unreasonably withheld - and subsequently submitted for acceptance to TE, acceptance which can not be unreasonably denied, that after acquiring any stake in NewCo shall adhere to this Co-investment Agreement and the Shareholders’ Agreement and be subject to obligations thereto and will not have any special rights in the corporate governance of NewCo, other than those attached to Class A shares in accordance with the By Laws and the Shareholders Agreement and those resulting from the applicable law; and (II) “TELECOM OPERATOR” shall mean any company or person operating in the telecom sector and any company or person holding (x) a controlling stake in any non-listed company operating in the telecom sector or (y) a stake in a

listed company operating in the telecom sector which exceeds 10% of the share capital or which, even though is below 10% of the share capital, enables the holder to appoint one or more members of the board of directors of the listed company.

4. CLASS A AND CLASS B SHARES

The Parti es agree: (A) that, as already provided for in the Newco’s By-Laws, the share capital of Newco shall be divided into two separate categories: the Class A and the Class B shares, (B) that all the share capital increases, following the Fifth Share Capital Increase, shall be resolved “IN OPZIONE” pursuant to article 2441, first paragraph, of the Italian Civil Code splitting the overall amount of shares so as to reflect the proportion from time to time existing between Class A and Class B shareholders, (C) that TE shall receive and thereafter acquire (through share capital increases or exercise of the pre-emption right set forth in the Newco’s By-Laws) only Class B shares or Class A shares to be converted into Class B shares, while the other Parties including the Fifth Share Capital Investors (as defined below) and the Italian Qualified Investors (as defined in the Shareholder’s Agreement), if any, shall hold Class A shares, save for the possibility to acquire Class B shares in case of e xercise of the pre-emption right to be converted into Class A shares, (D) that the Class B shares shall have exactly the same economic and administrative rights as the Class A shares, save as provided for in the Shareholders’ Agreement and in the Newco’s By-Laws, and (E) that the Parties - following the completion of the Fifth Share Capital Increase - favourably envisage the potential analysis of further contribution of TI Shares into Newco (without prejudice for the principles under the “stand still” clause of the Shareholders Agreement) provided that in such an event the right to subscribe further capital increases in cash shall be granted to the other existing shareholders in order to allow avoidance of possible dilutions.

5. 0; BUSINESS OF NEWCO

activity of TI, provided however that, in order to carry out such services, the prior authorisation of the shareholders’ meeting of Newco shall be required pursuant to Article 2364, first paragraph, No. 5), such authorisation to be approved with the favourable vote of at least 95% of the share capital of Newco.

6. SHAREHOLDERS’ AGREEMENT

The Parties recognize and agree (I) that the Shareholders’ Agreement contains provisions relating INTER ALIA to (X) the governance of Newco, (Y) the governance of O, including the definition of the criteria concerning the appointment of the directors in TI, to the extent feasible and (Z) the transfer of Newco, O and TI shares, (II) that the Newco’s By-Laws have been drafted in order to reflect to the maximum possible extent the principles of governance of Newco and the transfer of Newco’s shares and (III) that the remaining principles of governance of Newco and O, which was not possible to insert in Newco’s By-Laws, are contained in the Shareholders’ Agreement.

7. CONFIDENTIALITY

No Party shall make any announcement, communication or disclosure in relation to this Co-investment Agreement, or in relation to the ongoing negotiations between the Parties, or in relation to the status of the same without the other Party’s previous written consent, unless this is required by law and/or by the competent authorities. In this case, the Parties undertake to provide with no delay, to the extent feasible, to the other Parties notice and/or copy of the announcement, communication or disclosure required by law and/or by the competent authorities.

8. COSTS AND EXPENSES

Each Party shall pay its own costs and expenses (including fees and disbursements of any external legal or financial advisers and accountants) incurred in connection with the preparation, negotiation, and execution of this Co-investment Agreement.

Each Party represents and warrants that this Co-investment Agr eement has been concluded without the participation, assistance or intervention, direct or indirect, of any broker, intermediary, commission agent, business agent or similar party, who may claim

any expenses, fees, royalties, commission or other costs due to the preparation, negotiation, and execution of this Agreement from the other Parties.

9. NOTICES

Any notice, objection or other communication to be given by one Party to the other under, or in connection with, this Co - -investment Agreement shall be in writing and signed by or on behalf of the Party giving it. It shall be served by sending it by fax to the number set out in this Article 9, or delivering it by hand, or sending it by pre-paid recorded delivery, special delivery or registered post, to the address set out in this Article 9 and in each case marked for the attention of the relevant Party set out in this Article 9 (or as otherwise notified from time to time in accordance with the provisions of this Article 9). Any notice so served by hand, fax, post or e-mail shall be deemed to have been duly given:

(a) in the case of fax, at the time of the receipt of delivery; or

(b) in the case of prepaid recorded delivery, special delivery or registered post, at the date indicated in the receipt of delivery,

provided that in each case where delivery by hand or by fax occurs after 6 p.m. on a Business Day or on a day which is not a Business Day, service shall be deemed to occur at 9 a.m. on the following Business Day. Any references to time in this Article are to local time in the country of the addressee.

The addresses and fax numbers of the Parties for the purpose of Article 9 are as follows:

To TE:

Telefonica S.A.,

Gran Via n. 38, Planta 9,

28013, Madrid, Spain

To the attention of: the Group General Counsel (Ramiro Sanchez de Lerin),

Ph: + 34 91 584 0207

Fax: + 34 91 531 3206

E-mail: SECRETARIA.GENERAL@TELEFONICA.ES

To AG:

ASSICURAZIONI GENERALI S.p.A.,

Piazza Duca degli Abruzzi n. 2,

34132 Trieste, Italy

To the attention of: Mr. Giovanni Perissinotto

Ph: + 39 040 671036

Fax: + 39 040 671260

E-mail: GIOVANNI_PERISSINOTTO@GENERALI.COM

To SI:

SINTONIA S.A.

1, Place d'Armes,

L-1136 Luxembourg

Luxembourg

To the attention of: Mr. Gustave Stoffel

Ph: + 352 26 266255

Fax: + 352 26 266256

E-mail: GUSTAVE.STOFFEL@PT.LU

To IS:

INTESA SANPAOLO S.p.A.

Piazza Scala n. 6,

20121 Milano, Italy

To the attention of Mr. Gaetano Micciche and Mr. Fabio Cane

Ph: + 39 02 879 42650

Fax: + 39 02 879 43 540

E-mail: GAETANO.MICCICHE@INTESASANPAOLO.COM, and FABIO.CANE@INTESASANPAOLO.COM

To MB:

MEDIOBANCA S.p.A.

Piazzetta Cuccia n. 1,

20121 Milano, Italy

To the attention of: Mr. Clemente Rebecchini and Ms. Cristiana Vibaldi

Ph: + 39 02 8829 202 and + 39 02 8829 455

Fax: + 39 02 8829 943

E-mail: CLEMENTE.REBECCHINI@MEDIOBANCA.IT, cristiana.vibaldi@mediobanca.it

A Party may notify the other Party of a change to its name, relevant addressee, address or fax number for the purposes of this Article 9, provided that, such notice shall only be effective on:

(i) the date specified in the notice as the date on which the change is to take place; or

(ii) if no date is specified or the date specified is less than five (5) Business Days after the date on which notice is given, the date following ten (10) Business Days after notice of any change has been given.

10. VARIATIONS

No variation of this Co-investment Agreement shall be valid unless it is in writing and signed by or on behalf of each of the Parties. The expression "variation" shall include any variation, amendment, supplement, deletion or replacement however effected.

11. SEVERABILITY

any of the remaining provisions of this Co-investment Agreement. In any such event the Parties shall negotiate in good faith and agree all those amendments to this Co-investment Agreement which are consequently necessary to replace the invalid or unenforceable provision with terms having as near as possible the same commercial effect with a view to maintain unaltered the Parties' mutual interests as currently protected under this Co-investment Agreement and in any case preserving a balance between their respective rights and obligations in enabling them to fully perform their obligations as contemplated hereunder.

12. ENTIRETY OF AGREEMENT

This Co-investment Agreement constitutes together with its Annexes the entire agreement and understanding of the Parties in relation to the transactions hereby contemplated and supersedes any and all prior agreements and arrangements, whether written or oral, that may exist between the Parties with respect to the matters contemplated therein.

13. NO WAIVER AND FURTHER ASSURANCES

No failure or delay by any of the Parties in exercising any right or remedy provided by law or pursuant to this Co-investment Agreement shall impair such right or remedy or operate or be construed as a waiver or variation of it or preclude its exercise at any subsequent time and no single or partial exercise of any such right or remedy shall preclude any other or further exercise of it or the exercise of any other right or remedy. Each of the Parties undertakes to the others to perform (or procure the performance of) all further acts and things, and execute and deliver (or procure the execution and delivery of) such further documents (including without limitation any agreement or arrangement which shall be entered into between the Parties) as set forth in this Co-investment Agreement, as may be required to implement and/or give effect to this Co-investment Agreement and the transactions contemplated hereunder.

14. GOVERNING LAW/EXCLUSIVE JURISDICTION

This Co-investment Agreement shall be governed by, and interpreted in accordance with, the laws of the Republic of Italy. Any disputes arising out of or in connection with this Co-investment Agreement shall be submitted by the Parties to arbitration. The venue of the arbitration shall be Milan. The arbitration shall be conducted in the English language and in accordance with ICC Rules.

* * * * *

TELEFONICA S.A.		ASSICURAZIONI GENERALI S.P.A.




INTESA SANPAOLO S.P.A.		MEDIOBANCA S.P.A.



SINTONIA S.A.

EX-99.2 3 a07-27464_1ex99d2.htm AMENDMENT TO THE CO-INVESTMENT AGREEMENT AND THE STAKEHOLDER' AGREEMENT, DATED OCTOBER 25, 2007

Exhibit 99.2

AMENDMENT

TO THE CO-INVESTMENT AGREEMENT AND SHAREHOLDERS AGREEMENT

This agreement is entered into on 25 October, 2007

BY AND BETWEEN

TELEFÓNICA, S.A., a Spanish company with registered office at 28013, Madrid, Gran Via n. 28, Spain (“TE”);

ASSICURAZIONI GENERALI S.p.A., an Italian company with registered office at Piazza Duca degli Abruzzi n. 2, Trieste, Italy,

Alleanza Assicurazioni S.p.A., an Italian company with registered office at Milano, viale Luigi Sturzo n. 35;

INA Assitalia S.p.A., an Italian company with registered office at Roma, Corso d’Italia n. 33;

Volksfürsorge Deutsche Lebenversicherung A.G., a German company with registered office at Hamburg (Germany), an der Alster n. 57-63;

Generali Vie S.A., a French Company with registered office at Paris , Boulevard Hausmann n. 11; (collectively “AG”, and all such companies, other than ASSICURAZIONI GENERALI S.p.A., hereinafter the “Other Companies of the Generali Group”);

SINTONIA S.A., a Luxembourg company with registered office at 1, Place d’Armes, L. 1136 Luxembourg (“SI”);

INTESA SANPAOLO S.p.A, an Italian company with registered office at Piazza San Carlo n. 156, Torino, Italy (“IS”);

MEDIOBANCA S.p.A., an Italian company with registered office at Piazzetta Cuccia n. 1, Milano, Italy (“MB”);

(collectively the “Parties” and each, individually, a “Party”)

WHEREAS

1. With an agreement dated April 28, 2007 (the “Co-investment Agreement”), basically the Parties established the terms and conditions for (i) their participation into Centrotrenta 4/6 S.r.l, an Italian company with registered office at Galleria del Corso 2, Milan, Italy, fiscal code n. 05277610969, to be subsequently transformed and renamed as Telco S.p.A. (“Telco” or “Newco”), and (ii) the presentation by the Parties also on behalf of Newco of an offer (the “Offer”) for the acquisition by Newco from Pirelli&Co. S.p.A

and Sintonia S.p.A. and Sintonia S.A. of 100% of the share capital of an holding company named Olimpia S.p.A (“O”), which in turn holds a stake of 17,99% of the ordinary share capital of Telecom Italia S.p.A. (“TI”) and the capitalization and funding of Newco including the contribution to Telco of 5,6% of the ordinary share capital of TI, MB and AG (the “Acquisition”). In accordance with such Offer, the Parties and Pirelli&Co. S.p.A and Sintonia S.p.A. and Sintonia S.A.entered into a Stock Sale Purchase Agreement on May 4^th, , 2007 (the “SPA”).

2. The Parties entered into a Shareholders Agreement on April 28, 2007, by means of which basically they established the principles relating inter alia to (i) the corporate governance of Newco, (ii) the governance of O, (iii) the appointment of directors in TI and (iv) the transfer of the Newco’s shares and the O and TI’s shares directly or indirectly owned by Newco (the “Shareholders Agreement”).

3. On 23 October 2007, the Brazilian telecommunications regulator (“ANATEL”) published in its website a press release informing the approval of the Acquisition with the request of fulfillment of certain actions aimed at ensuring that the Brazilian activities of the Telefonica Group and the Telecom Italia Group remain separate (the “ANATEL Approval”).

4. The Parties wish to enter into this amendment to the Co-investment Agreement and Shareholders Agreement, so as to amend certain provisions in order to clarify their application.

Now, therefore, in consideration of the foregoing premises the Parties hereby

AGREE AND CONVENANT

as follows:

1. Unless differently stated herein, terms in capital letters used in this Second Amendment to the Co-Investment Agreement and the Shareholders’ Agreement shall have the same meaning as defined in the Co-Investment Agreement, the Shareholders’ Agreement on in the SPA, as the case may be.

2. The Parties hereby agree to amend the Co-investment Agreement by providing that the transformation of Telco into a società per azioni shall occur at Closing, provided that Telco will be liquidated and each Party (without prejudice of any other rights it may have under the Co-investment Agreement in the event of any breach by any Party) shall receive back all its respective contributions, net of any expenses occurred and taxes paid, should, for any reasons (i) the Acquisition not be completed within 195 days following the execution of the SPA or (ii) transformation not be registered, within 5 days from payment of the Share Capital Increases. It is hereby agreed and understood that the Parties shall in any case act in full respect of the Shareholders Agreement pending the registration of the transformation.

3. The Parties hereby agree to amend the Co-investment Agreement and the Shareholders Agreement, by providing that:

(i) the AG portion of the First Share Capital Increase shall be resolved for the benefit of and subscribed by AG and the Other Companies of the Generali Group as specified in Annex A, provided that, in case of subsequent change of control of any of said Other Companies of the Generali Group, the Telco shares held by it shall be transferred to AG before such change of control occurs. Each of the Other Companies of the Generali Group hereby adheres to Co-Investment Agreement and to the Shareholders Agreement, both as amended and restated, and to the SPA.;

(ii) AG shall ensure that AG and the other companies of the Generali Group becoming shareholders of Telco in accordance with point 3(i) above shall act as a single Party vis-à-vis the other Parties and fulfill all their obligations in accordance with the Co-Investment Agreement and with the Shareholders Agreement, both as amended and restated, and with the SPA; provided that, AG will be jointly and severally responsible for any breach of such obligations – excluding the obligations already fulfilled at Closing - by any of the Other Companies of the Generali Group;

(iii) any references to AG in the Co-investment Agreement and the Shareholders Agreement, shall be deemed as made to AG and the other companies of the Generali Group for the respective percentages and, where appropriate, as a single contractual Party (“unica parte complessa”).

(iv) any notices to AG and the other companies of the Generali Group becoming shareholders of Telco in accordance with point 1(i) shall be made by each of the Parties directly to AG also on behalf of such other companies of the Generali Group.

4. The Parties hereby agree to amend the Shareholders Agreement, by adding the following provision at the bottom of the Clause 8.7:

“Without prejudice to the Standstill provision contemplated in Clause 7, which, in any case, remains in full force and effect, it is agreed and understood that this Clause 8.7 shall not apply to any transactions on TI shares falling in the scope of investment services - as defined by article 1, paragraph 5, letters (b) to (e) of Legislative Decree no. 58/1998 - supplied by MB, AG, IS and, if any, by SI and/or any company of their respective groups

to a Telecom Operator in the ordinary course of business, provided that the relevant transaction does not involve TI Voting Shares in excess of 2% of TI Voting Share Capital.”

5. The Parties acknowledge the content of the ANATEL Approval (a copy of which is attached hereto) and each of the Parties undertakes, for so long as it lies within its respective powers, to implement the content thereof through appropriate legal instruments and actions.

6. Except as provided above, all the other provisions, terms and conditions set forth in the Shareholders Agreement and the Co-Investment Agreement shall remain unchanged and are hereby expressly ratified and confirmed by the Parties.

* * * * *

TELEFÓNICA, S.A.



ASSICURAZIONI GENERALI S.p.A.



Alleanza Assicurazioni S.p.A.



INA Assitalia S.p.A.



Volksfürsorge Deutsche Lebenversicherung A.G.



Generali Vie S.A.

SINTONIA S.A.



INTESA SANPAOLO S.p.A.



MEDIOBANCA S.p.A.

EX-99.3 4 a07-27464_1ex99d3.htm SHAREHOLDER'S AGREEMENT, DATED AS OF APRIL 28, 2007

Exhibit 99.3

SHAREHOLDERS’ AGREEMENT

This agreement (the “SHAREHOLDERS’ AGREEMENT”) is entered into on April, 28 2007

BY AND BETWEEN

• TELEFONICA S.A., a Spanish company with registered office at 28013, Madrid, Gran Via n. 28, Spain (“TE”);

• ASSICURAZIONI GENERALI S.p.A., an Italian company with registered office at Piazza Duca degli Abruzzi n. 2, Trieste, Italy (“AG”);

• SINTONIA S.A., a Luxembourg company with registered office at 1, Place d’Armes, L- 1136 Luxembourg (“SI”);

• INTESA SANPAOLO S.p.A., an Italian company with registered office at Piazza San Carlo n. 156, Torino, Italy ( “IS”);

• ; MEDIOBANCA S.p.A., an Italian company with registered office at Piazzetta Cuccia n. 1, Milano, Italy (“MB”);

(collectively the “PARTIES” and each, individually, a “PARTY”)

WHEREAS

1. With an agreement of even date (the “CO-INVESTMENT AGREEMENT”), the Parties have agreed to establish the terms and conditions for (I) their participation into Centotrenta 4/6 S.r.l., an Italian company with registered office at Galleria del Corso 2, Milan, Italy, fiscal code n. 05277610969 to be subsequently transformed and renamed as Telco S.p.A. (“TELCO” or “NEWCO”), (II) the presentation by the Parties also on behalf of Newco of an offer (the “OFFER”) for the acquisition by Newco from Pirelli&Co. S.p.A. (“PC”) and Sintonia S.p.A. and Sintonia S.A. (together “SINTONIA”) (the “ACQUISITION”) of 100% of the share c apital of an holding company named Olimpia S.p.A. (“O” and such shares the “OLIMPIA SHARES”), which in turn holds a stake of 17.99% of the ordinary share capital of Telecom Italia S.p.A. (“TI”), (III) the capitalization and funding of Newco in connection with the Acquisition, (IV) the division of Newco’s share capital into two classes of shares, (V) the corporate scope of Newco, and (VI) the general framework in which the respective obligations of the Parties under the Co-investment Agreement are inserted;

2. The Parties now wish to agree on the principles relating INTER ALIA to (I) the corporate governance of Newco, (II) the governance of O, (III) the appointment of directors in TI and (IV) the transfer of the Newco’s shares and the O and TI’s shares directly or indirectly owned by Newco.

NOW, THEREFORE, in consideration of the foregoing premises which together with the Annexes of this Shareholders’ Agreement are an essential part hereof, the Parties hereby,

AGREE AND COVENANT

AS FOLLOWS:

1. CORPORATE GOVERNANCE OF NEWCO

1.1 The Parties agree that the corporate governance of Newco is reflected, to the maximum possible extent, in the Newco’s by-laws (the “NEWCO’S BY-LAWS”). In particular:

(A) ; The composition of the board of directors of Newco shall be based on the principle of proportionality as follows. The Newco’s By-Laws shall provide that the number of directors shall be equal to ten. Should a director of Newco, who has been designated by one of the Parties, resign or otherwise cease for any reason whatsoever to hold his office, the relevant Party shall have the right to designate the new director in order to preserve the composition of the Board of directors referred to in this clause and the Parties shall exercise their rights so as to cause the appointment of the person indicated by the relevant Party. Should one of the Parties decide to revoke one or more of the directors designated by such Party, all the Parties shall vote in the relevant shareholders’ meeting for such revocation, provided that the Party asking the others to vote for the revocation of one or more of its designated directors sh all keep Newco and the other Parties fully harmless and indemnified for any damages connected therewith;

(B) The Newco’s By-Laws shall contain a voting list system to ensure that:

(I) the Parties holding the Class A shares will be entitled to appoint so long as they holds a percentage of at least 50% plus one share of the share capital of Newco six directors, including the Chairman; for this purpose, it is hereby agreed between the Parties holding the Class A that: (X) they will concur in the presentation of one list; (Y) the list shall be determined based on the principle of proportionality by the Parties holding the Class A shares unanimously, failing which unanimity within the terms indicated in the By-Laws, the proportionality will be as follows: two directors

will be indicated by AG, one director will be indicated by each of IS, SI and MB, the Chairman will be indicated unanimously; the same principle shall apply for any possible direct or indirect designation of O and TI’s directors.

(II) TE, as holder of Class B shares will be entitled to appoint (x) so long as it holds a percentage of at least 30% of the share capital of Newco four directors, including the Vice-Chairman, and (y) so long as it holds a percentage of at least 20% of the share capital of Newco, two directors;

It being understood that, should (X) the holders of Class A shares hold less than 50% plus one share, and/or (Y) TE as holder of Class B shares holds more than 50% plus one share , the Parties shall appoint the directors on the basis of the same proportionality principles under points (i) and (ii) above, which would in any case grant the majority of the directors to the class of shares representing at least 50% plus one share of the entire share capital of Newco and seven out of ten dir ectors to the class of shares representing more than 70% of the entire share capital of Newco. It is also understood that in the event any Class of shareholders dilutes below the aforementioned percentages it shall cause the resignation of the relevant exceeding director/s.

(C) On the following matters (the “RESERVED MATTERS”), the board of directors will decide with the vote of at least seven directors, it being however agreed and understood that if three or more dir ectors abstained from voting on any of the Reserved Matters or remained absent from the relevant meeting the quorum will be reduced to the vote of the majority of the directors in office (i.e. the vote of six directors), PROVIDED HOWEVER THAT, if the absent or abstaining directors from the relevant meeting are three or more TE directors, then (X) the discussion and resolutions about such Reserved Matter shall be postponed to a subsequent meeting (to be held not earlier than five business days later than the first meeting), where any resolution relating to such Reserved Matters will require the special majorities referred to above, (Y) each of the directors shall be entitled to ask that such subsequent meeting be held by teleconference or videoconference, and (Z) in the event that three or more directors, are absent or abstaining from the relevant subsequent meeting, the quorum will be reduced to the vote of the majority of the directors in office (i.e. the vote of six directors):

(AA) acquisition, disposal and encumbrance (directly or indirectly in any form or manner) of O’s or TI’s shares or any rights attached thereto including, but not limited to, voting rights, (with the exception of the sale by O and/or by Newco (or by the entity

resulting from the merger between O and Newco) of TI shares in order to adhere to a tender offer, it being understood and agreed that this decision will be taken by the board of directors with a simple majority subject however to the prior authorization of the shareholders’ meeting and to the right of “RISCATTO” as provided for in article 28 of the Newco’s By-laws);

(BB) ; carrying out of investments other than in O and in TI;

(CC) capital expenditure and financial structure decisions for amounts in excess of Euro 75 million;

(DD) decisions on the vote to be exercised in (x) the extraordinary shareholders’ meeting of TI convened pursuant to Article 2365 of the Italian Civil Code to approve resolutions on transactions of extraordinary nature (including but not limited to resolutions having an impact on the share capital of TI capital, such as increases or decreases, mergers and de-mergers, with the exception however of resolutions provided under art. 2446-2447 of the Italian civil code or other resolutions required to comply with applicable mandatory regulations) and (y) the shareholders’ meeting of O; or

(EE) approval and amendments of the budget of Newco;

(D) the shareholders’ meeting of Newco shall resolve with the vote of (I) at least 75% of the entire share capital on (X) share capital increases with the exclusion of the option right pursuant to Article 2441, 4th and 5th paragraph of the Italian Civil Code, (Y) mergers and de-mergers (except the merger between O and Newco) determining a dilution of the shareholders, and (Z) amendments to the provisions of the Newco’s By-Laws regarding the appointment of the board of directors and the QUORUM of board of directors and shareholders meetings; and (II) at least 65% of the entire share capital on the following matters:

(A) 0; any other matter pertaining to the extraordinary shareholders meeting of Newco, with the exclusion of mergers with companies wholly owned by Newco or in which Newco holds a stake of at least 90% of the entire share capital, which shall be referred to the Board of Directors of Newco pursuant to Articles 2505 and 2505-bis of the Italian Civil Code and will be resolved with the special majorities set forth under Article 1(c) above, save for the merger of O into Newco, which the Parties believe appropriate to analyse expeditiously as to the most efficient way to carry on after the Acquisition and shall therefore be approved with simple majority;

(B) dividend policy of Newco;

it being however agreed and understood that- both for the matters under this Article 1.1(d)(i) and (ii) above - in case one or more shareholders holding more than 30% of the entire s hare capital abstained from voting or remained absent from the relevant meeting the quorum will be reduced to the vote of at least 50% plus one share of the entire share capital;

(E) the shareholders’ meeting of Newco shall resolve the prior authorisation necessary pursuant to Article 2364, first paragraph, No. 5), to carry out the services referred to in Article 3 of Newco’s By-Laws with the vote of at least 95% of the Newco’s share capital.

1.2 The Parties agree that (except as provided for below in Article 8.5) deadlocks at the level of the board of directors and shareholders’ meetings on the matters referred to under items (aa) and (dd) of paragraph 1.1.(c) above and under paragraph 1.1(d) above with the exception of item (B) shall be resolved as follows:

(AA) the Parties shall try to find an amicable compromise within fifteen calendar days as of the relevant meeting;

(BB) then a new meeting shall be convened and at such meeting the decision will be passed with a simple major ity, i.e. without the special quorum referred to in letters (c) and (d) above;

(CC) in any such cases (i.e. where the decision were taken with simple majority and with the negative vote expressed by either TE or MB or AG or IS or SI, or by the members of the board of directors designated by either TE, or AG or SI or ISor MB, hereinafter the “DISSENTING SHAREHOLDER”), the Parties shall be bound to cause upon request by a Dissenting Shareholder, (who will be entitled to deliver to the other Parties, within the follow ing thirty days, a notice (the “DE-MERGER NOTICE”) requiring the other Parties to cause), as soon as possible, (A) the merger between Newco and O (if not already done at that time), and (B) the non-proportional de-merger of the company resulting in the attribution to the beneficiary company to be owned 100% by each Dissenting Shareholder of a percentage of all the assets and liabilities of Newco after merger with O corresponding to the stake held by each of such Dissenting Shareholder in Newco after merger with O ((a) and (b) jointly, hereinafter, the “DE-MERGER”). In such case (X) the Parties shall implement, adopt and vote, and cause the directors designated by them to implement, adopt and vote, all and any actions, documents and resolutions necessary to complete the De-merger within a reasonably short timeframe, but in any case no later than 6 months following the Demerger Notice or, if the transaction is subject to any

authorizations by law or contract, within 6 months following the obtaining of such authorizations, and (Y) Newco shall proceed with the execution of the Reserved Matter only after the effective date of the De-merger. Except if TE exercised the Call Option under Article 8.5(a) below, immediately upon receipt of the De-merger Notice, the portion of O or TI Shares corresponding to the Dissenting Shareholder’s stake in Newco shall be deposited in escrow with a fiduciary company or otherwise, in any case to secure the effectiveness of the De-merger and the exercise of the relevant voting rights thereon in accordance with the Dissenting Shareholders’ instructions. If TE exercises the Call Option under Article 8.5(a) below, immediately upon receipt of the Call Option notice, the O or TI Shares being the object of the Call Option shall be deposited in escrow with a fiduciary company or otherwise, in any case to secure the effectiveness of the Call Option and, subject to deposit in escrow of the full Call Option price, the exercise of the voting rights thereon in accordance with TE instructions. Upon effectiveness of the De-merger under this Article 1.2 (and also in the case under Article 8.5), the Dissenting Shareholder shall no longer be bound by this Agreement.

Without prejudice to the provision under 1.1 (c) above in relation to the reduction of the relevant quorum in case of absence or abstention, if the relevant QUORUM in respect of any Reserved Matter, other than items (aa) and (dd) of 1.1(c) above and of 1.1(d) above except for item (B), is not met, the releva nt proposal will be deemed to be rejected and no action will be taken.

TE will have the right to appoint one out of three effective members in the Board of Statutory Auditors of Newco, to be indicated as Chairman, and one alternate member (COLLEGIO SINDACALE).

The other Class A shareholders will have the right to appoint two out of three effective members in the Board of Statutory Auditors of Newco, and one alternate member (COLLEGIO SINDACALE).

< /p>

2. CLASS A AND CLASS B SHARES

exercise of the pre-emption right set forth in the Newco’s By-Laws) only Class B shares or Class A shares to be converted into B shares, while the other Parties, including the Fifth Share Capital Investors (as defined in the Co-investment Agreement) and the Italian Qualified Investors (as defined below), if any, shall hold Class A shares, save for the possibility to acquire Class B shares in case of exercise of the pre-emption right to be converted into A shares, (D) that the Class B shares shall have exactly the same economic and administrative rights as the Class A shares, save as provided for herein and in the Newco’s By-Laws, and (E) that the Parties - following the completion of the Fifth Share Capital Increase (as defined in the Shareholders’ Agreement) - will favourably envisage the potential analysis of further contribution of TI Shares into Newco (without prejudice for the principles under the “stand still” clause of this Agreement) provided that in such an event the right to subscribe further capital increases in cash shall be granted to the other existing shareholders in order to allow avoidance of possible dilutions.

3. BUSINESS OF NEWCO

The Parties agree that (I) the business of Newco shall only be that of investing, holding and disinvesting, dir ectly and indirectly, in TI shares, (II) however, the corporate scope of Newco shall permit, in principle, the carrying out of certain services in the field of activity of TI, provided however that, in order to carry out such services, the prior authorisation of the shareholders’ meeting of Newco shall be required pursuant to Article 2364, first paragraph, No. 5), such authorisation to be approved with the vote of at least 95% of the share capital of Newco.

4. CORPORATE GOVERNANCE OF O

The P arties agree that the principles of corporate governance referred to in Article 1 above shall also apply MUTATIS MUTANDIS to O. As a consequence, TE shall be entitled to designate a percentage of the directors, including the Vice-Chairman, to be appointed by Newco in O reflecting its shareholding in the Newco’s share capital and to appoint one out of three members of Board of Statutory Auditors of O to be indicated as Chairman, and one alternate member (COLLEGIO SINDACALE).

O will be subject to the activity of direction and coordination of Newco. As a consequence, prior to any board of directors meeting or shareholders’ meeting of O taking place, the Parties shall cause the board of directors of Newco to convene and to resolve on the decision to be then adopted in the relevant corporate body of O. More in particular, any decision to be taken at the level of the board of directors and shareholders’ meeting of O will be previously agreed by the board of directors of Newco in accordance with the principle of the Newco’s governance referred to above (including

special majorities where required), with the understanding and the agreement that the Parties shall cause the directors of O, respectively designated, to conform to the resolution adopted at the level of Newco.

In case of merger of O and Newco, the governance of O (or the incorporating entity as the case may be) will be that of Newco as provided for in Article 1 above, provided however that TI will not be subject to the activity of direction and coordination of Newco or O (or the incorporating entity as the case may be).

5. PROVISIONS RELATING TO TI AND TE

The Parties recognize and agree that the TI and TE groups will be managed autonomously and independently, without prejudice however to the Parties’ rights and prerogatives resulting from this Shareholders’ Agreement.

The Parties further recognize and acknowledge that, without prej udice of the independence and autonomy of any of TI’s management decision, the investment in Newco implies a strategic vision and perspective. Therefore the Parties will favorably regard any strategic initiative that the TI’s and TE’s respective managements may jointly carry out, in their autonomy and independence.

As soon as possible after Closing (as defined in the Offer), and for the entire term of the Shareholders’ Agreement the board of directors of Newco or O, as the case may be, shall approve the list to be submitted to the shareholder’ meeting of TI, for the appointment of the directors of TI pursuant to the following criteria: (I) TE - to the extent holding at least 30% of the Newco’s share capital - shall have the right vis-a-vis the other Parties to designate two directors of TI (X) to be included as designees for appointment in the board of TI in the list presented by O or Newco (as the case may be) and (Y) to the extent feasible, pursuant to Article 2386, first paragraph, of the Italian Civil Code (“COOPTAZIONE”); and (II) the Class A shareholders which are Party to this Agreement - to the extent holding at least 50% plus one share of the Newco’s share capital - shall designate the other members of the list as follows: (X) three members unanimously and (Y) the remaining members on the basis, MUTATIS MUTANDIS, of the same proportionality applied in Article 1.1(b)(i) above among the Class A shareholders which are Party to this Agreement.

The directors designated by TE in Newco, O and TI shall be directed by TE to n either participate, nor vote at the board of directors meetings (and TE, to the extent applicable, shall neither attend nor vote, at any shareholders’ meetings of Newco or the entity resulting from the merger of O with Newco, as the case may be) at which there will be discussed and proposed resolutions relating to the

policies, management, and operations of companies directly or indirectly controlled by TI providing their services in countries where regulatory and legal restrictions or limitations for the exercise of voting rights by TE (as indirect and ultimate shareholder of such companies) are in force.

Even though as of the date hereof TE does not envisage any burden, restriction or divestment to be imposed on TE by any regulatory or antitrust authority in relation to the Acquisition or once the Acquisition has been implemented, the Parties agree that if any competent antitrust or regulatory authorities in any country shall impose on TE or on TI any burden or divestment finally confirmed by the competent authorities (the “BURDEN”) resulting from TE’s equity investment in Newco and indirectly in TI, then TE, in case the Burden is imposed on TE, or each of the Parties, in case the Burden is imposed on TI, will have the right to request a De-merger as provided for in Article 1.2(cc) of this Shareholders’ Agreement.

The Parties agree that in the event that the Acquisition is subject to conditions precedent by competent antitrust or regulatory authorities which require TE to reduce its prerogatives and rights in terms of governance in Newco and/or in O and/or in TI, then TE shall be bound to satisfy such conditions precedent and the Parties shall ag ree in good faith the amendments to this Shareholders’ Agreement which, while preserving the fulfilment of such conditions precedent, shall preserve as much as possible the overall spirit underlying this Shareholders’ Agreement.

6. DISPOSITION OF TI MATERIAL ASSETS OR MATERIAL CHANGES IN TI’S STRATEGY

In the event of (I) any transfer in whatever form of any of the foreign assets hold directly or indirectly by TI having a value of more than Euro 4bn per transaction (or series of tra nsactions occurred within a period of 12 months for the same assets) or (II) TI entering into a significant strategic alliance with any “TELECOM OPERATOR” (to be construed as to include any person, company or entity operating in the telecom sector and any person, company or entity holding (A) a controlling stake in any non-listed company operating in the telecom sector or (B) a stake in a listed company operating in the telecom sector which exceeds 10% of the share capital or which, even though is below 10% of the share capital, enables the holder to appoint one or more members of the board of directors of the listed company), then TE, within the following thirty calendar days, will have the right to deliver a De-Merger Notice to the other Parties, who will bound to cause, the De-merger as provided for in Article 1.2(cc) of this Shareholders’ Agreement and in such case the Parties shall implement, adopt and vote, and cause their directors designated by them to implement adopt and vote, all and any actions, documents and resolutions necessary to complete the De-merger

within a reasonably short timeframe, but in any case no later than 6 months following the Demerger Notice or, if the transaction is subject to any authorizations by law or contract, within 6 months following the obtaining of such authorizations.

7. & #160; STAND STILL

The Parties represent to each other that (i) as of the date of this Agreement they respectively own or hold, directly or indirectly, the interests in TI shares indicated in Annex 7 hereto (the “RELEVANT TI INTERESTS”), calculated by taking into account all the shares and interests also held by entities connected to the Parties pursuant to Article 109 of Legislative Decree No. 58 of February 28, 1998 (the “CONNECTED ENTITIES”) and (ii) they have not executed nor taken part, directly or indirectly, also by means of the Connected Entities, in any agreement whatsoever, also oral, concerning interests in TI shares granting voting rights on the matters listed in Article 105 of Legislative Decree No. 58 of Feb ruary 28, 1998 or any option rights, convertible bonds, warrants, derivatives, granting the right to subscribe or acquire TI shares granting voting rights on the matters listed in Article 105 of Legislative Decree No. 58 of February 28, 1998 (collectively the “TI VOTING SHARES”) that may cause the holding by the Parties, Newco and the Connected Entities, taken as a whole, of a number of TI Voting Shares exceeding the 30% mandatory tender offer threshold pursuant to article 109 of Legislative Decree No. 58 of February 28, 1998 (the “THRESHOLD”). The Parties also acknowledge that O is currently part of a pre-emption agreement with Holinvest S.p.A. under which Holinvest S.p.A. is allowed to hold up to n. 492,697,862 plus 1% of the overall number of the issued TI Voting Shares (the “HOLINVEST SHARES”). For the purpose of this Article 7, the “INITIAL BALANCE” shall be equal to the number of TI Voting Shares resulting from the difference between (i) the number of TI Voting S hares equal to the Threshold and (ii) the total aggregate number of the TI Voting Shares held by O, the Relevant TI Interests and - until waiver of the pre-emption rights set out in pre-emption agreement with Holinvest S.p.A. as provided below - the Holinvest Shares.

Starting from the date hereof and for the duration of this Agreement, each Party undertakes not to execute or take part, directly or indirectly, also by means of the Connected Entities, in any agreement whatsoever, also oral, concerning TI Voting Shares (including option rights) that may cause the holding by the Parties, Newco and the Connected Entities, taken as a whole, of a number of TI Voting Shares exceeding the Threshold.

Without prejudice to the above, the acquisition of TI Voting Shares will be permitted to each Party for a number of TI Voting Shares not exceeding their respective Relevant TI Interests as at the date hereof plus the percentage pro-rata of the Initial Balance corresponding to the relevant Party’s percentage in Newco’s share capital following the Fifth Share Capital Increase. In such a case, the Parties agree that any such further acquisition of TI Voting Shares shall be immediately communicated to the other Parties and to a secretary office under the coordination of MB and/or by an entity selected and appointed by MB. In addition, each Party shall inform the other Parties and the secretary office under the coordination of MB and/or by an entity selected and appointed by MB about the number of TI Voting Shares held at the end of each calendar quarter. In any case it is agreed that the Parties (X) shall make as soon as possible after execution of this Shareholders’ Agreement precise calculation as to the Initial Balance and (Y), upon Closing, shall cause O to waive any rights under the pre-emption agreement with Holinvest S.p.A.

The Parties agree that, in the event a breach by a Party of the provisions contained in this Article 7 causes the overcoming of the Threshold and the triggering of the obligation to launch a mandatory tender offer pursuant to Article 109 of Legislative Decree No. 58 of February 28, 1998, such a Party undertakes to (i) hold harmless and indemnify the other Parties from any damages, losses, costs and expenses aris ing out from such a breach (ii) take the whole responsibility of the mandatory tender offer, if required, or of the sale of the exceeding stake, to the extent possible, and (iii) bear all the costs connected with the mandatory tender offer and all other costs (including advisory services) borne by the other Parties.

8. CAPITAL INCREASES - TRANSFER OF SHARES

8.1 CAPITAL INCREASES OF NEWCO

In the event of an increase of capital of Newco, without consideration or with consideration without exclusion of the option right, the shareholders who hold Class A shares shall have the right to receive and subscribe Class A shares and the shareholders of Newco who hold Class B shares shall hav e the right to receive and subscribe for Class B shares. In the event that any holders of Class A shares have not fully exercised their pre-emption right, the other holders of Class A shares shall have the preferred right to exercise the pre-emption on the unopted Class A shares. In the same manner, in the event that any holders of Class B shares have not fully exercised their pre-emption right, the other holders of Class B shares shall have the preferred right to exercise the pre-emption on the unopted Class B shares. In the event that after the exercise of the option and pre-emption rights by the holders of Class A shares remain Class A shares not subscribed, such shares may be subscribed, by means of the exercise of the option and pre-emption right, by the holders of Class B shares in proportion to their shareholding on the total number of Class B shares issued by Newco, subject to the automatic conversion of the aforesaid Class A shares at the rate of one newly issued Class B share (having the same chara cteristics as the Class B shares in circulation) for each Class A share subscribed. In the event that after the exercise of the option and pre-emption rights by the holders of Class B shares remain Class B shares not subscribed, such shares may be subscribed, by means of

the exercise of the option and pre-emption right, by the holders of Class A shares in proportion to their stakeholding on the total number of Class A shares issued by Newco, subject to the automatic conversion of the aforesaid Class B shares at the rate of one newly issued Class A share (having the same characteristics as the Class A shares in circulation) for each Class B share subscribed.

8.2 &# 160; TRANSFER OF SHARES OF NEWCO

8.2.1 Within the limits provided by this article 8.2 and by article 8.3., the shares of Newco are transferable to shareholders of Newco and to third parties.

The provisions of this article 8.2 and of article 8.3 apply not only to the transfer of the shares of Newco, but to the transfer of any right whatsoever relating to them, including, by way of example, (i) all shares or potential financial instruments of Newco (including those provided for in article 2346 of the civil code) having voting rights or convertible into shares having voting rights, (ii) all bonds or other financial instruments convertible into, exchangeable with, or conferring to the relevant owner the right to subscription or to acquisition of shares or financial instruments with voting rights of Newco, as well as shares originating in the respective conversion or the exercise of the abovementioned rights, (iii) any other right, title, and/or financial instrument (including rights of option and/or warrant and/or equity swap) that gives a right to the acquisition of and/or subscription to shares and/or financial instruments and/or bonds convertible into/ or exchang eable with, shares or financial instruments having voting rights or convertible into shares having voting rights in Newco, and/or the shares and/or financial instruments acquired on the basis of their exercise. The provisions of this article 8.2 and article 8.3 regard - in addition - not only the transfer of full ownership of the shares of Newco and the rights relating thereto, but also the transfer of the bare ownership and whatsoever real rights of enjoyment, exclusive of the real rights of guarantee.

For the purposes of this article 8.2 and article 8.3, by act of transfer is meant any transfer by deed between living people, in whatever manner (such as, for purely illustrative purposes, sale, barter, contango, fiduciary transfer, and the modification of the entitlement to the relationship underlying a possible fiduciary commission, the conferring or borrowing of titles, or rather title deeds, without consideration or out of generosity, amalgamation, splitting) able to be accomplished, directly or indirectly, in whole or part, including in a transitory manner, the ownership or availability of the Shares and whatever rights, interests, including of a non-property nature, deriving from or connected to the entitlement to the shares of Newco.

For the purposes of this Article 8.2, “ITALIAN QUALIFIED INVESTORS” shall mean any company or person, other than a Telecom Operator, which is a reputable qualified Italian institutional or private investor previously accepted in writing by the holders of Class B shares, provided that simultaneously with the acquiring of any stake in Newco, it shall adhere to any agreement executed by the other shareholders of Newco in relation to the shares of Newco to be transferred (including this Agreement).

The provisions of this article 8.2 and article 8.3 do not apply with regard to transfers in favour o f companies entirely owned or controlled or controlling pursuant to Article 2359, first paragraph No. 1 of the Civil Code, or operations of partial non-proportional de-merger of Newco, merger by incorporation of entirely owned companies, and merger between companies entirely owned or controlled or controlling pursuant to Article 2359, first paragraph No. 1 of the Civil Code by the same shareholder, provided that the transfer shall be subject to a condition subsequent whereby in case of subsequent change of control of said companies, the shares of Newco shall be deemed not having been transferred and shall have to be returned back to the original Shareholder Transferring Class A Shares (as defined below) or Shareholder Transferring Class B Shares (as defined below), as the case may be.

To the extent it does not prevent the other shareholders from exercising the redemption right under Article 8.4 below or any other right under this Shareholders’ Agreement, the Co-investment and the By-Laws, the provisions of this article 8.2 and article 8.3 do not apply also to transfers through derivative transactions or borrowing of titles according to which the original Shareholder Transferring Class A Shares (being a bank, financial company or insurance company), as the case may be (i) shall have the full title and ownership of the shares of Newco upon termination of the relevant transaction, and, in any case, (ii) shall maintain MEDIO TEMPORE all administrative and economic rights on the shares of Newco

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under the derivative transaction or being object of the borrowing of titles and (iii) shall not affect ; failure of such conditions will entail the immediate application of this article 8.2 and following article 8.3.

8.2.2 The shareholder who intends to transfer Class A shares (h ereinafter the “SHAREHOLDER TRANSFERRING CLASS A SHARES”) to a potential third party acquirer, including a shareholder of Newco (hereinafter, a “PERSON BIDDING FOR CLASS A SHARES”) must offer them in advance on equal terms to the other shareholders who hold Class A shares and subsequently, under the circumstances set forth by the following point (ii), to the shareholders who hold Class B shares; the holders of Class A shares may acquire the shares offered in pre-emption in proportion to the number of Class A shares held by each of them compared with the total number of Class A shares issued by Newco; the holders of Class B shares may acquire the shares offered in pre-emption, under the circumstances set forth in the following point (ii) below and in proportion to the number of Class B shares held by each of them compared with the total number of Class B shares; the above mentioned procedure shall occur in compliance with the following mechanisms: (hereinafter the “RIGHT OF PRE-EMPTIO N”):

(I) The Shareholder Transferring Class A shares must transmit a communication, by registered or certified mail with return receipt requested to the chairman of the board of directors of Newco and to the other shareholders holding Class A shares, specifying the number of Class A shares, the price, and the other economic and contractual conditions of the transfer and the personal particulars of the Person Bidding for Class A Shares (the “TRA NSFERRING NOTICE”). Within 30 days of the date of receipt of the Transferring Notice (the “TERM OF EXERCISE”), the shareholders holding Class A shares who intend to avail themselves of the Right of Pre-emption must give the appropriate written communication to the chairman of the board of directors and to the Shareholder Transferring Class A shares (the “ACCEPTANCE NOTICE”). The shareholders holding Class A shares who exercise the Right of Pre-emption, provided that they make a contextual request in the Notice of Acceptance, will have the right (hereinafter, the “RIGHT OF INCREASE”) to acquire the Class A shares remaining on sale once all the Notices of Acceptances have been received (the “REMAINING CLASS A SHARES”). Any Notice of Acceptance shall specify the number of Remaining Class A Shares in relation to which the relevant shareholder holding Class A shares wishes to exercise the Right of Increase. The Remaining Class A Shares shall be divided among the shareh olders who have exercised the Right of

Increase in proportion to the number of Class A shares held by each of them, provided that after the exercise of the above mentioned rights any shareholder holding Class A shares will not be entitled to acquire a number of Class A shares higher than the aggregate number indicated into the Acceptance Notice.

(II) & #160; if after the carrying out of the procedure in the preceding point (i) there still remain any Remaining Class A Shares, each holder of Class A shares other than the Shareholder Transferring Class A shares will have the right to procure within 30 days after the expiry of the Term of Exercise (the “FURTHER TERM”) the Acquisition of the Remaining Class A shares by one or more Italian Qualified Investors, provided that the Shareholder Transferring Class A shares will not have such right in the case that (AA) the Person Bidding for Class A shares is a Telecom Operator and (BB) as a consequence of such transfer of Class A shares, the aggregate percentage of the share capital held by the Class A shareholders as at the date of this Shareholders’ Agreement is reduced below 35% of the share capital; it being understood that the loss of such right shall refer exclusively to the portion of the transferred Shares falling bel ow the 35% threshold. If on the date the Further Term expires, there are still any Remaining Class A shares or if Italian Qualified Investors do not have the right to acquire Class A shares as referred to above, such Remaining Class A shares shall be offered without delay to the shareholders holding Class B shares by means of a communication made in the form specified in the preceding paragraph (i) of this Article 8.2.2. The Remaining Class A shares which become pre-empted by the shareholders holding Class B shares must be divided among the holders of Class B shares who pre-empted them - in proportion to the number of Class B shares held by each of them, provided that the Right of Increase included in Article 8.2.2(i) above shall apply MUTATIS MUTANDIS - subject to the automatic conversion of the aforesaid Class A shares subject to pre-emption at the rate of one newly issued Class B share (having the same characteristics as the Class B shares in circulation) for each Class A share subject to pre-emption. The exercise of the Right of Pre-emption by the shareholders holding Class B shares, potentially exercised in accordance with this article 8.2.2 (ii), must be carried out within 15 days of the receipt of the notice of offering in pre-emption by means of an appropriate written communication to the chairman of the board of directors and the Shareholder Transferring Class A shares, specifying the number of shares requested in pre-emption. The conversion of Class A shares into Class B shares takes effect upon the recording of the decision of the board

of directors (which for this purpose must be convened within 5 days of the expiry of the term for the exercise of the Right of Pre-emption specified in the present article 8.2.2 (ii)) resulting from the minutes drawn up by the notary - subject to the condition precedent that the event described under Article 8.2.2(iv) did not occur - who must proceed to carry out all the necessary formalities for the issuance of Class B shares as well as the necessary registrations in the register of companies, also bringing about the necessary and consequent modifications to the relevant article of the Newco’s By-laws, making the numerical expressions and the text in the necessary parts adequate for all legal purposes, providing, moreover, for deposit, according to articl e 2346 of the civil code, the text of the Newco’s By-laws updated in that sense, as well as carrying out all other formalities provided by the current legal standards.

(III) Should remain any Class A shares subject to the bid not acquired by Class A shareholders or by Italian Qualified Investors or by Class B shareholders in the sense of the foregoing (the “SHARES A NOT PURCHASED”) and the Person Bidding for Class A shares is accepting to buy the Shares not Purchased, the Shares not Pur chased may be transferred from the Shareholder Transferring Class A shares to the Person Bidding for Class A shares, within but not later than 15 days, if the transfer in favour of the Person Bidding for Class A shares has not occurred within the aforesaid term, any later transfer of Class A shares and of the rights related thereto shall be subject again to the procedure specified in the present article 8.2.2; any act of transfer carried out in violation of the provisions of the present Article 8.2.2 shall be invalid and not opposable to Newco.

(IV) ; Should remain any Share A not Purchased and the Person Bidding for Class A shares is not accepting to buy only the Shares A not Purchased pursuant to the previous Article 8.2.2(iii), the Shareholder Transferring Class A shares shall be entitled to sell all the Class A shares object of the Class A Transferring Notice to the Person Bidding for Class A shares.

8.2.3 The shareholder who intends to transfer Class B shares (hereinafter, the “SHAREHOLDER TRANSFERRING CLASS B SHA RES”) to a potential third-party acquirer as well as to a shareholder of Newco (“PERSON BIDDING FOR CLASS B SHARES”) must offer these shares in advance to all the other shareholders holding Class A and Class B shares with regard to the following procedure:

(I) the Shareholder Transferring Class B shares must transmit a communication, by registered or certified mail with return receipt requested to the chairman of the board of directors and other shareholders, specifying the number of Class B shares, the price, and the other economic and contractual conditions of the transfer and the personal particulars of the Person Bidding for Class B shares (the “CLASS B TRANSFERRING NOTICE 8;). Within 30 days of the date of receipt of the notice, the shareholders who intend to avail themselves of the Right of Pre-emption must give the appropriate written communication to the chairman of the board of directors and the Shareholder Transferring Class B shares, specifying the number of shares requested in pre-emption;

(II) (A) Should the offer be accepted in its totality by the shareholders, the Class B shares subject to bidding shall be divided among the aforesaid s hareholders, in proportion to the number of shares held by each of them compared to the total number of shares (of Class A and Class B) issued by Newco; (B) should the offer be accepted only in part by the shareholders, the Class B shares offered and acquired must be divided among the aforesaid shareholders in proportion to the number of shares held by each of them compared to the total number of shares (of Class A and Class B); The Class B shares pre-empted by the holders of Class A shares will be transferred to them pursuant to the present Article 8.2.3 subject to the automatic conversion of the aforesaid pre-empted Class B shares at the rate of one newly issued Class A share (having the same characteristics as the Class A shares in circulation) for each Class B share subject to pre-emption. The conversion of the Class B shares into Class A shares will be executed in compliance with the procedure set forth in Article 8.2.2 (ii) above.

(III) Should remain any Class B shares subject to the bid not acquired by Class B shareholders or by Class A shareholders (the “SHARES B NOT PURCHASED”) and the Person Bidding for Class B shares is accepting to buy the Shares not Purchased, the Shares B not Purchased may be transferred from the Shareholder Transferring Class B shares to the Person Bidding for Class B shares, within but not later than 15 days, if the transfer in favour of the Person Bidding for Class B shares has not occurred within the aforesaid term, any later transfer of Class B shares and of the rights related thereto shall be subject again to the procedure specified in the present Article 8.2.3; any act of transfer carried out in violation of the provisions of the present Article 8.2.3 shall be invalid and not opposable to Newco.

(IV) Should remain any Share B not Purchased and the Person Bidding for Class B shares is not accepting to buy only the Share B not Purchased, the Shareholder Transferring Class B shares shall be entitled to sell all the Class B shares object of the Class B Transferring Notice to the Person Bidding for Class B shares.

8.2.4 In the event that the transfer of shares does not provide a corresponding amount, or rather if it does not provide it entirely in cash (for example, in the event of donation, barter, or transfer through amalgamation, splitting) the price at which the shareholders in Newco shall be able to acquire the shares offered to them in pre-emption shall be determined by mutual agreement of the shareholder who intends to transfer and the shareholder or shareholders who have exercised the pre-emption (the “INTERESTED SHAREHOLDERS”). If the Interested Shareholders have not reached an agreement within 30 workdays, elapsing from the moment when the shareholder who intends to transfer ha s received the communication of the shareholders who intend to exercise the Right of Pre-emption, the price for each share shall be calculated on the basis of the adjusted net worth of Newco to be determined taking into account the price of the shares held in TI calculating by means of the arithmetic average of the official stock exchange prices within 30 days preceding the date of the offer in pre-emption divided by the number of shares issued] and, in case of disputes, the calculation, to be carried out on the basis of the criteria indicated above, shall be remitted to an expert appointed by the President of the Court of Milan, upon application by the most diligent shareholder.

8.2.5 ; All transfers provided under this Article 8.2 shall be subject to the applicable Antitrust and/or regulatory provisions and shall occur not later than 10 days after obtaining any applicable Antitrust and/or regulatory clearance, if needed, and in any case not later than six months from the completion of the binding agreement in relation to the transfer of the shares.

8.2.6 Transfers made in violation of the provisions of the present article 8.2 and the following article 8.3 shall be invalid and unenforceable with regard to Newco.

8.3 RIGHT OF CO-SALE (TAG-ALONG)

8.3.1 Without prejudice to the provisions of the foregoing article 8.2, in the event that one or more shareholders of Newco (hereinafter called jointly the “CONSIDERABLE SHAREHOLDER”) (i) intend to transfer, also one or more times, of a number of shares of Newco that represent a share equal to at least 30% of the share capital of Newco (the “CONSIDERABLE SHARE”) to a

potential third-party acquirer or to one or more potential acquirers belonging to the same group, connected by a relationship of control or linkage among them in the meaning of article 2359 of the civil code, or who in any case act in concert pursuant to article 109, Consolidated Financial Act, for the purchase of the Considerable Share, and (ii) none of the other shareholders exercises the Right of Pre-emption at the end of the respective term of exercise, or notwithstanding the exercise of the Right of Pre-emption by one or more of the other shareholders a bid by the third party is still pending for a share equal to at least the Considerable Share, the shareholder (or shareholders) who did not exercise the Right of Pre-emption to which they were entitled (here inafter the “NON-OPTING SHAREHOLDER”) shall have the right to transfer to the potential third-party acquirer his own shares (the “RIGHT OF CO-SALE” or “TAG-ALONG RIGHT”) at the same terms and conditions of the transfer of the Considerable Shareholder pursuant to this Article 8.3. If the transfer from the Considerable Shareholder does not comprise the entire stake held but only a part of such stake, the Tag Along Right shall be allocated to the Non-Opting Shareholder in the same proportion existing between the number of Shares to be sold and all the shares held by the Considerable Shareholder.

8.3.2 0; Ifthe Non-Opting Shareholder intends to exercise its Tag-Along Right, he must, under penalty of forfeiture, give a written communication to the Considerable Shareholder - and a copy to Newco - by the means and under the terms provided for the exercise of the Right of Pre-emption discussed in the foregoing Article 8.2. Once the express request has been made by the Non-Opting Shareholder to avail himself of the Tag-Along Right (hereinafter the “PROPOSAL OF SALE”), the aforesaid Non-Opting Shareholder shall be obliged to sell all or the different pro rata quantities established above of his own shares, free from every encumbrance, lien or right in favour of third parties, to the potential third-party acquirer, in accordance with the following procedure:

(I) The Considerable Shareholder must, as a condition for the efficacy of the transfer of his own shares, see to it that the potential third-party acquirer (a) accepts unconditionally the Proposal of Sale mentioned in this Article 8.3.2, having for its purpose the sale of all (or the different PRO RATA quantities established above) the shares owned by each Non-Opting Shareholder who has made the Proposal of Sale, without the potential third-party acquirer being able to require with regard thereto any declaration and/or guarantee, with the exception of the guarantees pertaining to (ai) the entitleme nt to the shares owned by the Non-Opting Shareholder, in the

absence of commitments regarding these and the capacity to freely dispose of them, and (aii) the fact that the shares are free from every encumbrance, lien or right in favour of third parties; and (b) acquires all (or the different PRO RATA quantities established above) the shares owned by each Non-Opting Shareholder who made the Proposal of Sale;

(II) The transfer of the shares by the Considerable Shareholder and the other Non-Opting Shareholders must arrive in one single setting, with contextual payment of the price within and not later than 15 days of the date of receipt of the Proposal of Sale by the Considerable Shareholder;

(III) If no shareholder has exercised the Right of Pre-emption in the sense of Article 8.2 nor the Tag-Along right in the sense of the present article, the Considerable Shareholder may transfer the shares belonging to him to a relevant third-party acquirer on condition that (a) the transfer occurs under the same conditions indicated in his own communication to the other shareholders, here including the same price and (b) the transfer shall occur within 15 days of the expiry of the different term of exercise mentioned in the foregoing Article 8.2, it remaining understood that the aforesaid term shall be reasonably extended, as referred below, if the transfer of the shares is subject to obligations of communication in advance or authorization by an authority; it remains the intention that the aforesaid term of 15 days be considered respected if within the appropriate deadline the Considerable Shareholder has executed with the potential third-party acquirer a purchase and sale contract with de ferred efficacy (but not more than 6 months) or conditional solely upon the obtaining of the authorizations required by law or regulation (provided that such agreement shall terminate if such authorizations have not been obtained within six months following execution of such purchase and sale contract), at a price per share and, in general, on the terms and conditions indicated by the potential third party acquirer in his own bid. If the transfer to the potential third party acquirer has not taken place in conformity with what is indicated in this paragraph and in the terms provided here, the Considerable Shareholder shall not be able to transfer his own shares unless subject to the experiencing of the procedures discussed in articles 8.2 and 8.3 and the transfer shall not be valid and enforceable against Newco.

8.4 REDEMPTION RIGHT

The Parties acknowledge that the Newco’s By-Laws contains INTER ALIA also a redemption right (i.e. RISCATTO) in case of public tender offers on the TI shares (i.e. OFFERTA PUBBLICA DI ACQUISTO SU AZIO NI DI TI).

8.5 CALL OPTION

In partial derogation of Article 1.2 (cc) above, in the event that a decision to dispose, directly or indirectly in any form of manner (including through measures with equivalent effect, such as mergers or demergers of N ewco or O) or encumber TI shares or O shares or any rights attached thereto (including but not limited to voting rights) is taken by the Board of Directors of Newco by simple majority as provided for in Article 1.2(bb) above and TE is a Dissenting Party in accordance with Article 1.2(cc), then TE shall have any of the following options, at its exclusive discretion, which shall be exercised in writing, by means of a notice to be sent to the Chairman of the board of directors of Newco, within thirty days following the date of the relevant board of directors of Newco:

(a) 60; the right to buy from Newco or O (as the case may be) the O or TI shares at the same price and conditions offered by the third party offering to acquire such TI or O shares (the “CALL OPTION”), in which case the Parties shall be bound to cause Newco or O (as the case may be) to sell the relevant O or TI shares to TE pursuant to the Call Option. Such acquisition by TE of the O or TI shares shall be completed within 15 business days following the relevant written request sent by TE to the chairman of the board of directors of Newco or, if the transaction is subject to any authorization by law or contract, within 15 business days following the obtaining of such authorization. In this connection, as soon as possible following closing (as defined in the relevant offer), the Partieshall cause Newco and O to enter into a call option agreement with TE under terms and conditions referred to in this arti cle 8.5(a);

(b) the right to proceed with the De-merger, as provided for in Article 1.2(cc) above. In such case the other Parties shall implement, adopt and vote, and cause their directors designated by them to implement, adopt and vote, all and any actions, documents and resolutions necessary to complete the De-merger within a reasonably short timeframe, but in any case no later than 6 months following the De-merger Notice or, if the transaction is subject to any authori zations by law or contract, within 6 months following the obtaining of such authorizations.

8.6. Each Party undertakes to include as a condition precedent:

(i)		to closing any transfer of Newcos’ shares, to be executed by such Party with any Italian Qualified Investor or with any third party acquiring shares of Newco (in both cases, in accordance with the procedures included in the bylaws), and

(ii)		to subscribe any Newcos’ shares by any Fifth Share Capital Investors or Italian Qualified Investor, as the case may be (in accordance with procedures included in the Newco’s By-Laws),

the execution of a deed of adherence of such Fifth Share Capital Investors or Italian Qualified Investor or such third party to this Shareholders Agreement.

8.7 In any case MB, AG, IS and SI undertake, for the durati on of this Agreement, neither to solicit, nor to respond positively to, any interest or approach from Telecom Operators, as defined above, for the potential acquisition or subscription of Newco’s shares, O shares and TI shares and/or for the acquisition of TI’s Foreign Material Assets and/or for the entering into strategic alliances with TI (the “NON SOLICITED OFFER”). MB, AG, IS and SI also undertake to inform TE to the extent possible about any Non Solicted Offer they may receive. MB and IS shall also refrain, for the duration of this Agreement, to provide any advisory services or financing in favour of Telecom Operators, in connection with the acquisition or subscription by any such Telecom Operators of Newco’s shares, O shares and TI shares and/or the acquisition by any Telecom Operators of TI’s Foreign Material Assets and/or the entering into strategic alliances between TI and any Telecom Operators.

8.8 It is agreed and understood among the Parties that no shareholder will be granted additional or special rights, unless granted to the relevant Class of Shares under the Shareholders’ Agreement, the Co-investment Agreement and the By-Laws.

9. NEWCO’S BY-LAWS

The Newco’s By-Laws incorporates most of the principles referred to in this Shareholders’ Agreement in connection with the governance of Newco and all the principles referred to in this Shareholders’ Agreement in connection with the transfer of the Newco’s shares.

As regards the governance of Newco, this Shareholders’ Agreement contains the principles (such as the solution of the deadlocks on certain items) which has not been possible to introduce in the Newco’s By-Laws.

The Parties acknowledge and agree that Newco shall adopt the By-Laws in the text attached hereto in both Italian and English version as Annex 9. It is understood that the Italian version will prevail and that the Parties will implement the amendments, if any, which will be requested by the Notary Public to comply with mandatory provisions of Italian law, subject to the principle of fullest implementation of the principles of this Shareholders’ Agreement.

It is agreed among the Parties that, in case of conflict, the provisions of this Shareho lders’ Agreement will prevail on the provisions of the By-Laws and the Parties shall conform their acting so as to implement such provisions.

10. ACCOUNTING PRINCIPLES

The Parties agree that, as soon as practicable, Newco and O shall move to and u se going forward IFRS principles for their financial statements.

11. DURATION AND DEMERGER

This Agreement shall commence on the date hereof, and shall expire on the third anniversary thereof (the “EXPIRY DATE”), provide d however that, if so required in writing by one of or more of the Parties (the “EXITING PARTIES”) not later than six months prior to the Expiry Date, the Parties shall be bound, to cause (A) the merger between Newco and O to occur (if not already occurred prior to such date), and (B) the non-proportional de-merger of the company resulting in the attribution to a number of beneficiaries companies equal to the number of the Exiting Parties (each beneficiary company owned 100% by each of such Exiting Party) of a percentage of all the assets and liabilities of Newco after the merger with O, corresponding to the stake held in Newco after the merger with O by such Exiting Party, PROVIDED THAT (I) the Parties shall implement, adopt and vote, and cause their directors designated by them to implement adopt and vote, all and any actions, documents and resolutions necessary to complete such merger and de-merger within a reasonably short timeframe, but in any case no later than 6 months following the Demerger Notice or, if the transaction is subject to any authorizations by law or contract, within 6 months following the obtaining of such authorizations, and (II) the Exiting Parties, to the extent the other Parties decide to execute a new shareholders agreement, shall be permitted to execute a new shareholders agreement with the other Parties, to be negotiated in good faith, provided that the De-merger has been completed and the Exiting Party contributes the relevant shares to such new shareholders’ agreement. The Parties agree that if none of them becomes an Exiting Party, they shall negotiate in

good faith a new shareholders agreement in line, MUTATIS MUTANDIS, with the terms and conditions of this Agreement, for a further three years period prior to the Expiry Date.

10. CONFIDENTIALITY

No Party shall make any announcement, communication or disclosure in relation to this Shareholders’ Agreement, or in relation to the ongoing negotiations between the Parties, or in relation to the status of the same without the other Party’s previous written consent, unless this is required by law and/or by the competent authorities. In this case, the Parties undertake to provide with no delay, to the extent feasible, to the other Parties notice and/or copy of the announcement, communication or disclosure required by law and/or by the competent authorities.

11. COSTS AND EXPENSES

Each Party represents and warrants that this Shareholders’ Agreement has been concluded without the participation, assistance or intervention, direct or indirect, of any broker, intermediary, commission agent, business agent or similar party, who may claim any expenses, fees, royalties, commission or other costs due to the preparation, negotiation, and execution of this Agreement from the other Party.

12. NOTICES

Any notice, objection or other communication to be given by one Party to the other under, or in connection with, this Shareholders’ Agreement shall be in writing and signed by or on behalf of the Party giving it. It shall be served by sending it by fax to the number set out in this Article 11, or delivering it by hand, or sending it by pre-paid recorded delivery, special delivery or registered post, to the address set out in this Article 11 and in each case marked for the attention of the relevant Party set out in this Article 11 (or as otherwise notified from time to time in accordance with the provisions of this Article 11). Any notice so served by hand, fax, post or e-mail shall be deemed to have been duly given:

(d) in the case of prepaid recorded delivery, special delivery or registered post, at the date indicated in the receipt of delivery,

(e) in the case of e-mail delivery at the e-mail address indicated below, with receipt of delivery,

The addresses and fax numbers of the Parties for the purpose of Article 11 are as follows:

To TE:

Telefonica S.A.,

Gran Via n. 38, Planta 9,

28013, Madrid, Spain

To the attention of: the Group General Counsel (Ramiro Sanchez de Lerin),

Ph: + 34 91 584 0207

Fax: + 34 91 531 3206

E-mail: secretaria.general@telefonica.es

To AG:

ASSICURAZIONI GENERALI S.p.A.,

Piazza Duca degli Abruzzi n. 2,

34132, Trieste, Italy

To the attention of: Mr. Giovanni Perissinotto

Ph: + 39 040 671036

Fax: + 39 040 671260

E-mail: giovanni_perissinotto@generali.com

To SI:

SINTONIA S.A.

1, Place d’Armes,

L-1136 Luxembourg

Luxembourg

To the attention of: Mr. Gustave Stoffel

Ph: + 352 26 266255

Fax: + 352 26 266256

E-mail: GUSTAVE.STOFFEL@PT.LU

To IS:

INTESA SANPAOLO S.p.A.

Piazza Scala n. 6,

20121 Milano, Italy

To the attention of Mr. Gaetano Micciche and Mr. Fabio Cane

Ph: + 39 02 879 42650

Fax: + 39 02 879 43 540

E-mail: GAETANO.MICCICHE@INTESASANPAOLO.COM, and Fabio.cane@intesasanpaolo.com

To MB:

MEDIOBANCA S.p.A.

Piazzetta Cuccia n. 1,

20121 Milano, Italy

To the attention of: Mr. Clemente Rebecchini and Ms. Cristiana Vibaldi

Ph: + 39 02 8829 202 and + 39 02 8829 455

Fax: + 39 02 8829 943

E-mail: CLEMENTE.REBECCHINI@MEDIOB ANCA.IT, cristiana.vibaldi@mediobanca.it

A Party may notify the other Party of a change to its name, relevant addressee, address or fax number for the purposes of this Article 11, provided that, such notice shall only be effective on:

(i)		the date specified in the notice as the date on which the change is to take place; or

(ii)		if no date is specified or the date specified is less than five (5) Business Days after the date on which notice is given, the date following ten (10) Business Days after notice of any change has been given.

14. VARIATIONS

No variation of this Shareholders’ Agreement shall be valid unless it is in writing and signed by or on behalf of each of the Parties. The expression “variation” shall include any variation, amendment, supplement, deletion or replacement however effected.

15. SEVERABILITY

If any provision of this Agreement is held to be invalid or unenforceable, then such provision shall (so far as it is invalid or unenforceable) be given no effect and shall be deem ed not to be included in this Shareholders’ Agreement, but without invalidating any of the remaining provisions of this Shareholders’ Agreement. In any such event the Parties shall negotiate in good faith and agree all those amendments to this Shareholders’ Agreement which are consequently necessary to replace the invalid or unenforceable provision with terms having as near as possible the same commercial effect with a view to maintain unaltered the Parties’ mutual interests as currently protected under this Shareholders’ Agreement and in any case preserving a balance between their respective rights and obligations in enabling them to fully perform their obligations as contemplated hereunder.

16. ENTIRETY OF AGREEMENT

This Shareholders’ Agreement constitutes the entire agreement and understanding of the Parties in relation to the transactions hereby contemplated and supersedes any and all prior agreements and arrangements, whether written or oral, that may exist between the Parties with respect to the matters contemplated therein.

17. NO WAIVER AND FURTHER ASSURANCES

No failure or delay by any of the Parties in exercising any right or remedy provided by law or pursuant to this Shareholders’ Agreement shall impair such right or remedy or operate or be construed as a waiver or variation of it or preclude its exercise at any subsequent time and no single or partial exercise of any such right or remedy shall preclude any other or further exercise of it or the exercise of any other right or remedy. Each of the Parties undertakes to the others to perform (or procure the performance of) all further acts and things, and execute and deliver (or procure the execution and delivery of) such further documents (including without limitation any agreement or arrangement which shall be entered into between the Parties) as set forth in this Shareholders’ Agreement, as may be required to implement and/or give effect to this Shareholders’ Agreement and the transactions contemplated hereunder.

18. GOVERNING LAW/EXCLUSIVE JURISDICTION

This Shareholders’ Agreement shall be governed by, and interpreted in accordance with, the laws of the Republic of Italy. Any disputes arising out of or in connection with this Shareholders’ ; Agreement shall be submitted by the Parties to arbitration. The venue of the arbitration shall be Milan. The arbitration shall be conducted in the English language and in accordance with ICC Rules.

* * * * *

TELEFONICA S.A.		ASSICURAZIONI GENERALI S.P.A.




INTESA SANPAOLO S.P.A.		MEDIOBANCA S.P.A.



SINTONIA S.A.

EX-99.4 5 a07-27464_1ex99d4.htm BY-LAWS OF OLIMPIA S.P.A

Exhibit 99.4

CORPORATE BY-LAWS

ARTICLE 1

NAME OF THE CORPORATION

A Corporation has been formed, called Olimpia S.p.A.

ARTICLE 2

OBJECT OF THE CORPORATION

The object of the Corporation is the participation in, the financing of, the cooperation with, the management of, and the rendering of consulting services and other services to legal persons or other companies, among which in particular, those having as their object the development, implementation, and management of telecommunications systems in general of any type, including broad band, data and video transmission, domestic and international telephone services, e-business and media activities, telephone directory activities, advertising development, and television.

In order to reach the aforementioned objective, the Corporation may perform all the financial, industrial, commercial and real estate transactions which are deemed by the Board of Directors to be necessary or useful in order to reach the objective of the Corporation. The Corporation may also grant promissory notes, pledges, and any other type of guarantees, including real estate guarantees, to third parties.

However, the Corporation is excluded from conducting activities which are expressly reserved by law to special categories of companies.

ARTICLE 3

REGISTERED OFFICE

The Corporation’s registered office is in Milan.

The Board of Directors may relocate the Corporation’s registered office within the national territory and may open or close secondary offices, branches and agencies, in the manner required by law, both in Italy and abroad.

The domicile of the Shareholders is understood to be, in accordance with the law, the domicile that is registered in the register of Shareholders.

ARTICLE 4

TERM

The term of the Corporation has been established up to 12/31/2050 (December thirty-first, two thousand fifty) and may be extended in accordance with the law.

The extension of the term of the Corporation does not grant a right of withdrawal to the Shareholders who did not participate in the approval of the relevant resolution.

ARTICLE 5

CORPORATE CAPITAL

The Corporate Capital is Euro 4,306,377,518 (four billion, three hundred and six million, three hundred and seventy-seven thousand and five hundred and eighteen ) Euros divided into n. 4,630,233,510 (four billion, six hundred and thirty million, two hundred and thirty-three thousand and five hundred and ten) Shares, with no nominal value.

The Corporate Capital may be increased with the contribution of capital in kind or credit.

The introduction or removal of constraints on the circulation of shares does not grant a right of withdrawal to the Shareholders who did not participate in the approval of the relevant resolution.

The Corporation may satisfy its own financial needs by taking advantage of financing on the part of its stockholders, within the limits and under the conditions established by current law and the current regulations governing such transactions.

ARTICLE 6

SHARES

(THE RIGHT OF PREEMPTION)

6.1 Shareholders who wish to move their stock in any manner, this being understood as selling the stock for cash, transferring it, giving it as a gift, or donating it, or any other type of transaction that leads to the direct or indirect transfer, to third parties or to other stockholders, of the Corporation’s stock, of bonds which may be converted into stock and/or rights to underwrite stock, or real rights for the use of the stock and/or guarantees relating to the aforementioned stock and convertible bonds, or any other rights relating to the aforementioned Shares of stock or convertible bonds (hereinafter referred to as the “Rights”), must first offer the right of preemption for the Rights to all other stockholders, under the same conditions, in proportion to the Shares held by each of them in the Corporation, notwithstanding the right to increase the Share base enjoyed by each Shareholder.

6.2 The right of preemption must be exercised in accordance with the following terms and conditions:

(i) A Shareholder (hereinafter referred to as the “Party Making the Offer”) who intends to proceed with the sale of the Rights that he holds will be obligated to offer them preemptively to other Shareholders, through registered letter with return receipt required, containing the identity of the proposed buyer, the price, and the other conditions of sale, in addition to the warning that in the event that one of the Shareholders does not wish or is not able to exercise the right of preemption, the Rights pertaining to this Shareholder will automatically increase proportionally in favor of those Shareholders who instead, intend to take advantage of this opportunity and who have not previously expressly waived the right of preemption that they hold.

(ii) The right of preemption may be exercised through a communication sent by registered mail with return receipt required, sent to the Party Making the Offer and to each of the Shareholders within the term, established for its expiration, of forty-five (45) calendar days from the receipt of the offer discussed in point (i) above, it being understood that, if express waiver is not made, this right of preemption shall be understood as automatically exercised also in respect to the Rights that have increased proportionally for each Shareholder as a result of the failure to exercise the right of preemption on the part of one or more Shareholders holding this right.

(iii) In the event that the right of preemption is not exercised within the terms indicated above in respect to all the Rights offered, the Party Making the Offer, in the event that he does not wish to accept the exercising of the right of preemption limited to only a part of the Rights offered for sale, may transfer all the Rights to the buyer indicated in the offer discussed in point (i) above, in terms which are no more favorable for that buyer than the terms stipulated in the aforementioned offer, within ninety (90) days from the expiration of the aforementioned term established in point (ii) above, or, in the event that the Party Making the Offer decides to accept the exercising of the right of preemption limited to only a part of the Rights offered for sale, he may, within the same term of ninety (90) days, transfer the remaining Rights of preemption to the buyer indicated in the offer discussed in point (i) above, in accordance with the conditions that shall be agreed upon with this buyer. In the event that the sale is not concluded within the term indicated, the Party Making the Offer must again satisfy the conditions established in this section.

(iv) In the event that the Party Making the Offer intends to sell his own Shares through a counter-offer in kind, the Shareholders who intend to exercise their right of preemption must indicate within the term established in section (ii) above, whether they intend to accept the counter-offer in kind or for the equivalent in cash, and, in the latter case, the purchase price shall be determined by common agreement or in accordance with Article 1473 of the Civil Code.

6.3 The regulations established above also apply to any other action or negotiation, of any nature, including gifts, which involves the transfer, in any manner whatsoever, of the Rights enjoyed by the Shareholders, it being understood that the stipulations established in section 6.1 above shall be applicable even when there is no notification, no offer, or no determination of a price in cash for the purposes of this offer, and in this case, the purchase price shall be determined by common agreement or in accordance with Article 1473 of the Civil Code.

6.4 Notwithstanding the stipulations established in sections 6.1 and 6.2, the transfer of any real rights of use of the Shares in an agreement established between living entities shall be admitted only on the condition that this transfer does not involve in any manner the loss of voting rights on the part of the parties involved.

6.5 The transfer of any real rights guaranteed on the Shares shall not be allowed and shall not be valid in respect to the Corporation if it has not been previously approved unanimously by the other Shareholder(s).

6.6 Notwithstanding the points established in the above sections, the Rights may be transferred, in whole or in part, by Shareholders to companies that hold the entire Corporate Capital of the stockholder making the transfer or to companies of which the Shareholder making the transfer holds the entire Corporate Capital, on the following conditions: (i) the Shareholder making the transfer provides at least 15 days notice prior to the transfer to the other Shareholders, in accordance with the provisions of section 6.1, (ii) the acquiring company succeeds to all of the obligations assumed by the selling Shareholder with respect to the other Shareholders, (iii) the transferring Shareholder and the acquiring company commit themselves to reacquire and retransfer, respectively, full title of the Rights transferred before proceeding with transactions that would affect the aforementioned legal ownership.

ARTICLE 7

SHARES

(CO-SALE)

(a) In the event that a Shareholder who holds Shares that represent an absolute majority (50.01%) of the Corporate Capital (hereinafter referred to as the “Majority Shareholder”) intends to conduct transactions that lead to the transfer to a third party or another Shareholder (hereinafter referred to as the “Buyer”) of all his Shares or a part of these, the other Shareholder(s) (hereinafter referred to as the “Minority Shareholders”), in the event that they do not wish to exercise their right of preemption as established in Article 6 above, shall have the right to transfer to the same Buyer and under the same terms and conditions: (i) the part of their own Shares proportional to the number of Shares that the Majority Shareholder shall offer for sale, when the Majority Shareholder, as a result of the aforementioned transaction(s), remains the bearer of an absolute majority of the Corporate Capital (50.01%); and (ii) in the event of the sale of all the Shares held by the Majority Shareholder or the transfer of a sufficient number of Shares that the Majority Shareholder comes to hold, as a result of the transfer, less than an absolute majority of the Corporate Capital (50.01%), the Minority Shareholders shall have the right and the obligation to transfer all their Shares together with those of the Majority Shareholder.

(b) To these effects, the Majority Shareholder who intends to proceed with the sale of Shares that he holds, shall be obligated to provide written communication by registered letter with return receipt required, to the Minority Shareholders, also informing them of the identity of the Buyer, the number of Shares offered for sale, the price and the other conditions of sale.

(c) In the event that the Minority Shareholders wish to exercise the right established herein in their favor, they must inform the Majority Shareholder, by registered letter with return receipt required, in the term of fifteen (15) calendar days from the receipt of the communication discussed in point (b) above; and if they do not do so within that term this right shall expire.

(d) In the event that the object of the sale should be all the Shares held by the Majority Shareholder or a sufficient number of Shares that the Majority Shareholder comes to hold, as a result of the transfer, less than an absolute majority of the Corporate Capital, the Minority Shareholders shall have the obligation to transfer all their Shares under the same terms and conditions proposed by the Buyer to the Majority Shareholder.

(e) In the event that the Buyer does not intend to purchase the Shares held by the Minority Shareholders, the Majority Shareholder may not proceed with the sale.

ARTICLE 8

SHARES HELD BY THE CORPORATION - CATEGORIES OF BOND LOANS - FINANCIAL INSTRUMENTS

The Corporation may proceed to purchase its own Shares in accordance with the stipulations established by civil regulations governing the matter. The Corporation may issue bearer or registered bonds, convertible bonds or bonds with warrants, and warrants in accordance with regulations governing the matter. The Corporation may also issue other categories of Shares, even Shares without voting rights, and financial instruments, in accordance with regulations governing the matter.

ARTICLE 9

ASSEMBLY OF THE SHAREHOLDERS

A regularly constituted Assembly represents all the Shareholders and the resolutions passed at such meetings made in accordance with the law, and the present Corporate By-Laws shall be binding on all Shareholders.

The Assembly shall be convened at the Corporation’s headquarters or elsewhere, as long as it takes place in Italy or in another country of the European Union.

The Assembly is convened by means of an announcement indicating the date, time and location of the meeting, a list of the topics to be addressed and, if applicable, instructions for participation via audio or video conference.

The meeting announcement must be published in the Gazzetta Ufficiale della Repubblica Italiana or in the daily newspaper Il Sole 24 Ore at least 15 days prior to the date scheduled for the meeting.

Alternatively, at the election of the Board of Directors, the meeting may be announced by means of a registered letter with return receipt required, email or fax, in accordance with the law.

The meeting announcement may also establish meetings that subsequent to the first meeting.

The Assembly for the approval of the balance sheet must be called within 120 days, or, in accordance with the law, within 180 days of the end of the fiscal period. In the event that

the meeting is called within 180 days, the Board of Directors must indicate the reasons for the delay in the report on management footnoted the balance sheet.

The Assembly shall also be convened by the Chairman of the Board when a request has been made by a majority of the Board Members, or by enough Shareholders to represent at least 1/10 (one tenth) of the Corporate Capital.

The Assembly may grant the Board of Directors the right to increase the Corporate Capital, in the manner and in accordance with the terms established by Article 2443 of the Civil Code.

Ordinary and Extraordinary Assemblies are valid and duly convened if the participants are located in different locations connected by audio or video if the following conditions are met:

• the person presiding over the meeting is able to ascertain the identity and legitimacy of the participants, regulate the carrying out of the meeting, verify and declare the results of the voting;

• the person taking minutes of the Assembly is able to perceive the meeting’s events that are subject of the minutes;

• the participants are able to participate simultaneously in the discussion and voting in the topics addressed during the Assembly; and

• unless the Assembly is a totalitarian Assembly, the meeting announcement indicates the audio/video locations that are arranged by the Corporation, from which participants may participate in the Assembly, such meeting to be considered to be located in the place where the person presiding over and the person taking minutes of the Assembly are located.

ARTICLE 10

PARTICIPATION IN THE ASSEMBLY

Participation in the Assembly is governed by the stipulations of law on the matter.

Every Shareholder who deposited his share certificates in the manner indicated in the meeting announcement no less than five days before the date of the shareholders meeting may participate in the meeting.

Every Shareholder that has the right to participate in the Assembly may be represented by another person, even if this person is not a Shareholder himself or herself, through the conferral of a written proxy, with the limitations established by law.

ARTICLE 11

PROXIES - PRESIDING OVER THE ASSEMBLY

The Assembly shall be presided over by the Chairman of the Board of Directors, or, in the event of the absence or unavailability of the Chairman, by the Vice-Chairman or any other Board Member named by the Board of Directors itself; if this is not possible, the Assembly shall be presided over by the person named by a majority of the votes of the Shareholders present. A Secretary named by the Assembly shall assist the person who presides over the Assembly. The attendance of a Secretary shall not be necessary.

ARTICLE 12

CONSTITUTION OF THE ASSEMBLY AND VALIDITY OF DECISIONS

An Ordinary Assembly shall be considered regularly constituted and shall make decisions with the majorities established in accordance with the law. An Extraordinary Assembly shall be regularly constituted and shall make decisions with the favorable votes of as many Shareholders necessary to represent at least 81% of the Corporate Capital.

Such quorum is also applicable to resolutions modifying or eliminating the list voting provision for the nomination of the Members of the Board of Directors, as well as a modification of the number of the Members of the Board of Directors and modification of this paragraph.

In the absence of formal convocation, the Assembly will be considered duly constituted if the entire Corporate Capital of the Corporation is represented and the majority of the Members of each of the Board of Directors and Board of Auditors is in attendance.

ARTICLE 13

LIST VOTING

Notwithstanding the provisions established in Article 12 for the Ordinary Assembly, the naming of Members of the Board of Directors shall occur on the basis of lists presented by the Shareholders (each Shareholder shall be allowed to present only one list) in which the candidates must be listed in progressive number. Each candidate may appear in only one list or else he shall be declared ineligible. The candidates on each list presented shall be assigned a percentage equal to the number of votes obtained by the list divided by one for the first candidate, two for the second candidate, three for the third candidate, and so on. The candidates from all the lists shall be arranged in a list in descending order according to the percentage of votes obtained by each of them.

Within the limit of the number of Board Members, the winners of the election will be those who obtained the highest percentage of votes. In the event of a tie in percentage for the last Board Member to be elected, the one from the list that obtained the highest number of votes shall be given preference, and, in the event of an equal number of votes, the one who is oldest shall be given preference.

In the event that, as a result of the computation provided in the first paragraph of this Article 13, more than one half of the Members of the Board of Directors is drawn from a single list, only half of the members of the Board of Directors will be selected from such list to proceed to nomination, with the remaining nominations to be selected in

accordance with the classification obtained in the application of the above described procedure.

In the event that no list is presented or the entire Corporate Capital is held by a single Shareholder, the nomination of the Board of Directors shall be decided by the Assembly in accordance with the law.

ARTICLE 14

THE BOARD OF DIRECTORS

The Corporation shall be managed by a Board of Directors composed of 10 (ten) Members, even those who are not Shareholders, named by applying the list votingclause established in Article 13.

The Board may name one or more Alternate Board Members and an Executive Committee composed of at least three Members, one of which shall be the Alternate Chairman, if so named. They shall remain in office for a term of three years and they also may be re-elected.

ARTICLE 15

MANAGEMENT OF THE CORPORATION

(THE CHAIRMAN AND THE VICE-CHAIRMAN)

Each time that it is renewed, the Board shall elect a Chairman from among its Members, if this person is not named by the Assembly. The Board shall also name a Vice-Chairman.

ARTICLE 16

MANAGEMENT OF THE CORPORATION

(CONVOCATION OF THE BOARD OF DIRECTORS)

The Board of Directors shall be convened at the registered office of the Corporation or elsewhere, as long as it is in the territory of the Republic of Italy, by the Chairman of the Board or, in his absence or unavailability, by the Vice-Chairman, on his own initiative or at the request of at least two Members of the Board. Communication to Board Members shall be done by registered letter, or, in the event of urgency, by telegram, telex, fax, or any other means of which receipt can be proven, sent respectively at least five days or at least 24 hours before the meeting, and in cases of extraordinary urgency - to be proven by the person convening the Board of Directors - 6 hours before the meeting.

The Chairman shall arrange for the Members of Board of Directors to be provided with adequate information regarding the items on the agenda, taking into account the circumstances.

ARTICLE 17

MANAGEMENT OF THE CORPORATION

(VALIDITY OF DECISIONS MADE)

In order for decisions made by the Board to be valid, the presence of a majority of current Board Members is required.

The Board of Directors may validly deliberate, even in the absence of a formal meeting, if all of its Members and all of the Members of the Board of Auditors are present.

The meetings of the Board shall be presided over by the Chairman or, in the event of absence, by the Vice-Chairman. The decisions of the Board shall appear in the minutes signed by the Chairman of the Board and the Secretary, who may also be chosen from among persons who are not on the Board.

The decisions of the Board shall require an absolute majority of votes.

The meetings of the Board of Directors may also be held in “teleconferences or videoconferences” or another “computer imaging system,” as long as the fundamental rights of participation of every Member of the Board of Directors and the Board of Auditors are guaranteed, and on the condition that the Chairman and the Secretary are present in the same place, that it is possible to identify the participants, that each of them may participate at any time, and that each participant may receive, transmit, and see documents.

ARTICLE 18

COMPENSATION FOR BOARD MEMBERS AND MEMBERS OF THE EXECUTIVE COMMITTEE

The Members of the Board of Directors and the Members of the Executive Committee shall receive annual compensation, established by the Assembly for the entire term in which they remain in the position, in addition to reimbursement of expenses incurred as part of their position. For Board Members charged with particular duties, reference should be made to Article 2389, section 3 of the Civil Code.

ARTICLE 19

MANAGEMENT OF THE CORPORATION (REPRESENTATION)

The representation of the Corporation before third parties and in legal matters is the duty of the Chairman, and in the event of absence or unavailability, the Vice-Chairman, or the other Members of the Board of Directors for their special duties, with these persons having the right to grant powers to proxies and attorneys.

ARTICLE 20

MANAGEMENT OF THE CORPORATION (POWERS)

The Board of Directors shall have all the powers necessary for the ordinary management of the Corporation and those powers which, by law or Corporate By-Laws, are not reserved for the Assembly of Shareholders.

Within the limits prescribed by law, the Board of Directors shall have the authority to issue non-convertible bonds, merge the Corporation into other entities that, prior to such

merger, own all of the shares of the Corporation, reduce the Corporate Capital of the Corporation in the event of withdrawal of the Shareholder, conform the Corporate By-laws to imperative provisions of law, and, as provided in Article 3 herein, relocate the Corporation’s legal headquarters within the national territory and open or close secondary offices.

ARTICLE 21

THE BOARD OF AUDITORS

(COMPENSATION)

The Assembly shall elect, with a majority of votes, a Board of Auditors composed of 3 (three) Auditors and 2 (two) alternates, operating in accordance with the law.

The Auditors shall have a term of three years and may be re-elected.

The Assembly that names the Auditors and the Chairman of the Board of Auditors shall determine the compensation due for the entire term of office.

ARTICLE 22

OPERATION OF THE CORPORATION

THE BALANCE SHEET

The Fiscal Year of the Corporation will close on December 31 of every year.

ARTICLE 23

PROFITS

EARMARKING OF PROFITS

The net profits appearing on the balance sheet which has been duly approved, after the deduction of the legal reserves until this figure reaches one fifth of the Corporate Capital, shall be distributed to the Shareholders, unless the Assembly makes a different decision.

When the conditions of law so permit, the Corporation may distribute dividend accounts.

ARTICLE 24

DISSOLUTION OF THE CORPORATION

In the event of the dissolution of the Corporation at any time and for any reason, the Assembly shall determine the method of liquidation and shall name one or more liquidators, specifying their powers.

ARTICLE 25

DIRECTION TO GENERAL STIPULATIONS

For all those matters not expressly discussed in these Corporate By-Laws, reference should be made to the Civil Code and other laws currently in effect.

EX-99.5 6 a07-27464_1ex99d5.htm SHARE PURCHASE AGREEMENT, DATED MAY 4, 2007,

Exhibit 99.5

4 May 2007

Pirelli & C. S.p.A.

Via Negri, 10

20123 Milano

TO THE ATTENTION OF THE CHAIRMAN, DR. MARCO TRONCHETTI PROVERA

Sintonia S.p.A.

Corso di Porta Vittoria, 16

20122 Milano

TO THE ATTENTION OF THE CHAIRMAN, DR. GILBERTO BENETTON

Sintonia S.A.

1, Place d’Armes

L-1136 Luxembourg

LUXEMBOURG

TO THE ATTENTION OF MR. GUSTAVE STOFFEL, DIRECTOR

Dear Sirs,

we have received your proposal concerning the execution of the “Stock Sale Purchase Agreement” for the acquisition of the entire share capital of Olimpia S.p.A., that we hereby transcribe duly signed for acceptance and initialized (together with the relevant Annexes) on each page:

“28 April 2007

TELEFONICA S.A.

Gran Via n. 28

28013, Madrid, Spain

TO THE ATTENTION OF MR. CESAR ALIERTA

ASSICURAZIONI GENERALI S.p.A.

Piazza Duca degli Abruzzi n. 2

Trieste, Italy

TO THE ATTENTION OF MR. GIOVANNI PERISSINOTTO

SINTONIA S.A.

1, Place d’Armes

L-1136 Luxembourg

TO THE ATTENTION OF MR. GUSTAVE STOFFEL, DIRECTOR

INTESA SANPAOLO S.p.A.

Piazza San Carlo n. 156

Torino, Italy

TO THE ATTENTION OF MR. GAETANO MICCICHE AND MR. FABIO CANE

MEDIOBANCA S.p.A.

Piazzetta Cuccia n. 1

Milano, Italy

TO THE ATTENTION OF MR. ALBERTO NAGEL AND MR. RENATO PAGLIARO

Dear Sirs,

Further to our discussions, we are pleased to confirm our undertaking to enter into the following:

STOCK SALE PURCHASE AGREEMENT

This Stock Sale Purchase Agreement (this “AGREEMENT”) is made by and between:

1. PIRELLI & C. S.P.A., a company limited by shares, incorporated under the laws of Italy, with its principal office at Via Negri, 10, 20123 Milan, registered at the Companies Register of Milan, No. 00860340157 (“PC”)

and

2. SINTONIA S.P.A., a company limited by shares incorporated under the laws of Italy, with its principal office at Corso di Porta Vittoria, 16, 20122 Milano, and SINTONIA S.A., a company limited by shares incorporated under the laws of Luxembourg, with its principal office at 1, Place d’Armes, L-1136 Luxembourg, registered at the Companies Register of Luxembourg No. B-77504 (collectively “SINTONIA”)

(to be collectively referred to hereinafter as the “SELLERS”);

- ON THE ONE SIDE -

AND

in their quality of perspective Newco’s shareholders:

3. TELEFONICA S.A., a Spanish company with registered office at 28013, Madrid, Gran Via n. 28, Spain, Registro Mercantil de Madrid, al tomo 208 de Sociedades, folio 1, hoja numero M-6.164, incripcion 946, tax code A-28/015865 (“TE”);

4. ASSICURAZIONI GENERALI S.p.A., an Italian company with registered office at Piazza Duca degli Abruzzi n. 2, Trieste, Italy, tax code 00079760328 (“AG”);

5. SINTONIA S.A., a Luxembourg company with registered office at 1, Place d’Armes, L-1136 Luxembourg, commercial register n. B77504 (“SI”);

6. INTESA SANPAOLO S.p.A., an Italian company with registered office at Piazza San Carlo n. 156, Torino, Italy, tax code 10810700152 ( “IS”);

7. MEDIOBANCA S.p.A., an Italian company with registered office at Piazzetta Cuccia n. 1, Milano, Italy, tax code 00714490158 (“MB”);

(to be collectively referred to hereinafter as the “INVESTORS”)

- ON THE OTHER SIDE -

The Sellers and the Investors shall be collectively referred to hereinafter as the “PARTIES” and individually all the Sellers - on the one side - and all the Investors - on the other side - a “PARTY”.

RECITALS

(A) The Sellers are the sole shareholders of Olimpia S.p.A (“OLIMPIA” or the “COMPANY”), a company limited by shares under the laws of Italy, with its corporate seat and principal place of business at Viale Sarca, 222, Milan, registered at the Companies’ Register of Milan, No. 03232190961

(B) The Company has an authorized and issued share capital of Euro 4,630,233,510, divided by No. 4,630,233,510 ordinary shares (the “COMPANY SHARES”). In particular, PC is the owner of No. 3,704,186,808 Company Shares and Sintonia S.p.A. is the owner of No. 434,285,714 Company Shares and Sintonia S.A. is the owner of No. 491,760,988 Company Shares.

(C) The Company is the legitimate owner of 2,407,345,359 ordinary voting shares (“TI SHARES”) of Telecom Italia S.p.A, an Italian limited by shares corporation listed under the laws of Italy, with its corporate seat and principal place of business at Piazza degli Affari, 2, Milan, (“TI”).

(D) The Purchaser (as defined below) intends to purchase all and not less than all of the Company Shares representing the one-hundred percent (100%) of the authorized and issued share capital of the Company.

(E) The Sellers intend to sell the Company Shares and the Investors intend to designate a common corporate vehicle with registered office in Milan, wholly owned by the Investors (the “NEWCO”) at Closing Date (as defined below), to purchase the Company Shares (the “DESIGNATION”). Newco share capital shall be in the percentages indicated in ANNEX (E).

(F) In this Agreement, the “PURCHASER” shall identify the Investors and, upon Designation, Newco, in any case with several and not joint responsibility of each of the Investors which will be pro-quota and, upon Designation jointly liable with Newco (as regards SI with exclusive reference to the acquisition of the relevant PC’s stake), up to the relevant percentage of shareholding as provided for in ANNEX E.

NOW THEREFORE IN CONSIDERATION OF THE ABOVE IT IS HEREBY AGREED AS FOLLOWS:

1. PREMISES AND INTERPRETATION

1.1 The recitals shall constitute an essential and integral part of this Agreement.

1.2 In this Agreement, unless the context otherwise requires,

(a) references to a Party shall include that Party’s successors and permitted assigns;

(b) references herein or in any other document to this Agreement shall be construed as references to this Agreement as amended, varied, supplemented, substituted or novated with the agreement of all the Parties.

2. SALE-PURCHASE AND TRANSFER OBLIGATIONS IN RELATION THERETO

2.1 Upon the terms and subject to the conditions of this Agreement, the Sellers hereby agree to sell and transfer to the Purchaser and the Purchaser hereby agrees to purchase from the Sellers, the Company Shares, free and clear from any liens or third party rights of any nature attaching thereto.

2.2 The Company Shares shall be purchased and sold with the right to receive any dividends which will be distributed by the Company after the Closing Date (as defined below), even if accrued prior to that date (i.e. “GODIMENTO REGOLARE”).

2.3 The completion of the sale and purchase of the Company Shares is subject to the condition precedent of the antitrust approval of the EU Commission or any EU antitrust Authorities pursuant to the applicable legislation (the “EU APPROVAL/S”). The Parties shall cooperate in good faith to obtain the EU Approval/s. The Purchaser shall

inform the Sellers of all the filings, notifications or other formalities made or to be made with respect to the transaction contemplated hereby with any antitrust or regulatory authorities within 30 days of the execution of this Agreement (the “FILINGS”).

The Parties agree that if within 180 days after the day of this Agreement:

(aa) the EU Approval/s is not obtained; and/or

(bb) any competent regulatory authorities prohibits the completion of the acquisition by Newco and/or any of the Investors of the Company Shares and/or (directly or indirectly) of the TI Shares (the “ACQUISITION”); and/or

(cc) any competent regulatory authority or any antitrust authority (other than the EU Commission) in countries where TE and/or TI have substantial operations with which a Filing is made adopts a decision which makes the completion of the Acquisition (i.e. the Closing) subject to conditions and/or prescriptions which (i) must be satisfied prior to Closing and thus may not be satisfied after completion of the Acquisition; and (ii) are not capable of being satisfied, or complied with, solely through actions, measures, or decisions of TE and its subsidiaries,

then this Agreement shall terminate and cease to be effective among the Parties without any liability for any of the Parties, unless the Parties agree in writing to implement the Closing or to extend the aforesaid term.

For the avoidance of doubt, if the conditions and/or prescriptions set out in a decision referred to in clause (cc) above to be satisfied prior to Closing are capable of being satisfied, or complied with, through actions, measures, or decisions of TE and its subsidiaries, and without a participation by TI and its subsidiaries, then this Agreement shall not terminate and the Purchaser shall be bound to proceed to Closing.

2.4 Without prejudice to the actions provided and/or permitted by this Agreement, the Sellers undertake - also on behalf of the Company pursuant to Article 1381 of the Italian Civil Code - that, between the date of this Agreement and the Closing Date (as defined below), (i) the Seller shall keep the Purchaser fully and timely informed of any transactions or actions of the Sellers or the Company having significance for the purpose of this Agreement and (ii) without the prior written consent of the Purchaser, which shall not be unreasonably denied or delayed:

• the Sellers shall not enter into any agreement which may affect the full title or the transferability of the Company Shares and shall cause the Company not to enter into any agreement which may affect the full title or the transferability of the TI Shares (except that the Company shall comply with the obligations

deriving from the financial arrangements existing on the date hereof to pledge additional TI Shares as collateral for the payment obligations under the relevant arrangements as specified in Annex 2.4, giving in any case prior information to the Purchaser);

• the by-laws of the Company will not be amended;

• the Company shall not issue any share, quota, bonds or other securities or any rights relating thereto and shall not carry out any other extraordinary corporate transaction and shall not unwind nor amend to any extent the Equity Swap with Caboto;

• the Company shall not pay any dividend or distribute any reserve or any other distributable asset;

• the Company shall not sell, transfer, encumber or otherwise dispose, directly or indirectly of the TI Shares or assume obligations to do so (except that the Company shall comply with the obligations deriving from the financial arrangements existing on the date hereof, to pledge additional TI Shares as collateral for the payment obligations under the relevant arrangements, giving in any case prior information to the Purchaser, as well as with the obligations arising from the mandatory exchangeable notes issued by the Company in October 2001 and outstanding, as of December 31, 2006, in the amount of approximately euro 1.6 million);

• the Company shall not execute any related party transaction except for those concerning administrative and legal services that fall in the ordinary course and are at market rates; and

• in general, the Company shall conduct its business in the ordinary course, in a prudent manner and consistently with past practice, without entering into any agreement, or incurring any obligation, liability or indebtedness or taking any other action which may cause any of the representations or warranties of the Sellers contained in this Agreement to become untrue and incorrect in any material respect.

2.5 The sale and purchase and transfer of the Company Shares from the Sellers to the Purchaser (the “CLOSING”) shall take place within 15 days of all the Approval/s having been obtained, provided that, in the event that:

• all the Approval/s have been obtained on a date earlier than 180 days after the date hereof, and

• as of such date any antitrust or regulatory authority with which a Filing has been made and which has the power under applicable law to issue a decision on the transaction (a “REGULATORY DECISION”) has not yet issued any such Regulatory Decision,

the Purchaser shall be entitled to require by notice in writing to the Sellers that the Closing be postponed until the issuance of all the Regulatory Decisions, provided that if any Regulatory Decisions have not been issued within 180 days from the date of execution of this Agreement, the Closing shall take place anyway within 15 days of the expiration of such 180 day term. The date on which the Closing shall take place as determined in accordance with this Article 2.5 is hereinafter referred to as the “CLOSING DATE”. The Closing shall take place at the office of Mediobanca located in Milan at Piazzetta Cuccia, 1.

2.6 At Closing, the following actions shall occur which, regardless of their sequence, shall be deemed to be one and a single transaction and shall not affect and shall not have any novative effect (effetto novativo) on the rights and obligations of the Parties under this Agreement:

• the Sellers shall deliver to the Purchaser a letter duly signed by the Company’s legal representative indicating the Company’s provisional net debt at Closing determined as indicated in Article 2.7 below (the “NET DEBT AT CLOSING”), after having anticipated such letter as per Clause 3.2 below;

• subject to the confirmation by the bank designated by the Sellers that the Provisional Consideration (as defined below) has been delivered to the accounts of the Sellers, the Sellers shall endorse and deliver to the Purchaser the certificates representing the Company Shares in order to transfer full title in the Company Shares to the Purchaser and the Parties shall execute the tax transfer certificate (FISSATO BOLLATO) and the Purchaser shall provide all the amounts due;

• the Purchaser shall deliver to the Sellers copy of the bank’s wire message confirming the payment of the Provisional Consideration (as defined below);

• the Sellers shall deliver to the Purchaser letters of resignation, duly signed, by the directors and, to the extent possible under applicable law, by the statutory auditors, of the Company confirming that said directors and statutory auditors shall expressly waive any possible claim against the Company deriving from their office;

• the Sellers shall deliver to the Purchaser letters of resignation of the following directors of TI: Carlo Alessandro Puri Negri, Luciano Gobbi and Claudio De Conto;

• the Sellers shall hold a validly convened or fully attended meeting of the shareholders of the Company in order to: (A) accept the resignations referred to above; (B) appoint the new directors and - to the extent possible under applicable law - statutory auditors indicated in writing by the Purchaser to the Sellers at least 2 (two) business days before the Closing Date (providing all the necessary information required by the applicable laws for their valid appointment); and (C) revoke any powers of attorney granted for the representation of the relevant Company;

• the Sellers shall deliver to the Purchaser the books and records of the Company;

• the Sellers and the Company shall terminate all the existing agreements between them, free of any charges for such termination or liabilities for the Company;

• the Sellers, the Company and the relevant Investors shall terminate all existing shareholders agreements concerning the Company and TI, free of any charges or liabilities for the Company, the relevant Investors and the Sellers;

• the Sellers shall deliver to the Purchaser the letter of termination of the agreement between the Company and Holinvest S.p.A. dated 12 July 2006 concerning certain obligations of Holinvest S.p.A. with respect to TI shares.

2.7 The Net Debt at Closing shall be determined as per Annex 2.7 hereto, it being agreed and understood that all such items shall be determined as of the Closing Date based on the accounting principles applied consistently by the Company with reference to the 2006 financial statement of the Company (the “FINANCIAL STATEMENT”), attached hereto as Annex 2.8 and known by the Investors.

2.8 The Parties agree and the Sellers undertake that all and any liabilities, costs, expenses and damages arising out of the tax claims indicated in the Financial Statement (the “TAX CLAIM”) shall be borne, paid and completely taken care of by the Sellers which shall keep the Purchaser and the Company fully indemnified and harmless in respect thereof. In particular, the Sellers (i) shall be entitled to appoint the lawyers and tax counsels to defend the relevant case, and (ii) shall be bound to anticipate to the Company and the Purchaser any amounts due and payable by them for any reason whatsoever in connection with the Tax Claim (including settlements and amnesties and - should the Sellers abstain to defend the case - the reasonable expenses of lawyers and tax advisors engaged by the Purchaser or the Company), and provided further that any refund finally and definitively obtained by the Company shall be refunded to the Sellers up to the amount already anticipated by them in accordance with this Clause 2.8.

2.9 In addition, should a mandatory prepayment of the existing financial arrangements of the Company occur as a consequence of the acquisition of the Company Shares by the Purchaser - such prepayments, if any, to be made in accordance with the applicable provisions of the relevant arrangements - the Parties agree that the Sellers shall indemnify the Company of any breakage fee, penalty or other cost of any nature payable by the Company in connection with the pre-paid financings.

2.10 As soon as practicable after the Closing, the Purchaser shall cause a board of directors and a general meeting of the Company to be convened, whereby all decisions and actions of all former directors and statutory auditors of the Company shall be approved, releasing them from any potential liability towards the Company or the Purchaser and waiving any claim or liability action which may be exercised against them.

2.11 For the purposes of the obligations under this Agreement, it is understood and agreed that, the relevant Investors and the Sellers waive any right arising out of the existing shareholders agreements concerning the Company and TI to which such Investors are a party, which would result in conflict with this Agreement or the consummation by the Sellers of the transactions contemplated hereunder.

3. CONSIDERATION

3.1 The consideration to be paid by the Purchaser in aggregate to the Sellers for the sale and purchase of the Company Shares shall be calculated multiplying the No. 2,407,345,359 TI Shares by EURO 2.82 per share less the Total Net Debt at Closing (the “CONSIDERATION”). For the purposes of this Agreement, “TOTAL NET DEBT AT CLOSING” means the Net Debt at Closing plus/minus the IRS Amount, as defined in Clause 3.2 below.

3.2 With the sole purpose of determining the amounts to be paid at Closing by Purchaser to the Sellers, at least 8 days prior to Closing the Sellers shall deliver to the Purchaser a letter, prepared and signed also by the Sellers’ legal representatives and chief financial officers, setting forth the reasonable estimate made by the Sellers of the Net Debt at Closing and the determination of the provisional Consideration (the “PROVISIONAL CONSIDERATION”). The Provisional Consideration shall be paid by the Purchaser to the Sellers in immediately available funds at the Closing as per Clause 2.6 above. In particular the Purchaser shall pay 80% of the Consideration to PC and 20% of the Consideration to Sintonia (split in accordance with the respective percentages). Payment of the Consideration shall be made by wire transfer to the Sellers’ account which shall be timely indicated by the Sellers to the Purchaser. Within the same 8 days period, the Parties shall fairly determine between them the amount of the Company’s IRS Swap as at Closing (the “IRS AMOUNT”). If an agreement is reached on the IRS Amount on or before the Closing Date, then the IRS Amount shall be included in the determination of the Provisional Consideration. If no agreement is reached within the Closing Date, the IRS Amount will be determined MUTATIS MUTANDIS in accordance with the procedure set out in Clauses 3.3 and 3.4.

3.3 Within 45 business days of the Closing Date, the Purchaser shall deliver to the Sellers a certificate, with attached a balance sheet of the Company as at the Closing Date, setting forth the final determination made by the Purchaser of the Total Net Debt at Closing and the determination of the Consideration. The Parties agree that after the Closing, the Sellers and their representatives, auditors and other advisors shall be allowed by the Purchaser to have reasonable access to all books, records and working papers relating to the Company which are relevant for the purpose of determining the Total Net Debt at Closing; further, the Purchaser shall cooperate with the Sellers and their representatives and advisors by providing any reasonable information necessary for them to review the balance sheet of the Company and to review the Total Net Debt at Closing as determined by the Purchaser. If, within 20 business days of the delivery by the Purchaser of the certificate determining the Total Net Debt at Closing and the Consideration, the Sellers do not notify to the Purchaser their disagreement (which disagreement shall state a reasonably detailed summary of its reasons), then the determination of the Purchaser shall be final and binding on the Parties. In case of a disagreement, the Purchaser and the Sellers shall negotiate in good faith to resolve the matter. If the Parties are unable to reach an amicable settlement within 20 business days of the delivery of the notice of disagreement, any disagreement between the Parties will be submitted by the most diligent Party, as exclusive remedy, to Ernst &Young (the “INDEPENDENT ACCOUNTANT”). The Independent Accountant shall - within 20 business days of the date on which any matters have been submitted to it -

(i) determine the Net Debt at Closing in accordance with Clause 2.7 above and the resulting Consideration; (ii) justify its determination; and (iii) act as an ARBITRATORE pursuant to Article 1349 of the Italian Code (DETERMINAZIONE DELL’OGGETTO), but excluding its MERO ARBITRIO. The determination of the Independent Accountant shall be final and binding upon the Parties. The costs and expenses of the Independent Accountant shall be borne 50% by the Sellers and 50% by the Purchaser.

3.4 Within 7 days from the determination of the Consideration having become final and binding in accordance with Clause 3.3, if the Provisional Consideration is greater than the Consideration so determined, then the Sellers shall pay PRO QUOTA to the Purchaser an amount equal to the difference; if, however, the Provisional Consideration is lower than the Consideration so determined, then the Purchaser shall pay PRO QUOTA to the Sellers an amount equal to the difference and shall pay or cause to be paid to the appropriate Parties and in the appropriate manner, any stamp, transfer or similar taxes or charges however levied on the transfer of the Company Shares in connection with such payment.

3.5 Any transfer tax to be imposed by the Italian tax authority on the sale and transfer of the Company Shares hereunder, if any, shall be borne and paid by the Purchaser, and the Purchaser shall indemnify and hold the Sellers harmless from and against any such tax. Any fee due to the Notary or the intermediary agent for the transfer of the Company’ shares shall be borne by the Purchaser.

4. REPRESENTATIONS AND WARRANTIES

4.1 The Sellers, each one severally and not jointly, represent and warrant to the Purchaser, as at the date of this Agreement and as at the Closing Date, that:

(a) they have full corporate powers and authority to execute this Agreement and to perform their obligations there under and that they have taken all necessary corporate action to authorize the execution of this Agreement and the performance of their obligations thereunder; neither the execution of this Agreement nor the consummation of the transaction contemplated hereby will result in violation of any undertaking or agreement to which the Sellers and/or the Company are parties;

(b) the Company Shares are validly issued and fully owned by them and (except for the first refusal rights of certain Investors pursuant to the existing shareholders agreements concerning the Company and TI) are free and clear of any liens or third party rights of any nature and upon the Closing Date the Purchaser shall acquire good and valid title thereto, free and clear of any such liens, or third party rights of any nature; on the Closing Date there will be no securities or rights of any kind or nature (such as options, warrants, subscriptions rights) which may be converted into the share capital of the Company, nor any other right which may entitle any other person to enter into the share capital of the Company. No bonds (convertible or not convertible into the share capital of the Company) issued by the Company are

currently issued and outstanding, except for the No. 703,000 notes mandatorily exchangeable into No. 331,502 TI shares, due October 2007, currently issued and outstanding;

(c) Olimpia is the legitimate owner of all the TI Shares free and clear of any liens or third party rights of any nature, other than those pledged or granted as collateral to the Company’s bank lenders as indicated in the 2006 financial statements (subject to any additional TI Shares pledged or granted as collateral in compliance with the obligations of the Company under the financial arrangements of the Company existing on the date hereof);

(d) subject to the provisions of Clause 2.3, the execution and fulfillment of this Agreement by the Sellers do not constitute a breach of the by-laws of the Sellers, of any contractual obligation of the Sellers nor of any decision, injunction and order issued by any Authority against the Sellers which may affect the validity, enforceability and fulfillment of this Agreement;

(e) in the period between December 31, 2006 and the date hereof, the Company has been managed in the ordinary course of business in compliance with the undertakings under Clause 2.4 above;

(f) the Company’s Equity Swap with UBM has been closed at an average price of Euro 2.3578 per TI Share; and

(g) other than the liabilities referenced to in the Net Debt at Closing, the Company has no liabilities, actual or contingent, towards any third party arising out of agreements, actions or omissions of the Company up to the Closing Date.

4.2 Each of the Investors and the Purchaser represents and warrants to the Sellers that:

(a) they all have the corporate powers and authority to execute this Agreement and to perform their obligations hereunder and that they have taken all necessary corporate actions to authorize the execution of this Agreement and the performance of its obligations thereunder; neither the execution of this Agreement nor the consummation of the transaction contemplated hereby will result in violation of any undertaking or agreement to which the Investors and/or the Purchaser are parties; and

(b) they have not engaged and shall not engage until the Closing Date on any action that would result in the obligation of any of the Company and/or the Sellers to launch a mandatory tender offer on TI shares, also jointly with any of the Investors or the Purchaser.

5. OBLIGATION TO INDEMNIFY

5.1 The Party (the “INDEMNIFYING PARTY”) whose representations and warranties prove to be untrue or incorrect shall have the obligation to indemnify the other Party (the “INDEMNIFIED PARTY”) for any claims, judgements, orders, losses, damages, costs, charges and expenses suffered by such Indemnified Party deriving from the breach of any such representation and warranty. The indemnification obligation hereunder shall be the sole and exclusive remedy of the Parties for any breach of the provisions of this Agreement to the exclusion of any other right, remedy, claim or action, in contract or otherwise, that may be available under applicable laws. Without limitation of the above generality, the Parties acknowledge and agree in accordance with Article 1469 of the Italian Civil Code that the provisions of Articles 1467 and 1468 of the Italian Civil Code shall not apply to this Agreement.

5.2 In no event shall a Party be liable to an Indemnified Party in respect of any actual or alleged breach of the representations and warranties which is notified to the Indemnifying Party later than 12 months after the Closing Date; except for any actual or alleged breach of the representations and warranties of the Sellers under (i) Clause 4.1(b) and (c) and (ii) Clause 4.1(g) concerning any tax liability which is notified by the Purchaser no later than 30 business days after the expiration of the statute of limitation applicable to the events constituting the subject matter of the relevant tax liability.

6. NOTICES

6.1 Any notices or other communication required or permitted to be given under this Agreement shall be in writing and shall be (i) personally delivered, (ii) transmitted by postage prepaid registered airmail or e-mail, or (iii) transmitted by facsimile communication to the Parties as follows:

IF TO THE SELLERS:

Pirelli & C. S.p.A.

Via Negri 10

20123 Milano

Attention: Dr. Marco Tronchetti Provera

Facsimile: + 39 02 8535 4469

Sintonia S.p.A.

Corso di Porta Vittoria, 16

20122 Milano

Attention:Mr. Gilberto Benetton, and Mr. Gianni Mion

Facsimile: + 39 02 54924200

Sintonia S.A.

Place d’Armes, 1

L1136 Luxembourg

Luxembourg

Attention: Mr. Gustave Stoffel, Director

Facsimile: + 352 26 266 256

IF TO THE INVESTORS OR THE PURCHASER, FOR THE BENEFIT OF THEM ALL:

MEDIOBANCA S.p.A.

Piazzetta Cuccia n. 1

20121 Milano

Attention: Mr. Clemente Rebecchini and Ms. Cristiana Vibaldi

Facsimile: + 39 02 8829 943

E-mail: CLEMENTE.REBECCHINI@MEDIOBANCA.IT, cristiana.vibaldi@mediobanca.it

or at such other address and telefax number as either Party may hereinafter furnish to the other Party by written notice, as herein provided.

6.2 All notices and other communications shall be deemed to have been duly and validly given (i) in the case of any letter delivered personally, when received by the Party to whom it is addressed, (ii) in the case of a facsimile communication the date of receipt of such communication, and (iii) in the case of a letter sent by postage prepaid registered airmail, forty-eight (48) hours after mailing. Any letter sent by airmail or e-mail shall, as promptly as practicable, be confirmed by facsimile communication (but failure to send such a facsimile communication or non-receipt thereof by the addressee shall not impair or affect the effectiveness of notice so given by airmail or e-mail).

7. MISCELLANEOUS

7.1 If a provision of this Agreement is or becomes unlawful, invalid or unenforceable in any jurisdiction, it shall not affect or impair the legality, validity or enforceability in such jurisdiction of any other provisions of this Agreement, nor shall it affect or impair the legality, validity or enforceability in any other jurisdiction of such provisions or any other provisions of this Agreement.

7.2 Each notice or other communication required to be given under this Agreement shall be in the English language.

7.3 Without prejudice to Clause 7.1 above, this Agreement may be amended only by a written document duly signed by the authorized representatives of each of the Parties.

7.4 Neither the Sellers or the Purchaser have entered into any agreement nor have taken any action that might give rise to third-party rights or claims VIS-A-VIS them for the payment of commissions, other brokerage fees or payments in relation to the execution and performance of this Agreement.

7.5 All obligations of the Sellers here under, including the obligations to sell and deliver the Company Shares and to indemnify the Purchaser pursuant to Clause 5, are several and not joint, and are undertaken by each of the Sellers proportionate to their respective interest in the share capital of the Company (i.e., 80% as for PC, and 20% as for Sintonia).

7.6 This Agreement and all of the provisions hereof shall be binding upon each of the Parties and their respective successors. Without prejudice to the Designation, neither Party may assign any of its rights, interests or obligations hereunder without the prior written consent of the other Parties and any attempt to assign this Agreement without such consent shall have no effect.

7.7 Except as otherwise mandatorily required under any laws or regulations, no publicity, release or announcement concerning the execution of this Agreement, any of the provisions contained herein or the transactions contemplated hereby will be issued without the prior written consent of the other Parties, provided that such consent or approval cannot be unreasonably withheld and that the Parties shall cooperate as to the timing and contents of any such press release or public announcement.

8. GOVERNING LAW AND JURISDICTION

8.1 This Agreement shall be governed by and construed in accordance with Italian laws.

8.2 Any and all disputes arising out of or in connection with this Agreement shall be submitted to the exclusive jurisdiction of the courts of Italy and the exclusive competence of the Tribunal of Milan.

***** *****

If you are in agreement with the terms of this Agreement please return it to us together with its Annexes duly undersigned in sign of your acceptance.

With best regards,

Pirelli & C. S.p.A.

Sintonia S.p.A.

Sintonia S.A.”

For acceptance:

TELEFONICA S.A.		ASSICURAZIONI GENERALI S.P.A.

INTESA SANPAOLO S.P.A.		MEDIOBANCA S.P.A.

SINTONIA S.A.

ANNEX E

NEWCO’S SHAREHOLDING

Shareholders	Share Capitale Percentage
Telefonica S.A.	42,3	%

Assicurazioni Generali S.p.A.	28,0	%

Sintonia S.A.	8,4	%

Intesa Sanpaolo S.p.A.	10,6	%

Mediobanca - Banca di Credito Finanziario S.p.A.	10,6	%

ANNEX 2.4

[EXISTING FINANCIAL ARRANGEMENTS]

ANNEX 2.7

NET DEBT AT CLOSING

1. “NET DEBT AT CLOSING” shall mean the net amount of the assets and liabilities of the Company below described, calculated as at the Closing Date, on the basis of the balance sheet of the Company prepared by the Purchaser as at the Closing Date and in accordance with the generally applicable Italian accounting principles as applied consistently by the Company with reference to the 2006 Financial Statement (the “CLOSING DATE BALANCE SHEET”), without any double counting.

2. The Net Debt at Closing shall mean the sum of the following items:

(i) Deducting:

a) Any cash and cash equivalent at their fair market value, in the amount presented in the Closing Date Balance Sheet;

b) The amount of accounts receivable at their net realizable value, in the amount presented in the Closing Date Balance Sheet;

c) Accrued interest income, in the amount presented in the Closing Date Balance Sheet.

(ii) Adding:

a) The amount of accounts payable at their nominal value; in the amount presented in the Closing Date Balance Sheet

b) The amount of the “PRESTITO OBBLIGAZIONARIO OLIMPIA S.P.A. - 1.5% 2001-2007”. This amount shall be calculated multiplying the number of shares by the “PREZZO UFFICIALE” published by Borsa Italiana of the TI ordinary shares at the Closing Date plus the accrued interest payable in cash at maturity;

c) The principal value of bank borrowings, in the amount presented in the Closing Date Balance Sheet;

d) Accrued interest expenses in the amount presented in the Closing Date Balance Sheet;

e) Current tax payables, in the amount presented in the Closing Date Balance Sheet;

f) Any deferred payment obligations related to the equity derivatives on TI Shares calculated by Caboto on the basis of a price per TI Share equal to Euro 2.268, as resulting from the reference price (PREZZO DI RIFERIMENTO) as of 27 April 2007, applying the same criteria utilized for the purpose of the calculation made as of 31 December 2006.

g) Any other liability resulting from the Closing Date Balance Sheet.

3. For the purpose of the Net Debt at Closing, no deferred tax effect on the above items shall be taken into account in the calculation.

4. Exclusively for the sake of clarity, an example of the Net Debt at Closing calculation based on the Financial Statement is attached hereto as Schedule 1.

ANNEX 2.8

[COMPANY FINANCIAL STATEMENT]

EX-99.6 7 a07-27464_1ex99d6.htm THE ANNOUNCEMENT OF THE BOARD OF COMMISSIONERS DATED OCTOBER 23, 2007,

Exhibit 99.6

The Board of Commissioners of the National Telecommunications Agency (Anatel) has decided today, October 23, 2007, in its 457^th Meeting:

a) To agree with the transfer of the indirect control of Telecom Itália S.p.A., indirect controlling entity of TIM Celular S.A. and TIM Nordeste S.A., to Telefônica S.A., Assicurazioni Generali S.p.A., Sintonia S.A., Intesa Sanpaolo S.p.A. and to Mediobanca S.p.A. – Banca di Credito Finanziario S.p.A., subject to the adoption of clauses in the corporate instruments that contemplate:

1. A prohibition to Telefônica S.A., in the General Shareholders’ Meetings, and to the members appointed by Telefônica S.A. to the Boards of Directors, the Officers or any body with equivalent function, to participate in, vote on or veto in the deliberations of Telco S.p.A., Olímpia S.p.A., Telecom Itália S.p.A. or any other company directly or indirectly controlled by Telecom Itália S.p.A., subjects that deal with matters related to the activities of such companies in rendering telecommunication services in the Brazilian market;

1.1. The prohibition mentioned in item 1 above shall be expressly provided for with respect to the Class B shares, which are owned exclusively by Telefônica S.A.

2. A prohibition to Telefônica S.A. to appoint members to the Boards of Directors, the Officers, or any bodies with equivalent functions of the companies directly or indirectly controlled by Telecom Italia S.p.A., established in Brazil, that render telecommunication services in the Brazilian market and their controllers;

3. A prohibition in the relationships between the companies controlled by Telefônica S.A. and Telecom Itália S.p.A. that render telecommunication services in the Brazilian market, when established on terms other than those provided for in the Brazilian regulation of telecommunication services, as to:

3.1. significant financing operation, either passive or active, under any format;

3.2. the providing of guarantees, whether security interests, personal or any other kind;

3.3. the transfer of assets under conditions, terms or values other than those practiced in the market;

3.4. the transfer of strategic technological know-how;

3.5. the rendering of telecommunications or related services on favored or privileged terms;

3.6. operating agreement that stipulates favored or privileged terms;

3.7. the common use of resources, whether material, technological or human;

3.8. the joint contracting of goods or services;

3.9. the execution of any legal instrument having as its subject the transfer of shares between the operators or the assignment of a right of first refusal related to the reciprocal transfer of shares;

3.10. the adoption of a common brand, marketing or advertising strategy.

4. Maintenance, in case there is a de-merger of Telco S.p.A., as provided in item 1.2 or item 11 of its Shareholders’ Agreement, of all the conditions imposed to Telefônica S.A. in relation to Telecom Itália S.p.A. and its controlled and controlling entities, as well as the prohibitions in the relationships between companies controlled by Telefônica S.A. and Telecom Itália S.p.A. that render telecommunication services in the Brazilian market.

5. Submission, for prior approval by Anatel, of a new formal legal instrument containing the same restrictions and prohibitions mentioned above, in case Telco S.p.A.’s Shareholders Agreement loses its validity, as well as in the case of a merger between Telco S.p.A. and Olímpia S.p.A.

6. A prohibition to Telefônica S.A. to exercise control, either direct or indirect, over any company of the TIM Group in Brazil, in the manner determined by specific regulation in force in this country, even if Telefônica S.A. exercises its purchase option in case of a unilateral withdrawal provoked by another shareholder company.

7. A determination that the preparers of the agendas for meetings of the Boards of Directors of Telco S.p.A., Olímpia S.p.A., Telecom Itália S.p.A. and Telecom Itália International N.V., their respective presidents, to separate the topics into separate agendas, being (i) one in which TE’s participation, through the Board members that it appoints, is allowed, and (ii) another in which the participation of Board members appointed by TE is not allowed. In the meetings at which the participation of Board members appointed by TE is not allowed, the topics dealt with shall necessarily pertain to matters that deal with subjects related to the activities of the companies directly or indirectly controlled by Telecom Itália S.p.A., in rendering telecommunication services in the Brazilian market and to directly related topics, these latter being, necessarily, connected to the main topics as regards competition strategy, such as budgets for marketing campaigns and investment plans in product development, assets (lato sensu), instruments, all that, in sum, is directed towards the development of activities related to the activities of the companies directly or indirectly controlled by Telecom

Itália S.p.A. in the rendering of telecommunication services in the Brazilian market.

b) To order the companies of the TIM Group in Brazil, TIM Celular S.A. and TIM Nordeste S.A., to present to Anatel within thirty (30) days after the publication of the authorization Act, the corporate instruments that contain, unequivocally, the conditions established, as well as the adjustments arising from these conditions, under penalty of losing the effects of the authorization here proposed.

c) To order the companies of the TIM Group in Brazil, TIM Celular S.A. and TIM Nordeste S.A., to forward, within thirty (30) days counted from the holding of the meetings of the Boards Directors of Telco S.p.A., Olímpia S.p.A., Telecom Itália S.p.A. or any other company directly or indirectly controlled by Telecom Itália S.p.A., a copy of the Agendas and of the Minutes, in Portuguese, of the meetings referred to in item 7 of point “a”, above;

d) To order that the Private Services Superintendency and the Public Services Superintendency jointly proceed with the analysis of the corporate instruments that unequivocally contemplate the conditions established, and submit it for approval by the Board of Commissioners.

In addition, there is:

a) established a period of six (6) months for the parties to submit for Anatel’s approval changes in the present proposal that guarantee the total separation [desvinculação] between Vivo and TIM Brasil (Tim Celular S.A. and TIM Nordeste S.A.);

b) established a period of six (6) months, after the analysis and acceptance of the proposal of change mentioned in item “a”, above, for the parties to implement them;

c) ordered that in this interim, the parties obey the proposed safeguards, as well as others that may be established by CADE, in analyzing the Act of Concentration prepared by this Agency.

EX-99.7 8 a07-27464_1ex99d7.htm JOINT PRESS RELEASE ANNOUNCING THE CLOSING OF THE TRANSACTION DATED OCTOBER 25, 2007,

Exhibit 99.9

Assicurazioni Generali S.p.A., Intesa Sanpaolo S.p.A., Mediobanca S.p.A., Sintonia S.A. comunicate that as of today Telco S.p.A. – a company participated by them together with Telefonica S.A. – has received 749,827,264 ordinary shares of Telecom Italia S.p.A., representing 5.6% of its share capital by means of contribution by Assicurazioni Generali S.p.A. and Mediobanca S.p.A. and purchased for a total price of Euro 4,161 million 100% of the Olimpia S.p.A. share capital, which in turn holds 2,407,345,359 ordinary shares of Telecom Italia S.p.A., representing 18% of its ordinary share capital.

On October 23, 2007, ANATEL (the brazilian TLC Authority) has resolved to authorise the closing of the transaction, providing with regard to the Barsilian market certain measures to be implemented following completion of the acquisition. The contents of ANATEL resolution has been published on ANATEL’s website www.anatel.gov.br.

The acquisition of Olimpia S.p.A. has been funded, as to Euro 3,248 million by means of a share capital increase of Telco S.p.A. and as to the remaining part through a financing made available by Intesa Sanpaolo S.p.A. and Mediobanca S.p.A., for a maximum amount of Euro 1,100 million, which has been utilised as of today for an amount of approximately Euro 925 million. Telco S.p.A.’s shareholders meeting has also resolved a further capital increase up to Euro 900 million, to be used to reimburse the abovementioned financing and aimed at allowing the entrance into the shareholding of Telco S.p.A. of other qualified Italian investors.

In addition, the following directors have been appointed to the board of Telco S.p.A.: Aldo Minucci (Chairman), Filippo Maria Bruno, Enrico Giliberti, Clemente Rebecchini, Gustave Stoffel, Maurizio Verbich, Ángel Vilá Boix, Ramiro Sánchez de Lérin García-Ovies, Miguel Escrig Melia and Sohail Qadri.

Finally the following directors have been appointed to the board of Olimpia S.p.A.: Aldo Minucci (Chairman), Filippo Maria Bruno, Enrico Giliberti, Giancarlo Olgiati, Clemente Rebecchini, Maurizio Verbich, Ángel Vilá Boix, Ramiro Sánchez de Lérin García-Ovies, Miguel Escrig Melia and Sohail Qadri.

EX-99.8 9 a07-27464_1ex99d8.htm JOINT PRESS RELEASE, DATED APRIL 28, 2007,

Exhibit 99.8

JOINT PRESS RELEASE

MILANO, 28th APRIL 2007 - A group of Italian investors made up of Assicurazioni Generali, Intesa Sanpaolo, Mediobanca and Sintonia SA, together with the international player Telefonica SA as minority partner, reached today an agreement with the Pirelli group, Sintonia S.p.A. and Sintonia SA for the purchase of the entire share capital of Olimpia at a provisional price of 4.1 billion euro.

The objectives of the transaction are:

• creating value over time for all shareholders, by accompanying Telecom Italia’s business growth strategies which will be defined in full autonomy by the Board of Directors and the management of Telecom Italia;

• strengthening and stabilizing the ownership structure of Telecom Italia, thanks to the commitment of important Italian institutional shareholders with a medium-term investment horizon and the financial support of one of the major international telecom players;

• 60; ensuring greater financial flexibility for Telecom Italia.

The offered consideration, to be paid in cash at the closing (forecasted within the end of 2007), implies the valuation of Olimpia’s equity investment in Telecom Italia at a unit price of 2.82 euro for each Telecom Italia ordinary share, for a countervalue of approximately 6.8 billion euro, gross of the net debts of Olimpia SpA.

The purchase contract is conditional upon the au thorizations and approvals of competent authorities.

The acquisition will occur via a newco, Telco S.p.A., destined to absorb Olimpia SpA, which, after the transaction will hold an approximately 23.6% stake in the voting share capital of Telecom Italia, 18% of which acquired via Olimpia and 5.6% of which contributed by Generali and Mediobanca.

Initially Telco will therefore be capitalized with:

• 1,373 million euro, through a contribution of Telecom Italia shares by Generali (542.8 million shares, equal to 4.06% of Telecom Italia’s ordinary share capital, valued 2.53 euro each);

• 522 million euro through a contribution of Telecom Italia shares by Mediobanc a (206.5 million shares, equal to 1.56% of Telecom Italia’s ordinary share capital, valued 2.53 euro each);

• 522 million euro contributed in cash by Intesa Sanpaolo, in line with the contribution values of Generali and Mediobanca;

• 412 million euro contributed in cash by Sintonia SA, in line with the contribution values of Generali and Mediobanca;

• 2,314 million euro contributed in cash by Telefonica SA;

• a bridge financing up to a maximum of 900 million euro in view to a further increase in the share capital of Telco, to be carried out after the closing of the transaction, and which may be subscribed proportionally by the Italian investors and Telefonica.

As a result of the transaction and before the increase in share capital, Italian shareholders will hold a 57.7% stake, broken down as follows:

• Generali, 28.1%;

• Intesa Sanpaolo, 10.6%;

• Mediobanca, 10.6%;

• Sintonia SA, 8.4%.

Telefonica will hold the remaining 42.3% of Telco’s share capital.

As part of the subsequent increase in share capital Intesa Sanpaolo may, with the reasonable approval of the other Telco shareholders, indicate new primary Italian financial investors, which may join Telco’s shareholders by acquiring newly-issued shares for a cash consideration, with individual equity stakes ranging between 2% and 5%.

Shareholders may over time make further contributions of Telecom Italia shares within the overall limit of 30% of the ordinary share capital of Telecom Italia, considering also the Telecom Italia shares which may be directly held by Telco shareholders.

Shareholder agreements and the Articles of Association of Telco will set forth that:

• the Chairman of Telco be indicated in agreement by Italian shareholders;

• governance be articulated according to the criteria of proportionality between shareholders, with the usual protections and qualified majorities required for particularly significant transactions (including mergers, acquisitions, spin-offs, sales of Telecom Italia shares and vote in the latter’s Extraordinary Shareholders’ Meetings);

• &# 160; pre-emptive rights between all shareholders, with the subordination of pre-emption of Telefonica with respect to pre-emption between the Italian shareholders.

Shareholder agreements ensure full independence of the management of Telecom Italia with respect to the shareholders of Telco. Any collaboration agreements between Telecom Italia and Telefonica are left to the sole and exclusive judgment of the competent deliberative bodies within the two groups.

In particular, as concerns the majority list for the designation of Telecom Italia Directors, agreements provide for the fact that they will be indicated by Telco according to criteria of professionalism and experience. 13 proposed Telecom Italia directors will be indicated jointly by Italian shareholders and two, with non-executive roles, by the partner Telefonica.

The agreements shall last three years, at the end of which, without prejudice to renewal, each shareholder may obtain the spin-off of its stake in Telco and the pro quota assignment of Telecom Italia shares and any relative debt.

EX-99.9 10 a07-27464_1ex99d9.htm JOINT PRESS RELEASE REQUESTED BY CONSOB, DATED MAY 2, 2007

Exhibit 99.9

JOINT PRESS RELEASE REQUESTED BY CONSOB

MILANO, 2nd MAY 2007 - Upon request of Consob, Assicurazioni Generali, Intesa Sanpaolo, Mediobanca and Sintonia SA confirm that the pre-emptive right in favour of Telefonica on the Telco shares held by Italian shareholders will be subordinated to the pre-emptive rights in favour of the latter. Furthermore, Italian shareholders, before Telefonica may exercise its pre-emptiv e right, may indicate new primary Italian investors, for whom Telefonica’s approval is provided for.

Furthermore, it is hereby confirmed that the governance of Telco will be articulated according to proportionality criteria; it sets forth qualified majorities - the achievement of which implies also the assent of Telefonica - for certain specific, particularly significant transactions, among which those which may change the shareholder structure (spin-offs, mergers and reserved increases in share capital); should such qualified majorities not be reached, a “deadlock” will occur and the relative resolutions will be taken with the majority of votes, without prejudice to the right of dissenting shareholders to exit the shareholder base of Telco via the relevant spin-off. A qua lified majority is also required for the determination of Telco’s dividend policy (and not of the dividend policy of the Telecom Italia group) which if not reached will not cause a “deadlock”. If Telecom Italia intended making divestments abroad exceeding 4 billion euro or closing significant strategic alliances with telecom players, Telefonica, if dissenting, will have the right to exit the shareholder base of Telco via the relevant spin-off.

As concerns the price for Olimpia’s entire share capital indicated in 4.1 billion euro, it is confirmed that such price is provisional since Olimpia’s net financial position must be considered at the date of the closing of the transaction, which, as already disclosed, will occur after the authorisations and approvals of the competent authorities.

Lastly, the stakes in the capital of Telco as a result of the transaction are confirmed: Assicurazioni Generali 28.1%, Intesa Sanpaolo 10.6%, Mediobanca 10.6%, Sintonia SA 8.4% and Telefonica 42.3%.

Shareholder agreements will be published according to the terms set forth by regulations in force.

EX-99.10 11 a07-27464_1ex99d10.htm BY-LAWS OF TELCO S.P.A (UNOFFICIAL ENGLISH TRANSLATION)

Exhibit 99.10

BY-LAWS

TITLE I

NAME – REGISTERED OFFICE – PURPOSE – DURATION

Article 1

(Name)

1.1 The name of the company shall be “Telco S.p.A.” (hereinafter “the Company”).

Article 2

(Registered office)

2.1 The Company has its registered office in Milan.

2.2 Secondary offices, subsidiaries, branches, administrative and technical offices, representations, agencies, and dependencies of all types, can be established, transferred, and abolished - in Italy and abroad - by way of resolution of the Board of Directors; moreover, the transfer of the registered office of the Company within the territory of Italy can be decided by way of resolution of the Board of Directors.

2.3 The domicile of the shareholders, the directors, the auditors and accountant – for their relations with the Company – is that shown in the Company books.

Article 3

(Purpose)

3.1 The Company has for its purpose:

(a) The investment in, holding of, and disinvestment in shares, direct and indirect, in Telecom Italia S.p.A. or in other companies operating in the telecommunications sector, only with the purpose of stable investments and not vis-à-vis the public;

(b) the management and coordination of the activities of the controlled companies;

(c) the provision of services for and the management, without territorial limit, of licensed telecommunication services for public use and use in the free market, as well as corporate or administrative organizational services in the publishing, advertising, data processing, telecommunications and multimedia sectors for the benefit of the participated companies, excluding any activities reserved to directors and those persons enrolled on the professional register;

(d) any other transaction or activity instrumental – and not prevalent – to the foregoing activities, including the grant of loans, issue of bank guarantees, sureties and endorsements in favour of subsidiaries, expressly excluding the exercise of these activities and of any other financial activity vis à vis the public and the exercise of qualified professional activities, the offering of securities to the public and the granting of consumer credit, including with regard to own shareholders, and in any

event with the absolute exclusion of activities reserved under Laws 12/1979, 1966/1939, 1815/1939, and Legislative Decrees 385/1993 (Article 106) and 58/1998.

Article 4

(Duration)

4.1 The term of the Company is fixed for a period ending on thirty-one (31) December (12) two thousand and fifty (2050).

TITLE II

CAPITAL – SHARES – WITHDRAWAL – BONDS – FINANCING

Article 5

(Capital and Shares)

5.1 The share capital is equal to Euro 4,849,038,420.00 and is divided into 1,939,615,368 shares (hereinafter, the “Shares”), with a nominal value of Euro 2.50 each, of which 1,119,046,300 Shares belong to Class A (hereinafter “Class A Shares”) and 820,569,068 Shares belong to Class B (hereinafter “Class B Shares”); Class A Shares and Class B Shares confer upon their holders equal economic and administrative rights, except as indicated in this Article 5 and in Articles 7, 8, 15 and 22 of the By-laws.

5.2 The shareholders of the Company resolved, at the shareholders’ meeting held on 25 October, 2007, to increase the share capital by a maximum nominal amount of Euro 889,328,065 through the issuance of a total maximum amount of 355,731,226 shares, of which 205,236,419 shares will be Class A Shares and 150,494,807 will be Class B Shares. As more specifically described in the applicable shareholders’ resolution, the increase must be implemented according to the terms indicated for each tranche, in three tranches, of which the first will be in favour of the First Tranche Underwriters, the second will be in favour of the holders of Class A Shares and the third will be in favour of the holders of Class B Shares.

5.3 For the purposes of Article 5.2, “First Tranche Underwrites” means entities or persons, who are not Telephone Operators (as defined below), who are qualified primary Italian institutional investors or private persons or entities selected by the holders of Class A Shares and whose participation in the Company has been accepted by the holders of Class B Shares, such acceptance not to be unreasonably withheld.

For the purposes of the By-laws, “Telephonic Operators” means entities or persons operating in the telecommunications sector and any entity or person that holds (a) a controlling interest in non-listed entities that operate in the telecommunications sector or (b) more than a 10% interest in the share capital of listed entities that operate in the telecommunications sector, or even if less than a 10%

interest in the share capital is held, such holder has the ability to nominate one or more members of the Board of Directors of such listed entity.

For the purposes of the By-laws, “Class A Founding Shareholders” means shareholders who are assignees of Class A Shares in the context of the conversion of the Company into a società per azioni as resolved during the shareholders’ meeting held on 25 October, 2007.

5.4 The share capital may also be increased by contribution of credits and contribution in kind, pursuant to article 2440 of the Italian Civil Code.

5.5 In the event of an increase of capital with or without consideration, whereby the issuance of Class A Shares and Class B Shares is proportionate to the then issued Class A Shares and Class B Shares, the shareholders that hold Class A Shares shall have the right to receive and subscribe Class A Shares and the shareholders who hold Class B Shares shall have the right to receive and subscribe for Class B Shares. In the event that holders of Class A Shares have not entirely exercised their option rights, the other holders of Class A Shares will have the right to exercise their pre-emption rights with respect to such Class A Shares. Likewise, in the event that holders of Class B Shares have not entirely exercised their option rights, the other holders of Class B Shares will have the right to exercise their pre-emption rights with respect to such Class B Shares. If, following the exercise of option rights and pre-emption rights by the holders of Class A Shares, there are remaining Class A Shares that are unsubscribed, these may be subscribed – in accordance with the procedure applicable to the exercise of option and pre-emption rights – by the holders of Class B Shares in proportion to their interest in Class B shares issued by the Company, with an automatic conversion of such Class A Shares to newly issued Class B Shares (having the same characteristics as the then issued Class B Shares). If, following the exercise of option rights and pre-emption rights by the holders of Class B Shares there are remaining Class B Shares that are unsubscribed, these may be subscribed – in accordance with the procedure applicable to the exercise of option and pre-emption rights – by the holders of Class A Shares in proportion to their interest in Class A shares issued by the Company, with an automatic conversion of such Class B Shares to newly issued Class A Shares (having the same characteristics as the then issued Class B Shares).

5.6 Without prejudice to the provisions set forth in Article 5.4 of the present by-laws, the share capital increases not fully subscribed by Class A and by Class B shareholders after the exercise of the option rights or the pre-emption rights as the case may be, will be deemed subscribed up to the amount actually subscribed.

5.7 The shares are represented by share certificates.

5.8 The shares are registered; their conversion into bearer shares is not allowed.

Article 6

(Withdrawal)

The right of withdrawal does not belong to the shareholders who have not participated in the decisions regarding:

• the extension of the term of the Company’s duration, and

• the introduction or removal of commitments to the circulation of stock certificates.

Article 7

(Transfer of Shares)

7.1 Within the limits provided by this article 7 and by article 8, the shares are transferable to shareholders and to third parties, whether by a deed between living people or by reason of death.

The provisions of this article 7 and of article 8 apply not only to the transfer of Shares, but to the transfer of any right whatsoever relating to them, including, by way of example, (i) all shares or potential financial instruments of the Company (including those provided for in article 2346 of the civil code) having voting rights or convertible into shares having voting rights, (ii) all bonds or other financial instruments convertible into, exchangeable with, or conferring to the relevant owner the right to subscription or to acquisition of shares or financial instruments with voting rights of the Company, as well as shares originating in the respective conversion or the exercise of the abovementioned rights, (iii) any other right, title, and/or financial instrument (including rights of option and/or warrant) that gives a right to the acquisition of and/or subscription to shares and/or financial instruments and/or bonds convertible into/ or exchangeable with, shares or financial instruments having voting rights or convertible into shares having voting rights in the Company, and/or the shares and/or financial instruments acquired on the basis of their exercise. The provisions of this article 7 and article 8 regard – in addition – not only the transfer of full ownership of the Shares and the rights relating thereto, but also the transfer of the bare ownership and whatsoever real rights of enjoyment, exclusive of the real rights of guarantee.

For the purposes of this article 7 and article 8, by act of transfer is meant any transfer by deed between living people, in whatever manner (such as, for purely illustrative purposes, sale, barter, contango, fiduciary transfer, and the modification of the entitlement to the relationship underlying a possible fiduciary commission, the conferring or borrowing of titles, or rather title deeds, gratis or out of generosity, amalgamation, splitting) able to be accomplished, directly or indirectly, in whole or part, including in a transitory manner, the ownership or availability of the Shares and whatever rights, interests, including of a non-property nature, deriving from or connected to the entitlement to the Shares.

For the purposes of this Article 7, “Qualified Italian Investors” means the entities and persons, that are not Telephonic Operators, that are qualified primary Italian institutional investors or private persons or entities that were previously accepted in writing by the holders of Class B Shares, it being understood that, in the context of the acquisition of shares of the Company they must adhere to the

contractual obligations agreed upon by the transferring shareholders with respect the shares being transferred. The provisions of the present article 7 and article 8 do not apply with regard to transfers in favour of companies entirely owned or controlled or controlling pursuant to Article 2359, first paragraph No. 1 of the Civil Code, or operations of partial non–proportional de-merger of the Company, merger by incorporation of entirely owned companies, and merger between companies entirely owned or controlled or controlling pursuant to Article 2359, first paragraph No. 1 of the Civil Code by the same shareholder, provided that the transfer shall be subject to a condition subsequent whereby in case of subsequent change of control of said companies, the Shares shall be deemed not having been transferred and shall have to be transferred back to the original Shareholder Transferring Class A Shares or Shareholder Transferring Class B Shares (as defined below), as the case may be.

To the extent that the rights of redemption of each shareholder provided for in Article 28 of the By-laws and the other rights provided for in the By-laws are not prejudiced, the provisions of the present article 7 and article 8 do not apply also to transfers through derivative transactions or borrowing of titles according to which the original Shareholder Transferring Class A Shares (being a bank, financial company or insurance company), as the case may be (i) shall have the full title and ownership of the Shares upon termination of the relevant transaction, and, in any case, (ii) shall maintain medio tempore all administrative and economic rights on the Shares under the derivative transaction or being object of the borrowing of titles; failure of such conditions will entail the immediate application of this article 7 and following article 8.

7.2 The shareholder who intends to transfer Class A shares (hereinafter the “Shareholder Transferring Class A shares”) to a potential third party acquirer, including a shareholder of the Company (hereinafter, a “Person Bidding for Class A shares”) must offer them in advance on equal terms to the other shareholders who hold Class A shares and – for the purposes of point (ii) below – to the shareholders who hold Class B shares, who may acquire them pre-emptively – respectively, in proportion to the number of Class A shares held by each of them compared with the total number of Class A shares issued by the Company and, with regard to Class B shareholders, in accordance to point (ii) below in proportion to the number of Class B shares held by each of them compared with the total number of Class B shares– with regard to the following procedure (hereinafter the “Right of Pre-emption”):

(i) The Shareholder Transferring Class A shares must transmit a communication, by registered or certified mail with return receipt requested to the Chairman of the Board of Directors and to the other shareholders holding Class A shares, specifying the number of Class A shares, the price, and the other economic and contractual conditions of the transfer and the personal particulars of the Person Bidding for Class A Shares (the “Transferring Notice”). Within 30 days of the date of receipt of the Transferring Notice (the “Term of Exercise”), the shareholders holding Class A shares who intend to avail themselves of the Right of Pre-emption must give the appropriate written communication to the Chairman of the Board of Directors and to the Shareholder Transferring Class A shares (the

“Acceptance Notice”). The shareholders holding Class A shares who exercise the Right of Pre-emption, provided that they make a contextual request in the Notice of Acceptance, will have the right (hereinafter, the “Right of Increase”) to acquire the Class A shares remaining on sale once all the Notices of Acceptances have been received (the “Remaining Class A Shares”). Any Notice of Acceptance shall specify the number of Remaining Class A Shares in relation to which the relevant shareholder holding Class A shares wishes to exercise the Right of Increase. The Remaining Class A Shares shall be divided among the shareholders who have exercised the Right of Increase in proportion to the number of Class A shares held by each of them, provided that after the exercise of the above mentioned rights any shareholder holding Class A shares will not be entitled to acquire a number of Class A shares higher than the aggregate number indicated into the Acceptance Notice.

(ii) if after the carrying out of the procedure in the preceding point (i) there still remain any Remaining Class A Shares, each holder of Class A shares other than the Shareholder Transferring Class A shares will have the right to procure within 30 days after the expiry of the Term of Exercise (the “Further Term”) the Acquisition of the Remaining Class A shares by one or more Qualified Italian Investors, it being understood that the Shareholder Transferring Class A Shares will not have such right if (aa) the Shareholder Transferring Class A Shares is a Telephonic Operator and (bb) as a result of the transfer of Class A Shares, the interest held by the Class A Founding Shareholders falls below 35% of the share capital, it being understood that the loss of such right shall be limited to the portion of shares transferred that determines the decrease in interest of the Class A Founding Shareholders to below 35%. If after the expiration of the Further Term there still remain any Remaining Class A shares, such Remaining Class A shares shall be offered without delay to the shareholders holding Class B shares by means of a communication made in the form specified in the preceding paragraph (i) of this Article 7.2. The Remaining Class A shares which become pre-empted by the shareholders holding Class B shares must be offered to the holders of Class B shares – in proportion to the number of Class B shares held by each of them compared to the aggregate number of Class B shares issued by the Company – subject to the automatic conversion of the aforesaid Class A shares subject to pre-emption at the rate of one newly issued Class B share (having the same characteristics as the Class B shares in circulation) for each Class A share subject to pre-emption. The exercise of the Right of Pre-emption by the shareholders holding Class B shares, potentially exercised in accordance with this article 7.2 (ii), must be carried out within 15 days of the receipt of the notice of offering in pre-emption by means of an appropriate written communication to the Chairman of the Board of Directors and the Shareholder Transferring Class A shares, specifying the number of shares requested in pre-emption. The conversion of Class A shares into Class B shares takes effect upon the recording of the decision of the Board of Directors (which for this purpose must be convened within 5 days of the expiry of the term for the exercise of the Right of Pre-emption specified in the present article 7.2 (ii)) resulting from the minutes drawn up by the notary, who must proceed to carry out all the necessary formalities for the issuance of Class B shares as well all other formalities provided by the current legal standards.

(iii) Should remain any Class A shares subject to the bid not acquired by Class A shareholders or by Qualified Italian Investors or by Class B shareholders in the sense of the foregoing (the “Shares A not Purchased”) and the Person Bidding for Class A shares is accepting to buy the Shares not Purchased, the Shares not Purchased may be transferred from the Shareholder Transferring Class A shares to the Person Bidding for Class A shares, within but not later than 15 days, if the transfer in favour of the Person Bidding for Class A shares has not occurred within the aforesaid term, any later transfer of Class A shares and of the rights related thereto shall be subject again to the procedure specified in the present article 7.2; any act of transfer carried out in violation of the provisions of the present article 7.2 shall be invalid and not opposable to the Company.

(iv) Should remain any Share A not Purchased and the Person Bidding for Class A shares is not accepting to buy only the Shares A not Purchased, the Shareholder Transferring Class A shares shall be entitled to sell all the Class A shares object of the Class A Transferring Notice to the Person Bidding for Class A shares.

7.3 The shareholder who intends to transfer Class B shares (hereinafter, the “Shareholder Transferring Class B shares”) to a potential third-party acquirer as well as to a shareholder of the Company (“Person Bidding for Class B shares”) must offer these shares in advance to all the other shareholders holding Class A and Class B shares with regard to the following procedure:

(i) the Shareholder Transferring Class B shares must transmit a communication, by registered or certified mail with return receipt requested to the Chairman of the Board of Directors and other shareholders, specifying the number of Class B shares, the price, and the other economic and contractual conditions of the transfer and the personal particulars of the Person Bidding for Class B shares (the “Class B Transferring Notice”). Within 30 days of the date of receipt of the notice, the shareholders who intend to avail themselves of the Right of Pre-emption must give the appropriate written communication to the Chairman of the Board of Directors and the Shareholder Transferring Class B shares, specifying the number of shares requested in pre-emption;

(ii) (a) Should the offer be accepted in its totality by the shareholders, the Class B shares subject to bidding shall be divided among the aforesaid shareholders, in proportion to the number of shares held by each of them compared to the total number of shares (of Class A and Class B) issued by the Company; (b) should the offer be accepted only in part by the shareholders, the Class B shares offered and acquired must be divided among the aforesaid shareholders in proportion to the number of shares held by each of them compared to the total number of shares (of Class A and Class B) issued by the Company. The Class B Shares that are acquired by the holders of Class A Shares in accordance with this Article 7.3, will be transferred to such shareholders in accordance with this Article 7.3 and, in any event, will be subject to automatic conversion to newly issued Class A Shares (having the same characteristics of the then issued Class A Shares). The conversion of Class A Shares to Class B Shares will be in accordance with the provisions of the second and third paragraph of Article 7.2(ii) of the By-laws and

(iii) Should remain any Class B shares subject to the bid not acquired by Class B shareholders or by Class A shareholders (the “Shares B not Purchased”) and the Person Bidding for Class B shares is accepting to buy the Shares not Purchased, the Shares B not Purchased may be transferred from the Shareholder Transferring Class B shares to the Person Bidding for Class B shares, within but not later than 15 days, if the transfer in favour of the Person Bidding for Class B shares has not occurred within the aforesaid term, any later transfer of Class B shares and of the rights related thereto shall be subject again to the procedure specified in the present article 7.3; any act of transfer carried out in violation of the provisions of the present article 7.3 shall be invalid and not opposable to the Company.

(iv) Should remain any Share B not Purchased and the Person Bidding for Class B shares is not accepting to buy only the Share B not Purchased, the Shareholder Transferring Class B shares shall be entitled to sell all the Class B shares object of the Class B Transferring Notice to the Person Bidding for Class B shares.

7.4 In the event that the transfer of shares does not provide a corresponding amount, or rather if it does not provide it entirely in money (for example, in the event of donation, barter, or transfer through amalgamation, splitting) the price at which the shareholders in the Company shall be able to acquire the shares offered to them in pre-emption shall be determined by mutual agreement of the shareholder who intends to transfer and the shareholder or shareholders who have exercised the pre-emption (the “Interested Shareholders”). If the Interested Shareholders have not reached an agreement within 30 workdays, elapsing from the moment when the shareholder who intends to transfer has received the communication of the shareholders who intend to exercise the Right of Pre-emption, the price for each share shall be calculated on the basis of the adjusted net worth of the Company to be determined taking into account the price of the ordinary share or savings share held in Telecom Italia S.p.A. (“TI”) calculating by means of the arithmetic average of the official stock exchange prices within 30 days preceding the date of the offer in pre-emption and, in case of disputes, the calculation, to be carried out on the basis of the criteria indicated above, shall be remitted to an expert appointed by the President of the Court of Milan, upon application by the most diligent shareholder.

7.5 The transfers provided for in this Article 7 are subject to applicable antitrust regulations and must be effectuated with 10 days of obtaining the relevant antitrust authorizations, where necessary, and, in any event within six months of entering into a binding agreement to transfer the shares.

7.6 Transfers made in violation of the provisions of the present article 7 and the following article 8 shall be invalid and unenforceable with regard to the Company.

Article 8

(Right of Co-Sale (Tag-Along))

8.1 Without prejudice to the provisions of the foregoing article 7, in the event that one or more shareholders (hereinafter called jointly the “Considerable Shareholder”) (i) receives an offer relating to transfer, also one or more times, of a number of shares that represent a share equal to at least 30% of

the Company (the “Considerable Share”) by a potential third-party acquirer or by one or more potential acquirers belonging to the same group, connected by a relationship of control or linkage among them in the meaning of article 2359 of the civil code, or who in any case act in concert pursuant to article 109, Consolidated Financial Act, for the purchase of the Considerable Share, and (ii) none of the other shareholders exercises the Right of Pre-emption at the end of the respective Term of Exercise, or notwithstanding the exercise of the Right of Pre-emption by one or more of the other shareholders a bid by the third party is still pending for a share equal to at least the Considerable Share, the shareholder (or shareholders) who did not exercise the Right of Pre-emption to which they were entitled (hereinafter the “Non-Opting Shareholder”) shall have the right to transfer to the potential third-party acquirer his own shares (the “Right of Co-Sale” or “Tag-Along Right”) at the same terms and conditions offered to the Considerable Shareholder pursuant to this article 8. If the offer to the Shareholder does not comprise the entire stake held but only a part of such stake, the Tag Along Right shall be allocated to the Non-Opting Shareholder in the same proportion existing between the number of Shares to be sold and all the shares held by the Considerable Shareholder.

8.2 If the Non-Opting Shareholder intends to exercise its Tag-Along Right, he must, under penalty of forfeiture, give a written communication to the Considerable Shareholder – and a copy to the Company – by the means and under the terms provided for the exercise of the Right of Pre-emption discussed in the foregoing article 7. Once the express request has been made by the Non-Opting Shareholder to avail himself of the Tag-Along Right (hereinafter the “Proposal of Sale”), the aforesaid Non-Opting Shareholder shall be obliged to sell all or the different pro rata quantities established above of his own shares, free from every encumbrance, lien or right in favour of third parties, to the potential third-party acquirer, in accordance with the following procedure:

(i) The Considerable Shareholder must, as a condition for the efficacy of the transfer of his own shares, see to it that the potential third-party acquirer (a) accepts unconditionally the Proposal of Sale mentioned in this article 8.2, having for its purpose the sale of all (or the different pro rata quantities established above) the shares owned by each Non-Opting Shareholder who has made the Proposal of Sale, without the potential third-party acquirer being able to require with regard thereto any declaration and/or guarantee, with the exception of the guarantees pertaining to (ai) the entitlement to the shares owned by the Non-Opting Shareholder, in the absence of commitments regarding these and the capacity to freely dispose of them, and (aii) the fact that the shares are free from every encumbrance, lien or right in favour of third parties; and (b) acquires all (or the different pro rata quantities established above)the shares owned by each Non-Opting Shareholder who made the Proposal of Sale;

(ii) The transfer of the shares by the Considerable Shareholder and the other Non-Opting Shareholders must arrive in one single setting, with contextual payment of the price within and not later than 15 days of the date of receipt of the Proposal of Sale by the Considerable Shareholder;

(iii) If no shareholder has exercised the Right of Pre-emption in the sense of article 7 nor the Tag-Along right in the sense of the present article, the Considerable Shareholder may transfer the shares belonging to him to a potential third-party acquirer on condition that (a) the transfer occurs under the same conditions indicated in his own communication to the other shareholders, here including the same price. and (b) the transfer shall occur within 15 days of the expiry of the different Term of Exercise mentioned in the foregoing article 7, it remaining firm that the aforesaid term shall be reasonably extended, as referred below, if the transfer of the shares is subject to obligations of communication in advance or authorization by an authority; it remains the intention that the aforesaid term of 15 days be considered respected if within the appropriate deadline the Considerable Shareholder has executed with the potential third-party acquirer a purchase and sale contract with deferred efficacy (but not more than 6 months) or conditional solely upon the obtaining of the authorizations required by law or regulation (provided that such agreement shall terminate if such authorizations have not been obtained within six months following execution of such purchase and sale contract), at a price per share and, in general, on the terms and conditions indicated by the potential third party acquirer in his own bid. If the transfer to the potential third party acquirer has not taken place in conformity with what is indicated in this paragraph and in the terms provided here, the Considerable Shareholder shall not be able to transfer his own shares unless subject to the experiencing of the procedures discussed in articles 7 and 8 and the transfer shall not be valid and enforceable against the Company.

Article 9

(Bonds and Financing)

9.1 The Company may issue convertible and non-convertible bonds, take loans from shareholders, with interest or interest-free, with or without reimbursement obligation, in compliance with the applicable laws and regulations and its by-laws.

SECTION III

SHAREHOLDERS’ MEETING

Article 10

(Ordinary Shareholders’ Meeting)

10.1 The Ordinary Shareholders’ Meeting shall decide upon matters reserved to it by law. Furthermore, the Ordinary Shareholders’ Meeting authorises, within the meaning of Article 2364 (1)(5) of the Civil Code, subject to the responsibilities of the Board of Directors, (i) with the majority provided in the following Article 12, paragraph 3, the carrying out by the Company of the activities discussed in Article 3.1, letter (c) and (ii) the Company’s subscription to any tender offers having as

their subject the shares of TI held by the Company, provided that in such a case the efficacy of the authorization resolved by the meeting is subject to the condition precedent of the failed exercise of the Redemption discussed in the following Article 28.2 potentially carried out – with respect to the prerequisites and procedure discussed in the following Article 28.2 – by the shareholders authorised to do so, provided that if the said Redemption is exercised, the aforesaid resolution of the Meeting is intended to be definitively revoked at the moment of the transfer of the shares subject to Redemption and the TI shares directly or indirectly held by the Company shall be rendered unavailable within the meaning of the following Article 28.2 (iii).

Article 11

Call

11.1 The Shareholders’ Meeting may also be convened in a place other the registered office, provided that it is held in Milan.

11.2 The Meeting may be convened, subject to resolution of the Board of Directors, by the Chairman of the Board of Directors at least eight days prior to the date of the meeting by means of:

(i) A letter or telegram sent to all the shareholders entered in the shareholders’ register, to the directors and statutory auditors by postal service or an equivalent; with notice of receipt;

(ii) a fax or e-mail message sent and received by all the persons indicated above, who must, within the date established for the meeting, confirm in writing, also using the same means, receipt of the notice, specifying the date of receipt whenever the delivery means used do not provide for notification – even electronic – of receipt by the addressee.

11.3 In the notice of call a second meeting may be set for another day, if the preceding Meeting was not legally constituted.

11.4 In the absence of formal call, the Meeting is regularly constituted when the entire share capital of the Company is represented and the majority of the members of the Board of Directors and of the members of the managerial body take part; in that case, each of the participants may object to the discussion of issues for which he is not sufficiently informed.

11.5 Except as provided by the last paragraph of Article 2367 of the Civil Code, the Board of Directors must convene the Meeting without delay when a request is made by as many shareholders representing at least one tenth of the share capital of the Company and the issues to be discussed are set out in the request.

11.6 The Ordinary Shareholders’ Meeting must be convened by the Board of Directors at least once a year, within one hundred and twenty days of the close of the Company’s fiscal year; the Meeting may be convened within one hundred and eighty days of the close of the Company’s fiscal year should the Company be required to prepare consolidated financial statements or when this is required by particular reasons connected to the structure and the purpose of the Company.

Article 12

(Resolutions)

12.1 Without prejudice to the provisions of paragraph 12.3 below, the Ordinary Shareholders’ Meeting – in first call – is regularly convened with the participation of such shareholders as represent at least half of the share capital and - in second call - is regularly convened with the participation of such shareholders as represent at least one fifth of the share capital, except for the approval of the financial statements and the appointment and removal of corporate officers, for which it is regularly convened whatever the proportion of the share capital represented by the shareholders taking part.

12.2 Without prejudice to the provisions of paragraph 12.3 below, the Ordinary Shareholders’ Meeting – in first and second call – resolves with the favourable vote of the absolute majority of the capital present.

12.3 The Meeting convened to resolve on the authorization of activities or operations in pursuit of the corporate purposes indicated in Article 3, paragraph 3.1, letter (c) of the By-laws is validly constituted and decides by a favourable vote of such shareholders as represent at least 95% of the share capital.

The Meeting convened to resolve on the distribution of dividends is validly constituted and decides by a favourable vote of such shareholders as constitute at least 65% of the capital stock, it remaining firm that if one or more shareholders who, even altogether, represent a share of the Company greater than 30% of the capital stock, should abstain or be absent from the decision of the Meeting, it may be adopted by a favourable vote of a majority of holders of the capital stock of the Company.

12.4 The Extraordinary Shareholders’ Meeting – in first and second call – is regularly constituted and resolves with the favourable vote of such shareholders as represent at least (i) 75% of the share capital with regard to the resolutions (x) approving share capital increase with the exclusion of the option right pursuant to article 2441, par. 4 and 5, of the Italian civil code, (y) approving mergers or de-mergers causing a dilution of the stakeholding held by the shareholders in the Company, except as provided in Article 18.2(i) and (z) approving amendments to articles 12, 15, 18 and 22 of the present by-laws, and (ii) with regard to the remaining other resolutions, 65% of the share capital (with the exception of resolutions under Articles 2446 and 2447 of the Civil Code, which are decided by the

applicable majorities), provided that if one or more shareholders who, even together, hold an interest in the company that exceeds 30% of the share capital should abstain from such a Shareholders’ Meeting resolution or be absent, it may be adopted by a favourable vote of a majority of holders of the capital stock of the Company.

In the event the quorums to convene the Extraordinary Shareholders’ Meeting and resolve upon the issues set out in the first paragraph of this paragraph 12.4 are not met, the Extraordinary Shareholders’ Meeting may be convened anew to resolve on the same issues, provided at least 30 days have elapsed from the preceding call. In such a case the meeting – in first call and in second call – is regularly convened and resolves by the favourable vote of such shareholders as represent the absolute majority of the share capital.

Article 13

(Right of participation and vote)

13.1 Participation in the shareholders’ meeting is allowed to those shareholders having the right to vote or the financial instruments giving the right to vote on at least one of the topics listed on the agenda as well as to those individuals who have been granted the right of participation either by law or by virtue of these By-laws. Each share has attached the right to issue one vote. The Company guarantees the provision of translation services in favour of shareholders who do not speak Italian.

13.2 For participation in the shareholders’ meeting, it is not necessary to have previously lodged (i) shares or the relative certificates thereof, and (ii) financial instruments incorporated in securities or documented by certificates.

13.3 The shareholders’ meeting can also be held in a number of places, either contiguous or distance from each other, connected by audio and/or video, as long as the collective assembly method is used, principles of good faith are upheld, and all shareholders are treated equally. In particular, it is necessary that:

(i) the president of the shareholders’ meeting and the person taking record of the shareholders’ meeting be in the same place; they will write up and sign the minutes and for the purposes of record the meeting will be considered as having taken place at that location;

(ii) the president of the shareholders’ meeting be allowed, including through the office of the president, to verify the identity and legitimacy of the participants, control the meeting process, verify and announce the results of voting;

(iii) the person taking down the minutes be allowed to properly observe the shareholders’ meeting events he or she is required to record;

(iv) the participants be allowed to take part in the discussion and simultaneously vote on the items of the agenda, as well as view, receive and transmit documents;

(v) the audio and/or video locations to which the Society is responsible for allowing the participants to connect to be indicated in the notice to call the shareholders’ meeting.

Article 14

(President and secretary)

14.1 The shareholders’ meeting shall be chaired by the Chairman of the Board of Directors or by a person elected with the majority vote of those present.

14.2 The shareholders’ meeting shall appoint a secretary, not necessarily having to be a shareholder, and if need be also one or more observers, not necessarily having to be shareholders. The attendance of the secretary is not necessary when the minutes are recorded by a notary.

SECTION IV

ADMINISTRATION

Article 15

(Appointment of the Board of Directors)

15.1 The Company is administered by a board of directors comprising 10 directors, in accordance with the decisions made by the shareholders’ meeting called for the purposes of such appointments.

15.2 The appointment of the board of directors shall take place on the basis of on the lists submitted by shareholders holding Class A shares and Class B shares in accordance with the paragraphs describing this process whereby the candidates shall be listed using a sequential numbering scheme.

Class A Shareholders who, either individually or collectively with other Class A Shareholders represent a participation equal to at least 20% of the Company’s share capital may submit or concur in the presentation of a list. Class B shareholders who, individually or collectively with other Class B Shareholder hold a participation equal to at least 20% of the Company share capital may submit or concur in the presentation of a list.

The lists submitted by the shareholder must be submitted to the Company’s registered office at least five days before the date set for the shareholders’ meeting and each of them must contain the number of candidates equal to the maximum number of board members to be elected.

Included with each list, and within the deadlines indicated above, there must be narrations with which the individual candidates irrevocably accept their candidature and attest, under their own responsibility, that there are no pre-existing conditions of ineligibility or incompatibility, and that they do in fact possess the requirements set out for the respective positions.

Shareholders can submit or concur with a submission, and vote on a single list.

The Class A shareholders may vote only for one list presented by one or more Class A shareholders. The Class B shareholders may vote exclusively for one list presented by one or more Class B shareholders.

15.3 In the event that, on the date of the shareholders’ meeting, the Class A Shares constitute an absolute overall majority of the share capital of the Company, the following procedure is to be followed in the appointment of the members of the Board:

(a) four board members shall be chosen from the first of the lists that may have been submitted by Class B shareholders; the first of the directors to be elected shall be appointed vice-Chairman;

(b) the remaining board members to be elected will be taken from list submitted by Class A shareholders; the first of the directors to be elected shall be appointed Chairman.

Alternatively, in the event that, on the date of the shareholders’ meeting, the Class B Shares constitute an absolute overall majority of the share capital of the Company, the following procedure is to be followed in the appointment of the members of the Board:

(a) four board members shall be chosen from the first of the lists that may have been submitted by Class A shareholders; the first of the directors to be elected shall be appointed vice-Chairman;

(b) the remaining board members to be elected will be taken from list submitted by Class B shareholders; the first of the directors to be elected shall be appointed Chairman.

15.4 In the event that, on the date of the shareholders’ meeting, the Class B Shares constitute less than 30% but more than 20% of the share capital of the Company, two board members shall be chosen from the list submitted by Class B shareholders and the remainder shall be chosen from the list submitted by Class A shareholders. In the event that, on the date of the shareholders’ meeting, the Class A Shares constitute less than 30% but more than 20% of the share capital of the Company, two board members shall be chosen from the list submitted by Class A shareholders and the remainder shall be chosen from the list submitted by Class B shareholders

15.5 When a single list has been submitted, the board members who appear on that list will be elected. In the event that no list is submitted, the appointment of the board members will not be carried out with the list vote system indicated above but rather by a resolution of the Shareholders’ meeting taken with the legal majorities present.

15.6 If in the course of this exercise a director has ceased to add his or her position, he or she shall be replaced by the first non-elected candidate on the same list to which the missing director belongs, or if there is an obstacle to the first non-elected candidate stepping up in this manner, then the non-elected person immediately below him or her on that same list will serve as the replacement. If it is not possible for any reason to replace the missing board member with any of the non-elected candidates from that same list, then the provisions of law shall be followed.

If in the course of the exercise there fails to be a majority with regard to the members who make up the board of directors, then the remaining board members shall resign, with such resignation taking official effect from the moment the Board is reconstituted by nomination of the shareholder’s meeting A shareholders’ meeting shall be called immediately by remaining board member, for the purposes of appointing the new board of directors.

Should all board members resign or cease to hold their position for any reason, the shareholders’ meeting for the purposes to appoint the new board of directors, shall be called immediately by the board of statutory auditors, which shall perform the ordinary administrative activity in the meantime.

Article 16

(General provisions)

16.1 The administration of the Company may also be entrusted to non-members.

16.2 The directors shall hold their positions for a term established by their deed of appointment and therefore for a period not to exceed three financial years. This term shall expire on the date of the shareholder meetings’ called to approve the balance sheet for the last financial period of their term.

Article 17

(Chairman of the board of directors)

17.1 The board of directors elects from among its members – where a shareholders’ meeting has not already been held – a chairman and the possible one or more vice-chairman presidents, establishing therein their powers save for the power provided by law.

17.2 The board of directors can further appoint a secretary, also in a permanent manner, and who does not necessarily have to be a member of such board of directors.

Article 18

(Powers of the board of directors and representation)

18.1 The board of directors is vested with the broadest powers for ordinary and extraordinary management of the Company, without exception of any sort, and shall carry out all functions not reserved - by law or these By-laws- to the competence, including of an authoritative nature, of the shareholders’ meeting.

18.2 The board of directors shall be exclusively responsible for making decisions on the following:

(i) mergers by incorporation of companies in which the Company holds at least ninety percent of the shares or stakes, merger by incorporation of the Company into another company which already holds at least ninety percent of the Company’s shares, as well as a de-merger of the Company in accordance with Article 2506 of the Civil Code;

(ii) transactions for the of acquisition or transfer of – or encumbrance of – the Company’s direct or indirect shareholdings in Olimpia S.p.A. (“O”) and O’s direct or indirect shareholdings in TI, with the exception of shareholdings transferred to meet public acquisition offers provided by law or regulation which shall occur once the authorization of ordinary shareholders’ meeting has been given;

(iii) investments in companies other than investments in O and in TI;

(iv) fixed capital investment and financial structure decisions for amounts in excess or Euro 75 million;

(v) decisions on the vote to be exercised in the shareholders’ meetings of O and TI;

(vi) approval and amendments of the Company’s budget;

(vii) reduction of share capital in the event of a shareholder’s withdrawal;

(viii) the By-laws’ compliance with legislative provisions;

(ix) the setup, transfer or dissolution of branch offices;

(x) all other decisions reserved exclusively to the authority of the board of directors.

The resolutions regarding the matters mentioned above in (ii) to (vi) are approved by way of the favourable vote of at least 7 sitting members of the board (the “Consolidated Quorum”). As a partial exception to the above, should there be resolutions of board members that require Consolidated Quorums in which three or more directors have abstained or are absent, such resolutions shall be taken with the favourable vote of the majority of only those board members sitting.

18.3 The representation, including in legal proceedings (including therein the ability to file lawsuits and initiate legal actions, including in Supreme Courts and to appoint to that end attorneys and proxy attorney), is the responsibility of:

(i) the chairman of the board of directors;

(ii) the vice-chairman;

(iii) anyone not a member of the board of directors, designated thereby, within the scope of and in the exercise of the powers granted to them.

Article 19

(Meetings of the board of directors)

19.1 The board of directors can also meet in a place other than the registered office of the Company, provided that it occurs in Milan, any time that the chairman of the board of directors, or whoever is standing in for him, deems it suitable and/or necessary or when he is asked to do so by at least one of his directors or by the board of statutory auditors and at least once every quarter.

19.2 The board of directors is called to assembly by the chairman of the board of directors or by whomsoever is standing for him, at least five business days - or in case of urgency, two business days – before the date set for the meeting, via registered letter, hand-delivered letter, telegram or fax, sent to all directors and statutory auditors at the addresses indicated in the company books; the date, place and time of the meeting, list of items on the agenda and possible details relating to the audio and/or videoconferencing connections should be included in the call to assembly.

19.3 In the absence of a formal call to assembly, the board of directors shall be considered as having been validly constituted if all sitting board members and statutory auditors are participating therein.

19.4 At the request of any Director, meetings of the board of directors can also take place in a number of places, either together or distant from each other, connected by audio and/or video, as long as :

(i) the president of the assembly and the person taking record of the assembly are in the same place; they will write up and sign the minutes and for the purposes of record, the meeting will be considered as having taken place at that location;

(ii) the president of the assembly is allowed to verify the identity of the participants, control the meeting process, oversee and announce the results of voting;

(iii) the person taking down the minutes is allowed to properly observe the events of the meeting he or she is tasked with recording;

(iv) the participants are allowed to take part in the discussion and simultaneously vote on the items of the agenda, as well as look at, receive and transmit documents;

The Company guarantees the provision of translation services for directors’ interventions and the translation of the relevant documents to be review by the Board, which shall be provided with together with the corresponding call of the meeting.

19.5 Without prejudice to the provisions of article 18.2 above, the resolutions of the board of directors shall be considered as having been validly made with the majorities provided by law.

19.6 Meetings of the board of directors are presided over by the president of the board of directors or by the board member appointed by the participants.

19.7 Resolutions of the board of directors must be recorded in the minutes signed by the president of the meeting and by the individual who recorded them and must be transcribed into the book of assemblies and deliberations of the board of directors.

Article 20

(CEO and attorneys)

20.1. The board of directors may appoint, replace and remove one or more chief executive officers, deciding on their functions, assignments and faculties.

20.2 The board of directors may also appoint, replace and remove agents, attorneys and representatives – in general – for particular acts or categories of acts; the same can be done by any director vested with the power of representation, within the limits of the relative assignments.

Article 21

(Compensation of directors)

21.1 Compensation for directors shall be determined in accordance with article 2389 of the civil code.

21.2 The shareholders’ meeting may determine a total amount for compensation of all the directors, including those invested with particular offices.

21.3 In any case, the directors must be reimbursed for expenses incurred in the performance of their duties.

SECTION V

BOARD OF STATUTORY AUDITORS AND ACCOUNTING CONTROL

Article 22

(Board of Statutory Auditors)

22.1 The Board of Statutory Auditors is composed of three effective auditors and two alternate auditors.

Appointment of the Board of Statutory Auditors shall be done on the basis of lists submitted by shareholders. Class A shareholders can submit or concur to submit a single list. Class B shareholders can submit or concur to submit a single list.

The lists submitted by the shareholders must be submitted to the Company’s registered office at least five days before the date set for the first-call of the shareholders’ meeting.

Included with each list there must be declarations with which the individual candidates accept their candidature and attest under their own responsibility that there are no pre-existing conditions of ineligibility or incompatibility, and that they do in fact possess the requirements set out for the respective positions by law and by the By-laws.

The lists shall be divided into two sections: one for candidates for the position of effective statutory auditor and the other for candidates for the position of alternate auditor.

Anyone with the right to vote can vote on a single list.

The following procedure is to be followed in the election of the members of the Board:

(a) from the list that may have been submitted by Class B shareholders shall be chosen, per the sequential order in which they appear on this list, one alternate and one effective statutory auditor, who will act as Chairman.

(b) the remaining board members to be elected will be taken from the list submitted by Class A shareholders.

22.2 Where no lists are presented, the appointment of the Board of Statutory Auditors shall take place according to the provisions provided by law.

22.3 The effective statutory auditors will be compensated on the basis of professional tariffs, where such compensation has not been determined by the shareholders’ meeting.

22.4 Meetings of the board of statutory auditors may also be held using telematic methods in compliance with the rules set forth under Article 19.4 above.

Article 23

(Accounting control)

23.1 Until the Company is not obliged to consolidated its financial statement, the accounting control is exercised by the Board of Statutory Auditors, entirely formed by accounting auditors registered under the national register kept by the Ministry of Justice; with resolution of the ordinary shareholders’ meeting, accounting control may, however, be conferred on an accounting auditor or an auditing company registered under the national register kept by the Ministry of Justice.

SECTION VI

FINANCIAL STATEMENTS AND PROFITS

Article 24

(Company fiscal year)

24.1 The Company’s fiscal years end on 31 December of every year.

Article 25

(Balance sheet)

25.1 At the end of each of the Company’s fiscal year, the board of directors shall draw up the financial statement pursuant to law.

Article 26

(Profits)

26.1 The profits resulting form the financial statement, minus an amount not less than 5% (five percent) intended for the legal reserve, up to the limit allowed by law, shall be distributed among the shareholders in a proportion corresponding to the number of shares held by each shareholders, unless the shareholders’ meeting decides on special allocations to extraordinary reserves or some other purpose or decides to carry it over - in whole or in part - to the next fiscal year.

26.2 If the Company’s financial statement has been subjected by law to auditing by an auditing company registered under the related professional register, the distribution of accounts of dividends pursuant to article 2433-bis of the civil code is allowed.

SECTION VII

DISSOLUTION

Article 27

(Dissolution)

27.1 The Company shall be dissolved for the reasons established by law.

27.2 In the event the Company is dissolved, the procedure to be followed shall be that set out in articles 2484 and subsequent of the civil code.

SECTION VIII

RULES FOR REDEMPTION

Article 28

(Methods for exercising the right of redemption)

28.1 Any Company Share (either Class A or Class B) can be redeemed pursuant to and for the effects of article 2437-sexies of the civil code, if the prerequisites set out in this article have been satisfied.

28.2 If the ordinary shareholders’ meeting has authorized the Company, pursuant to article 10.1(ii), to adhere to public tender offers to acquire the shareholdings directly or indirectly held by the Company in TI, any shareholder (or shareholders) who have caused to set down in writing their dissent thereto at this shareholders’ meeting (hereafter, the “Dissenting Shareholder”) shall have the option of redeeming all – and not just part – of the Company Shares (hereafter, the “Redemption”) held by the other shareholders, in accordance with the following procedure:

(i) The Dissenting Shareholder who wishes to exercise the Redemption must give written notification (the “Notice”) thereof via registered letter with return receipt to all the other shareholders and to the Chairman of the board of directors within five working days after the date of the shareholders’ meeting which decided to authorize the operation cited above, indicating, in this notification, the Redemption price, such Redemption price to be determined in accordance with section (iv) below;

(ii) in the event that there are more Dissenting Shareholders, they shall have the right to buy the Shares which are the object of the Redemption in proportion to their stake in the Company’s share capital;

(iii) as of the date of the Ordinary Shareholders Meeting which decided to authorize the operation cited above, the TI shares directly or indirectly held by the Company will be made unavailable by depositing them in an account held by the Company or by a company controlled by it which owns a direct stake in TI, with a fiduciary company that has received binding and irrevocable instructions, in accordance with the provisions of this clause, and with the necessary powers to proceed to execute the transfer and endorsement of the shares to the Dissenting Shareholder;

(iv) the Redemption price per each Company share shall be the Company’s adjusted net worth divided by the total number of issued Company Shares. The Company’s adjusted net worth is determined by taking into account the greater of (i) the consideration offered for the TI shares subject to public offering and (ii) the price of the shares held by TI calculated by means of the respective arithmetic average of the official stock exchange prices within 30 days preceding the date of the Notice provided for in Article 28.2(i);

(v) in case of dispute, on the part of one or more shareholders, as to the price of Redemption within 10 days after receipt of the notification mentioned in number (i) above, the determination thereof shall be handed over to an expert appointed, upon request of the most diligent shareholder, by the President of the Court of Milan. The expert must adhere to the criteria stated in the preceding number (iv) above and must determine the Redemption price within 20 working days after the appointment;

(vi) the transfer of the shares and the payment of the Redemption Price shall occur: (x) within 15 business days following the Notice, or (y) if the transaction is subject to any authorization by law or contract, within 15 business days following obtaining such authorization or (z) in case of dispute, within 15 business days following the final determination of the Redemption price, provided that transfer of the Shares which are the object of the Redemption shall only take effect from the time of

the notification that the Redemption price has been deposited – as indicated in the Notice if there are no disputes, or as determined by the expert appointed pursuant to number (v) above – with Banks appointed by the shareholders transferring the shares. The Company will proceed to make the consequent annotations in the shareholders’ register.

SECTION IX

TRANSITORY RULES

Upon the Founding Class A shareholders (as defined below) ceasing to hold at least 35% of the share capital, article 7.2(ii) above shall be replaced as follows :

“(ii) if after the carrying out of the procedure in the preceding point (i) there remain any Class A shares offered but not acquired (the “Remaining Class A Shares”), such Remaining Class A shares must be offered without delay to the shareholders holding B shares by means of a communication made in the form specified in the preceding paragraph (i) of this Article 7.2; the Remaining Class A shares which become pre-empted by the shareholders holding Class B shares must be divided among the titular acquirers of Class B shares – in proportion to the number of Class B shares held by each of them – subject to the automatic conversion of the aforesaid Class A shares subject to pre-emption at the rate of one newly issued Class B share (having the same characteristics as the Class B shares in circulation) for each Class A share subject to pre-emption. The exercise of the Right of Pre-emption by the shareholders holding Class B shares , potentially exercise in the sense of what is provided in the present article 7.2 (ii), must be carried out within 30 days of the receipt of the notice of offering in pre-emption by means of an appropriate written communication to the Chairman of the Board of Directors and the Shareholder Transferring Class A shares, specifying the number of shares requested in pre-emption. The conversion of Class A shares to Class B shares takes effect upon the recording of the decision of the Board of Directors (which for this purpose must be convened within 5 days of the expiry of the term for the exercise of the Right of Pre-emption specified in the present article 7.2 (ii)) resulting from the minutes drawn up by the notary, who must proceed to carry out all the necessary formalities for the issuance of Class B shares as well as the necessary registrations in the Register of Companies, also bringing about the necessary and consequent modifications to article 5 of the Company’s By-laws, making the numerical expressions and the text in the necessary parts adequate for all legal purposes, providing, moreover, for deposit, according to article 2346 of the civil code, the text of the By-laws updated in that sense, as well as carrying out all other formalities provided by the current legal standards.”

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Under the Securities Exchange Act of 1934 (Amendment No. )*

Signature

Under the Securities Exchange Act of 1934
(Amendment No. )*