Today TerniEnergia S.p.A. and the controlling company T.E.R.N.I. Research S.p.A entered into a framework agreement that will be effective from September 1st, 2010 up to August 31, 2013 concerning the supply by the latter company of certain logistic services, including the availability of spaces that fit for carrying out industrial activity and to be used as offices, as well as the supply of legal and corporate assistance and information technology consultancy and assistance. According to such an agreement, the remuneration due by TerniEnergia S.p.A. to T.E.R.N.I. Research S.p.A. on an annual basis is Euro 967,236, plus VAT, and it is subject to review on a half-year period basis. The service supply agreement that was signed today is a partial novation relating to the object of the contract compared with a previous agreement with an analogous content that had been already executed among the parties concerning the availability of the building where TerniEnergia’s current headquarter is placed in Terni, Via Casale. The remuneration that was due pursuant to the previous agreement was approximately Euro 400,000. The increase of the remuneration set forth by the new agreement reflects the fact that wider spaces are now available for carrying out both industrial and management activities, while the consideration of the remaining services remain substantially unchanged. Indeed, the above mentioned increase is caused by the quantity of services that arose out over the years and that were needed by TerniEnergia S.p.A., also in consideration of its growing business turnover and the increase of the employed personnel. In light of the fact that the contractual counter-party is a related party, TerniEnergia S.p.A. provides hereby detailed information on the transaction also pursuant to Article 71 bis, paragraph 1, of Consob Regulation 11971/99.
1) Risks relating to potential conflicts of interest
There are no specific current or potential conflicts of interest between the related parties which signed the contract since it was agreed between the parties at market conditions.
2) Summary of the characteristics, terms and conditions of the transaction
The agreement sets forth the supply by T.E.R.N.I. Research S.p.A. to TerniEnergia of the following services: – Use of buildings and spaces that fit for offices or for carrying out production activity into a sole place in Nera Montoro (Narni Municipality) and the availability of operational offices in Milan and Lecce. – Legal and corporate consultancy services; – Information & Communication Technology services.
3) Indication of the related parties with whom the transaction was executed, kind of parties’ interests involved in the transaction; brief description of the risks connected with the related parties of the transaction
The counterparty of this services supply contract is T.E.R.N.I. Research S.p.A. who owns no. 16,734,500 ordinary shares without par value of TerniEnergia S.p.A., such an amount being equal to 67.42% of its share capital.
The Chairman of T.E.R.N.I. Research S.p.A.’s Board of Directors, Stefano Neri, is also Chairman and Managing Director of TerniEnergia S.p.A..
In addition, Stefano Neri has the direct and indirect control of TerniEnergia, since he owns no. 16,784,200 shares amounting to 67.62% of its share capital. In consideration of the above, the director Stefano Neri, having significant interests in the transaction pursuant to art. 2391 of the civil code, provided the other members of the Board of Directors and the members of the Board of Statutory Auditors with all information requested by the law, concerning in particular the existence of a related parties relationship between T.E.R.N.I. Research S.p.A. and TerniEnergia S.p.A., as well as its nature, the kind, the origin and the terms of the interests involved into the transaction pursuant to art. 2391 of the civil code.
4) Evaluations concerning the fairness of the price and independent experts’ opinions supporting the fairness of such evaluations
The Board of Directors’ meeting of TerniEnergia that was held today resolved to fix the total remuneration of the contract amounting to Euro 967,236. Such a remuneration is the result of the addition of the following items: – Use of the buildings for offices and for carrying out production activity at the industrial site in Nera Montoro and the additional availaibility of the offices in Milan and in Lecce, for a total amount of Euro 732,236. – Legal and Corporate Affair, for an amount of Euro 125,000. – Information & Communication Technology services for an amount of Euro 110.000 The Board of Directors of TerniEnergia S.p.A confirmed that the above mentioned remuneration is in line with market conditions and it based such an assessment on the opinion signed by the independent expert Geom. Marco Ubaldi of the Surveyor’s Register in Terni, dated 21/06/2010. Notably, such an opinion related to the market value of the real estate placed in Nera Montoro only. On the basis of such a value, the annual lease cost was determined, this being a substantial part of the remuneration under exam.
5) Description of the economic reasons under the completion of the transaction and of the relevant economic and financial effects
In view of the strengthening and growth of the industrial perspectives of the Company, the Board of Directors of TerniEnergia S.p.A. approved the partial novation of the services contract with the controlling company Terni Research S.p.A., concerning the lease of the real estate, the management of legal and corporate affairs, the supply of ICT. Such a resolution was taken in consideration of the need to avail of wider production spaces, exploiting the opportunity to concentrate the activity into one place only, in Nera Montoro in Narni Municipality, that is characterized by a significant production tradition and important infra-structural facilities (warehouse storages, provided with all the shelving facilities, electric station AT, offices, links to roadway and railway), industrial activities and management offices. The increase of the remuneration compared with the previous frame-work agreement is reasoned by the availability of wider spaces in order to support at the best the future development of TerniEnergia S.p.A. By reason of such a novation TerniEnergia shall avail of spaces with a covered surface exceeding 18,000 square meters, while according to the previous agreement the size of the available spaces was approximately 2.700 square meters.
6) Corporate bodies or directors which carried out or took part into and/or directed the negotiations
On July 5, 2010 TerniEnergia S.p.A.’s Board of Directors approved the entering into of a frame-work agreement with T.E.R.N.I. Research S.p.A. and delegated to the director Fabrizio Venturi the relevant power of signature, with Stefano Neri abstaining from voting in consideration of the matters under point 3 above.
7) Information about the variation of the remuneration pertaining to the issuers’ or the controlled companies’ directors and of the shares ownership of the directors involved into transaction
Further to the execution of the contracts mentioned above, neither amendments to TerniEnergia’s directors nor the controlled companies‘ remuneration shall take place. No amendments to the share ownership of the directors involved in the transaction shall take place.
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