EDF / 2018 Reference document

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RISK FACTORS AND CONTROL FRAMEWORK Legal proceedings and arbitration

Carlo Tassara The company Carlo Tassara, Edison’s main minority shareholder, brought legal proceedings on 12 July 2012 before the Regional Administrative Court in Latium (Rome) requesting on the merits an increase in the price of the mandatory takeover bid launched by the EDF subsidiary Transalpina di Energia (TdE), following the acquisition of control of Edison on 24 May 2012. The parties against which the plaintiff brought these proceedings are CONSOB, the Italian financial market authority, EDF, as well as its Italian subsidiaries (MNTC, WGRM4 and TdE), Edison, Delmi and A2A. At the same time, the plaintiff filed with CONSOB in May 2012 a request to increase the price of the mandatory takeover bid based on practically identical arguments to those filed for the proceedings on merits before the Administrative Court. CONSOB dismissed this request on 25 July 2012. The plaintiff did not appeal against this decision. In March 2015, the plaintiff also issued civil proceedings before the Court in Milan seeking damages from EDF, A2A and Edison on the basis of a similar fact-based line of reasoning as that used for the administrative proceedings. The proceedings were served on EDF on 27 March 2015. In this case, the plaintiff claims that the negotiations between EDF and A2A that led to the takeover of Edison and Edipower were not conducted in line with Edison’s sound management principle and harmed the interests of its minority shareholders. The plaintiff alleges that it was forced to sell its shares under the mandatory takeover bid launched following the acquisition of control of Edison as otherwise its holding in approximately 10% of Edison’s share capital would have lost all liquidity. For the record, the bid price was €0.89 per common share. The plaintiff alleges a loss caused by a drop in value of approximately €294 million in the Edison securities recorded on its balance sheet as at 31 December 2011. However, it has not given an exact figure for the damages it claims and asks the court to appoint a court expert to assess the exact amount of its loss. On 26 January 2016, a procedural hearing was held before the Civil Court in Milan. The court decided that replies must be filed by 29 March and 18 April. In a decision issued on 5 May 2016, registered and notified to the parties on 2 November 2016, the Court dismissed the procedural pleas and the applications to strike out filed against the plaintiff and set the date of the first directions hearing (20 December 2016). At this hearing, the timetable for the submission of the parties’ statements of case was decided. The hearing for the clarification of the pleadings has been scheduled for 19 March 2019. This is the closing hearing of the investigation phase. However, several pleadings may be exchanged before the deliberation. Measures taken by employees concerning exposure to asbestos or other harmful chemical substances Over the last years, Edison has faced a significant increase in the number of claims for damages arising from the death or illness of employees that were allegedly caused by exposure to several forms of asbestos at factories owned by Montedison, or other judicial cases assumed by Edison as a result of corporate acquisitions. Furthermore, Edison is involved in several criminal proceedings filed by former employees of companies belonging to the Edison group or their legal successors, arising from exposure to harmful chemical substances emitted by Montedison’s facilities (since transferred to Enimont which became Enichem, a subsidiary of ENI). Environmental litigation Edison is involved in several criminal proceedings currently underway concerning damages caused by the operation of Montedison’s chemical factories (petrochemical facilities in Porto Marghera, Crotone, Mantua and Cesano Maderno) prior to their sale to Enimont. These criminal proceedings also include actions brought by third parties concerning personal injuries related to the alleged environmental damage. In the first half of 2018, the public prosecutor of Pescara (Abruzzo region) opened a preliminary investigation against Edison's directors on the assumption that remediation activities were not carried out at the Piano D'Orta industrial site (Pescara province, Abruzzo region) where, until the late 1960s, there was a Montecatini plant.

The decision, given in February 2017 by the Appellate Assize Court, was appealed to the Court of Cassation. In this context, a large quantity of industrial waste was found on a plot of land belonging to Edison adjacent to the plant, an attachment order has been placed on that land, and on 4 October 2007, the President of the Italian Council of Ministers appointed a deputy special commissioner empowered to undertake urgent measures: identification, safety and rehabilitation measures for the land. The commissioner has ordered Edison to prepare a survey of the zone, take urgent measures to make it safe and present proposals for decontamination of the ground and ground water. Edison, which has never used this site for its business, filed an appeal with the Regional Administrative Court in June 2008. The Regional Administrative Court rejected this appeal in March 2011 and Edison challenged this judgment before the Council of State. Following the hearing of 15 January 2015, the Council of State definitively set aside the decision of the deputy special commissioner in a judgment handed down on 5 March 2015. Edison is therefore no longer required to carry out urgent interventions. By decision dated 28 September 2018, the Court of Cassation annulled without referral the ruling of the Assize Court of Appeal of Aquila on the criminal proceedings against the Bussi sul Tirino industrial complex. The Assize Court of Appeal had (i) acquitted some defendants of environmental disaster and water poisoning charges on the grounds that they "had not committed the acts attributed to them"; (ii) considered that the accusation of environmental disaster attributed to the other defendants was time-barred, the limitation period having expired before the judgement of appeal was rendered; and (iii) considered that nothing was due for the damages allegedly suffered by the civil parties. Also in this context, on 28 February 2018, the Province of Pescara notified Solvay Speciality Polymers Italy SpA (formerly Solvay Solexis SpA) and Edison SpA of the launch of an administrative procedure to determine who was responsible for the pollution of the land belonging to Ausimont SpA and the subject of the sale. In 2012, an arbitration procedure was launched by Solvay SA and Solvay Specialty Polymers Italy SpA for violation of the representations and warranties in environmental matters, for the Bussi and Spinetta Marengo sites, contained in the Agora SpA concession agreement (company controlling Ausimont SpA), signed in December 2001 between Montedison SpA and Longside International SA, on the one hand, and Solvay Solexis SpA (Solvay Specialty Polymers Italy SpA), on the other. Action by the Public Prosecutor of Alessandria In 2009, the Public Prosecutor of Alessandria (Italy) sent certain managers and former Directors of Ausimont Spa (now named Solvay Solexis SpA, a company sold by Montedison to the Solvay group in 2002) notification of the conclusion of investigations related to the possible poisoning of water from the spring on the industrial site of Spinetta Marengo and surrounding sites, and the lack of any action for site rehabilitation. The investigation was closed on 16 January 2012. The judge entertaining jurisdiction decided, on 16 January 2012, to bring action before the Assize Court in Alessandria against a number of former Montedison executives for behaviour that could constitute environmental and public safety offences. The trial before the Assize Court began on 17 October 2012. At the end of the proceedings before the Assize Court on 18 December 2015, Aussimont’s former managers and Montedison were acquitted of the water poisoning charges. Accordingly, Edison has not been held civilly liable, in any manner whatsoever. The judgment was published on 6 June 2016 and has been appealed to the Assize Court of Appeal in Turin. The hearings before the Court began in February 2018. The sentence is expected in the first half of 2018 On 4 January 2019, the Turin Assize Court published the full grounds for the decision confirming the acquittal of the former directors and employees of Montedison and Ausimont, concerning the alleged events of environmental disaster and water poisoning related to the management of the Spinetta Marengo Chemical industrial site. In addition, an administrative decision ordered Solvay Solexis to rehabilitate the Spinetta Marengo site. Edison voluntarily intervened in the proceedings to defend its interests in relation with the claim filed by Solvay Solexis for the cancellation of this administrative decision, notably because the administrative decision doesn’t impose any obligation on Edison to rehabilitate the site (this obligation is imposed exclusively on Solvay Solexis). The procedure is ongoing.

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