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Torino 11/06/12 Dear Salim, its a pleasure to hear about you after a so long time.

I congratulate you for your new role as King of Rotundia! I am really looking forward to meet you in Turin and discuss with you about this delicate situation you have in your country. In the meanwhile, let me give you my point of view and suggestions. I can see that the main problem in your country is that no one is obliged to disclose anything and, for that reason, market is full of rumors instead of facts. In this foggy environment where no one knows for sure what is happening, a company such as Paris Delight can easily threaten minority shareholders spreading rumors in the market and then take advantage of them. I can understand from your letter that you are perfectly aware of this so lets make a first macro distinction about rumors: 1) They can be personal or collective view of circumstances that led to conjectures spread in the market 2) They can be verified false information that are intentionally spread in the market or secret information spread in breach of a non-disclosure agreement or other relationship of trust and confidence (and this is called insider trading). As you can imagine, the first kind of rumor is legal but not the second. Of course if you dont put specific regulation, you will never know if the rumors in Rotundias market belong to the good ones or bad ones. My first advice is the institution of SECOR (Security Exchange Commission of Rotundia). I can see that you are quite stressed by all this situation so why having all this weight on your shoulders? SECOR can be a good solution for your troubles and can help you to guarantee the clearness of Rotundias financial market. It should be an independent institution with the responsibility to enforce securities laws, regulating securities industry and the national stock exchange market. This independent body, can help you to prevent corporate abuses in the market and could take civil actions against individuals or companies that commit accounting fraud, provide false information, engage inside trading or violate other security laws.

SECOR should be the organ in charge of investigation. It would also have the power to ask for emails, private data and information that may highlight warning behavior and, eventually, act against them with civil trial. If Paris Delight and Tilsitt, the companies that you mentioned in your letter, are spreading false information about juventus, the forever youth plant, then SECOR would be in charge of verifying the real events and investigate in the interest of shareholders. I think that a market monitored by this independent institution, can be seen as more reliable by potential foreign investors and so it can attract new capitals in Rotundia. If you dont know who can be in charge of SECOR (since you told me that the lawyers in your country are not specialized in these issues), well I can tell you that there are a lot of young and talented lawyers, economists and engineers unemployed so definitely, we can find very good members for SECOR. My second advice regards Regulation for Derivatives and shares. Since Paris Delight is threaten minority shareholders with the ownership of 25% derivatives of Hoches, I think it should be better to disclose derivatives ownership. The shareholders should communicate to SECOR (compiling a report) how many shares they own and how many derivatives they are buying, right in the moment of the acquisition. This because the moment in which the derivative right is exercised, is too late: in this case everybody will be aware of the real percentage of the ownership. Of course we cant be too strict otherwise no one would like to invest in Rotundia so I suggest you these thresholds: 1. the shareholder always have to disclose shares up to 3% in order to protect shareholders belonging to very fragmented companies 2. Disclosure of derivatives up to 10% 3. Sum of shares and derivatives equal to 20% My third suggestion is about Tender Offer. Since there are rumors about a possible tender offer by Paris Delight to Hoche, I think its important to regulate also this aspect. As you know my dear friend, there can be two kinds of tender offer: voluntary and mandatory. A bidder can do a voluntary tender offer whenever he/she wants, no matter the percentage of shares he/she owns. While a mandatory tender offer is something imposed by law after reaching a certain threshold. In both cases, the bidder must prove that he has the liquidity, considered as equity plus debts, to buy all the remaining shares.

He must describe completely and carefully the propose: he needs to provide a detailed documentation with all the information about his tender offer (no matter if it is voluntary or mandatory), about the strategy and purposes he wants to pursue for the company. This is because the shareholders that deny the offer have the right to know in which direction the company is going. Then the bidder must wait a certain period of acceptance. This period will be helpful for shareholders to evaluate the offer and also for competitors to act based on these information. When the bidder decides to make a tender offer, he has to disclose everything he/she owns: shares, derivatives and other options he/she has. I suggest you to set also a price regulation for both mandatory and voluntary tender offer, in order to protect the minority shareholders. The price should be as reasonable as possible related to the real value of the company. It should be at least greater than the average market price during the 3 months prior to the commencement of the offer (in order to reflect the real situation of the company). I suggest you to introduce in Rotundia a regulation for Mandatory Tender Offer. In particular in the case a shareholder owns 30% or more of the shares, he is mandatory forced to make a tender offer to all of the Shareholders, like in most of the jurisdiction. If the bidder doesnt have enough liquidity in order to buy all of the shares from all of the shareholders and pay all of them, he is forced to sell the amount of shares or derivatives, until he reaches the value of 29%, that means below mandatory tender offers threshold. In the case a shareholder inherits or receives as donation a number of shares that makes him cross the threshold, he is not forced to make a mandatory tender offer immediately. He has a period of ten working days in which he can decide if selling the shares staying below the threshold or keeping them (being obliged in this case to make a tender offer). The fourth and last advise is about Merger. The companies that want to merge must make an application to the jurisdiction, in this case to you Salim, in order to make it public ten working days before the voting meeting. The companies should provide in the same day of the application, a detailed report describing the purposes of the merger to their shareholders. Then I suggest you Salim to institute an Antitrust Authority for the Kingdom of Rotundia in order prevent possible anticompetitive behaviors. So if, for example, the merger would create a monopolistic company, it would not be allowed from the Antitrust Authority. If the 3/4th of the participants in the voting meeting agree to the merger, then who is against it will have a period of ten working days to sell their part/shares at the price that must not be lower than any price paid in the three months before the announcement of the merger.

After this period of time the merger is binding on all creditors/shareholders of the company.

I really hope that my suggestions will be helpful for you and your Kingdom. I am looking forward to come to visit Rotundia. Zai jian, bao zhong!