SECURITIES REGISTRATION STATEMENT
Amendment No. 1
Amendment No. 2
Amendment No. 3
Amendment No. 4
TELEFÓNICA EUROPE B. V.
a private company with limited liability
under Netherlands law with corporate seat at Rotterdam
(This translation of the Japanese Securities Registration Statement has been prepared solely for reference purposes and shall not have any binding force.)
SECURITIES REGISTRATION STATEMENT AMENDMENT No. 4
Cover Document to be filed : Securities Registration Statement Filed with : The Director-General of Kanto Local
Finance Bureau
Date of Filing : 11 July 2007
Corporate Name : Telefónica Europe B.V. Title and Name of Representative : Carlos David Maroto Sobrado
Managing Director Location of the Registered Office : Strawinskylaan 1259,
1077 XX Amsterdam, The Netherlands Name of the Attorney-in-fact : Fumiaki Shimazaki
(Attorney-at-law)
Address of the Attorney-in-fact : Shimazaki International Law Office 2nd Floor, Teral-Koraku Building 3-27, Koraku 2-chome
Bunkyo-ku, Tokyo 112-0004 Japan
Telephone : 03-5802-5860
Administrative Personnel to Contact : Fumiaki Shimazaki (Attorney-at-law) Place to Contact : Shimazaki International Law Office
2nd Floor, Teral-Koraku Building 3-27, Koraku 2-chome
Bunkyo-ku, Tokyo 112-0004 Japan
Public Offering for Subscription to Be Registered:
Type of Securities to be Offered
for Subscription :
Bonds
Amount to be Offered for Subscription
: Telefónica Europe B.V. Japanese Yen Bonds - First Series (2007) Guaranteed by Telefónica, S.A.
¥15,000,000,000
Telefónica Europe B.V. Japanese Yen Floating Rate Bonds - First Series (2007) Guaranteed by Telefónica, S.A.
¥15,000,000,000 Matters concerning Stabilising
Operations : N/A
Place at which Copy of the Present Statement is Offered for Public Inspection
Name of Such Office : N/A
TABLE OF CONTENTS
Page PART I. INFORMATION CONCERNING SECURITIES...
I. TERMS AND CONDITIONS OF OFFERING ... 1. Offering of the Bonds... 2. Purpose of the Fund Raising ... (1) Amount of Proceeds from the Issuance... (2) Use of Proceeds ...
II. OTHER DESCRIPTION ...
PART II. CORPORATE INFORMATION... I. OUTLINE OF THE LEGAL AND OTHER SYSTEMS
IN THE HOME COUNTRY ... 1. Outline of the Corporate System ...
(1) Corporate System of the Country or Political Sub-Division Thereof to which the Company belongs ... (2) Corporate System as Provided for in
the Articles of Association of the Company ... 2. Foreign Exchange Control System ... 3. Tax Treatment ... 4. Legal Opinion ...
II. OUTLINE OF THE COMPANY ... 1. Trends in Major Operational Indices, etc. ... 2. History of the Company ... 3. Nature of Business ...
4. Affiliated Companies ... 5. Employees ...
III. DESCRIPTION OF BUSINESS ... 1. Description of Performance, etc. ... 2. State of Production, Order Intake and Sale ... 3. Matters to be Resolved... 4. Risks relating to Business ... 5. Material Contracts Relating to Business ... 6. Research and Development ... 7. Analysis of Financial Conditions and Operating Results ...
IV. CONDITION OF FACILITIES ... 1. Outline of Investment in Facilities, etc. ...
2. Principal Facilities... 3. Plans for Installation or Removal , etc. of Facilities ...
V. DESCRIPTION OF THE COMPANY ... 1. Description of Shares, etc. ... (1) Total Number of Shares ... (2) Total Number of Shares Issued and Outstanding
and Changes in the Share Capital ... (3) By Type of Shareholders ... (4) Major Shareholders... 2. Dividend Policy...
3. Trends in Share Prices ... 4. Directors and Executive Officers ... 5. State of Corporate Governance ...
VI. FINANCIAL CONDITION ... 1. Financial Statements ...
2. Details of Principal Assets and Liabilities ... 3. Major Differences of Accounting Principles and
4. Other ...
VII. TREND OF FOREIGN EXCHANGE RATES...
VIII. SUMMARY OF ISSUER'S SHARE HANDLING, ETC. IN JAPAN ...
IX. REFERENCE INFORMATION OF ISSUER ...
PART III. INFORMATION ON GUARANTOR, ETC ... I. INFORMATION ON GUARANTOR ...
1. Bonds covered by the Guarantee... 2. Matters relating to Guarantor which is a Continuing
Disclosure Company ... (1) Documents filed by the Guarantor ... (2) The Place(s) at which copies of the Documents referred to
above are available for Public Inspection ... 3. Matters Relating to Guarantor which is not a Continuing
Disclosure Company ...
II. INFORMATION ON NON-GUARANTOR ... III. INFORMATION ON INDICES, ETC. ...
PART IV. ADDITIONAL INFORMATION ... I. RECENT FINANCIAL STATEMENTS OF THE COMPANY ... II. FORM OF SECURITIES ... 1. Form of the Bond Certificate ... 2. Form of the Coupon ... III. RECENT FINANCIAL STATEMENTS OF GUARANTOR ...
NOTES:
1. In this document, unless the context requires otherwise, references to the "Issuer" or the "Company" are to Telefónica Europe B.V., references to the "Guarantor" are to Telefónica, S.A. and references to the "Group" are to Telefónica, S.A. and its consolidated subsidiaries unless the context requires otherwise. Also references to "Japanese Yen Bonds-1st Series" are to Telefónica Europe B.V. Japanese Yen Bonds - First Series (2007) Guaranteed by Telefónica, S.A. and references to "Japanese Yen Floating Rate Bonds-1st Series" are to Telefónica Europe B.V. Japanese Yen Floating Rate Bonds - First Series (2007) Guaranteed by Telefónica, S.A., respectively, and the terms "Bonds", "Conditions of Bonds" and "Fiscal Agent" used under the headings "<Japanese Yen Bonds-1st Series> and <Japanese Yen Floating Rate Bonds-1st Series> refer to those of the Japanese Yen Bonds-1st Series and Japanese Yen Floating Rate Bonds-1st Series, respectively. Unless separate description are made under such headings, these two bonds are collectively referred to as the "Bonds".
2. In this document, references to "Euro" or "EUR" are to the lawful currency of the member states of the European Union that adopt the single currency in accordance with the Treaty establishing the European Community, as amended by the Treaty on European Union and references to "¥" are to Japanese yen. The mean of the telegraphic transfer spot selling and buying rates vis-à-vis customers as at 7 May 2007, as quoted by a major bank engaging in foreign exchange transactions in Tokyo was EUR1=¥163.33. For convenience in reading this document, certain Euro amounts have been translated into Japanese yen at the above rate.
3. The financial year of both the Issuer and the Guarantor commences on January 1 and ends on December 31 of each year.
4. Where figures in tables in this document have been rounded, the totals may not necessarily agree with the arithmetic sums of the figures.
PART I. INFORMATION CONCERNING SECURITIES
I. TERMS AND CONDITIONS OF OFFERING
1. Offering of the Bonds(other than Short-Term Notes)
<Japanese Yen Bonds-1st Series>
Name of the Bonds : Telefónica Europe B.V. Japanese Yen Bonds - First Series (2007) Guaranteed by
Telefónica, S.A. (the "Bonds")
Registered / Bearer : N/A
Aggregate Face Value or Aggregate Amount of Book-Entry Bond
: ¥15,000,000,000
Amount of Each Bond : ¥100,000,000
Aggregate Issue Price : ¥15,000,000,000
Issue Price : ¥100 per ¥100 of the principal amount of the Bond
Rate of Interest : 2.11% p.a.
Interest Payment Date : Payable on each January19 and July 19 of each year
Maturity : July 19, 2012
Method of Offering : Public offering Deposit for Subscription : Not required Period of Subscription : July 11, 2007
Place of Subscription : Head office and each branch office in Japan of the Joint-Lead Managers named below
Payment Date : 19 July 2007
Japan Securities Depository Center, Incorporated
1-1, Nihonbashi Kayaba-cho 2-chome,, Chuo-ku, Tokyo
Method of Public Notice : Public notice in relation to the Bonds shall be made in the Japanese Official Gazette (kampo) (if possible) and in a major daily newspaper.
(Note 1) The Bonds shall be subject to the provisions of the Law concerning Book-Entry Transfer of Corporate Bonds, etc. (Law No. 75 of 2001, as amended) (the "Book-Entry Transfer Law") and shall be handled in accordance with the business regulations of a Book-Entry Transfer Institution (as defined in the Entry Transfer Law) setting forth the matters required by the Book-Entry Transfer Law.
Underwriters
The securities companies (the "Managers") which have entered into the Subscription Agreement are as follows:
Name Address Underwritten Amount
Daiwa Securities SMBC Co. Ltd.
Mitsubishi UFJ Securities Co., Ltd.
Mizuho Securities Co., Ltd.
(Collectively, the “Joint-Lead Managers”)
8-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo 4-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo
Otemachi First Square, 5-1 Otemachi 1-chome, Chiyoda-ku, Tokyo
Since the Managers will subscribe for the total issue amount of the Bonds on a joint and several basis, there are no respective underwritten amounts. The total underwritten amount is ¥15,000,000,000.
All the Bonds will be subscribed for, and offered to the public in Japan at the issue price, by the Joint-Lead Managers pursuant to the Subscription Agreement entered into by and among the Issuer, the Guarantor and the Joint-Lead Managers July 11, 2007. The aggregate of the management, underwriting and selling commissions is equal to 0.35% of the aggregate amount of the Bonds.
<Japanese Yen Floating Rate Bonds-1st Series>
Name of the Bonds : Telefónica Europe B.V. Japanese Yen Floating Rate Bonds - First Series (2007) Guaranteed by Telefónica, S.A. (the "Bonds")
Registered / Bearer : N/A
Aggregate Face Value or Aggregate Amount of Book-Entry Bond
: ¥15,000,000,000
Amount of Each Bond : ¥100,000,000
Aggregate Issue Price : ¥15,000,000,000
Issue Price : ¥100 per ¥100 of the principal amount of the Bond
Rate of Interest : 6 month JPY LIBOR displayed in the Reuter's LIBOR01 page plus 0.40% p.a.(floating rate. Please refer to "Method of Payment of Interest" below.
Interest Payment Date : Payable on each January 19 and July19 of each year
Maturity : July 19, 2012
Method of Offering : Public offering Deposit for Subscription : Not required Period of Subscription : July 11, 2007
Place of Subscription : Head office and each branch office in Japan of the Joint-Lead Managers named below
Payment Date : 19 July 2007
Clearing /Recording Agency : Clearing Agency
Japan Securities Depository Center, Incorporated
1-1, Nihonbashi Kayaba-cho 2-chome,, Chuo-ku, Tokyo
Method of Public Notice : Public notice in relation to the Bonds shall be made in the Japanese Official Gazette (kampo) (if possible) and in a major daily newspaper.
(Note 1) The Bonds shall be subject to the provisions of the Law concerning Book-Entry Transfer of Corporate Bonds, etc. (Law No. 75 of 2001, as amended) (the "Book-Entry Transfer Law") and shall be handled in accordance with the business regulations of a Book-Entry Transfer Institution (as defined in the Entry Transfer Law) setting forth the matters required by the Book-Entry Transfer Law.
Underwriters
The securities companies (the "Joint-Lead Managers") which have entered into the Subscription Agreement are as follows:
Name Address Underwritten Amount
Daiwa Securities SMBC Co. Ltd.
Mitsubishi UFJ Securities Co., Ltd.
Mizuho Securities Co., Ltd.
(Collectively, the “Joint-Lead Managers”)
8-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo 4-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo
Otemachi First Square, 5-1 Otemachi 1-chome, Chiyoda-ku, Tokyo
Since the Joint-Lead Managers will subscribe for the total issue amount of the Bonds on a joint and several basis, there are no respective underwritten amounts. The total underwritten amount is ¥15,000,000,000.
All the Bonds will be subscribed for, and offered to the public in Japan at the issue price, by the Joint-Lead Managers pursuant to the Subscription Agreement entered into by and among the Issuer, the Guarantor and the Joint-Lead Managers July 11, 2007. The aggregate of the management, underwriting and selling commissions is equal to 0.35% of the aggregate amount of the Bonds.
Fiscal , Issuing and Paying Agent and Its Duties and Functions
<Japanese Yen Bonds-1st Series>
The fiscal ,issuing and paying agent (the "Fiscal Agent") is as follows:
Name of the Fiscal Agent Address
The Bank of Tokyo-Mitsubishi UFJ, Ltd. 7-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo, Japan
Substance of Duties and Functions of the Fiscal Agent
(1) The Bank of Tokyo-Mitsubishi UFJ, Ltd. acts as fiscal agent of the Issuer and the Guarantor in respect of the Bonds and also acts as issuing and paying agent (as provided in the JASDEC Business Regulations) of the Issuer (such fiscal agent and issuing and paying agent being collectively referred to as the "Fiscal Agent").The Fiscal Agent shall perform the duties and functions provided for in the conditions of the Bonds (the "Conditions of Bonds"), the Fiscal Agency Agreement dated July 11, 2007 among the Issuer, the Guarantor and the Fiscal Agent (the "Fiscal Agency Agreement") and the JASDEC Business Regulations, respectively. The Fiscal Agent shall act solely as agent of the Issuer or the Guarantor (as the case may be) and does not assume any obligation towards or relationship of agency or trust for or with the Bondholders. A copy of the Fiscal Agency Agreement to which the conditions of Bonds (the "Conditions of Bonds") and the conditions of guarantee (the "Conditions of Guarantee") are attached shall be kept at the head office of the Fiscal Agent and shall be made available for perusal or photocopying by any Bondholder during normal business hours. All expenses incurred for such photocopying shall be borne by the applicant therefor.
(2) No person who is comparable to a corporate bond administrator (as provided for in Article 702 of the Company Law (Law No. 86 of 2005)) is appointed in respect of the Bonds. Accordingly, should any necessity arise to enforce the rights of Bondholders under the
Conditions of Bonds or the Guarantee (as defined in "Security (2)" below), the Bondholder may have to enforce these rights on their own and to proceed directly against the Issuer and/or the Guarantor.
(3) The Issuer may from time to time vary the appointment of the Fiscal Agent, provided the appointment of the Fiscal Agent shall continue until the replacement fiscal agent shall be effectively appointed. In such case the Issuer shall give prior public notice, in accordance with" Method of Public Notice" above, thereof to the Bondholders.
(4) Should JASDEC revoke its designation of the Fiscal Agent acting as issuing agent or paying agent and the Issuer receive a notice of such revocation, the Issuer shall, without delay, appoint another such agent who has been so designated.
Fiscal , Issuing ,Paying and Reference Agent and Its Duties and Functions
<Japanese Yen Floating Rate Bonds-1st Series>
The fiscal agent, issuing ,paying and reference agent (the "Fiscal Agent") is as follows:
Name of the Fiscal Agent Address
The Bank of Tokyo-Mitsubishi UFJ, Ltd. 7-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo, Japan
No bond administrator will be appointed.
Substance of Duties and Functions of the Fiscal Agent
(1) The Bank of Tokyo-Mitsubishi UFJ, Ltd. acts as fiscal agent of the Issuer and the Guarantor in respect of the Bonds and also acts as issuing and paying agent (as provided in the JASDEC Business Regulations) and reference agent of the Issuer (such fiscal agent, issuing and paying agent and reference agent being collectively referred to as the "Fiscal Agent"). The Fiscal Agent shall perform the duties and functions provided for in the
Conditions of Bonds, the Fiscal Agency Agreement dated July 11, 2007 among the Issuer, the Guarantor and the Fiscal Agent (the "Fiscal Agency Agreement") and the JASDEC Business Regulations, respectively. The Fiscal Agent shall act solely as agent of the Issuer or the Guarantor (as the case may be) and does not assume any obligation towards or relationship of agency or trust for or with the Bondholders. A copy of the Fiscal Agency Agreement to which the Conditions of Bonds and the Conditions of Guarantee are attached shall be kept at the head office of the Fiscal Agent and shall be made available for perusal or photocopying by any Bondholder during normal business hours. All expenses incurred for such
photocopying shall be borne by the applicant therefor.
(2) No person who is comparable to a corporate bond administrator (as provided for in Article 702 of the Company Law (Law No. 86 of 2005)) is appointed in respect of the Bonds. Accordingly, should any necessity arise to enforce the rights of Bondholders under the
Conditions of Bonds or the Guarantee, the Bondholder may have to enforce these rights on their own and to proceed directly against the Issuer and/or the Guarantor.
(4) The Issuer may from time to time vary the appointment of the Fiscal Agent, provided the appointment of the Fiscal Agent shall continue until the replacement fiscal agent shall be
effectively appointed. In such case the Issuer shall give prior public notice, in accordance with "Method of Public Notice" above, thereof to the Bondholders.
(4) Should JASDEC revoke its designation of the Fiscal Agent acting as issuing agent or paying agent and the Issuer receive a notice of such revocation, the Issuer shall, without delay, appoint another such agent who has been so designated.
Method of Payment of Interest
<Japanese Yen Bonds-1st Series>
The Bonds shall bear interest at the rate of 2.11% per annum of the principal amount thereof.
The Bonds shall bear interest from and including July 19, 2007, payable in Japanese yen semi-annually in arrears on January 19, 2008 and on each subsequent January 19 and July 19 in respect of the six (6)-month period to and including each such date. Interest for any period other than such six (6) month period shall be payable for the actual number of days included in such period computed on the basis of a 365-day year. Each date set for payment of interest in this Section (1) is hereinafter referred to as an "Interest Payment Date".
The Bonds shall cease to bear interest after the date on which they become due for redemption; provided, however, that should the Issuer fail to redeem any of the Bonds when due in accordance with the Conditions of Bonds, interest shall be paid at the interest rate specified above in the first paragraph for the actual number of days included in the period from but excluding the due date to and including the date of actual redemption of such Bond, computed on the basis of a 365-day year. Such period, however, shall not exceed the date on which the Fiscal Agent (in its capacity of paying agent under the JASDEC Book-Entry Transfer System) allocates the necessary funds for the full redemption of the Bonds received by it among the relevant JASDEC Participants; provided that if such overdue allocation is not possible under the JASDEC Book-Entry Transfer System, such period shall not exceed 14 days commencing the date on which a public notice is given by the Fiscal Agent in
accordance with "Remarks – (4) Payment " above.
<Japanese Yen Floating Rate Bonds-1st Series>
(1)(i) The Bonds shall bear interest from and including July 19, 2007, payable in Japanese yen semi-annually in arrears on January 19 and July 19 of each year in respect of the Interest Period (as defined below) ending on but excluding such date; provided that, if any such date would otherwise fall on a day which is not a Tokyo Business Day (as defined below), the relevant due date for payment of interest shall be postponed to the next succeeding Tokyo Business Day unless it would thereby fall into the next
calendar month, in which event such due date shall be brought forward to the immediately preceding Tokyo Business Day, and the interest shall be payable in respect of the Interest Period ending on but excluding the due date as modified
for the actual number of days included in such part on the basis of a 360-day year. Each due date for payment of interest, as provided above, is hereinafter referred to as an "Interest Payment Date".
In this Section:
(a) "Tokyo Business Day" means a day on which banks are open for business (including dealings in foreign exchange and foreign currency deposits) in Tokyo; and
(b) "Interest Period" means the period beginning on and including July19, 2007 and ending on but excluding the first Interest Payment Date and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next succeeding Interest Payment Date.
(ii) The Bonds shall bear interest at the rate (the "Rate of Interest") from time to time determined as follows; provided that such Rate of Interest shall not be less than 0%: (a) At or prior to 10:00 a.m. (Tokyo time) on the Tokyo Business Day (an "Interest
Rate Determination Date") immediately following the Interest Rate Quotation Date (as defined below), the Issuer will ascertain in respect of the relevant Interest Period the offered rate (rounded, if necessary, to the nearest 4th decimal place with five or more in the 5th decimal place to be rounded upwards) for six (6)-month Japanese yen deposits in the London interbank market which appears on the Reuters Page LIBOR01 (as defined below) as of 11:00 a.m. (London time) on the second London Business Day (as defined below) before the first day of such Interest Period (or, in respect of the first Interest Period, on July 17, 2007) (each such day being hereinafter referred to as an "Interest Rate Quotation Date"). The Rate of Interest for such Interest Period shall be the rate equal to 0.40% per annum plus the above offered rate so ascertained by the Issuer. In this Section,
(x) "London Business Day" means a day on which banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London; and
(y) "Reuters Page LIBOR01" means the page designated as "LIBOR01" displayed on Reuters (or any successor service) which page displays the British Bankers' Association Interest Settlement Rate for Japanese yen deposits or such other page as may replace LIBOR01 on that service or
other page on such other service as may be reasonably nominated by the Issuer as the information vendor, for the purpose of displaying rates comparable to the British Bankers' Association Interest Settlement Rates for Japanese yen deposits, which replacement shall be promptly notified by the Issuer to the Fiscal Agent in writing.
(b) If the above offered rate does not appear on the Reuters Page LIBOR01, or if such page is unavailable, in either case, as of 11:00 a.m. (London time) on any Interest Rate Quotation Date, the Issuer will request on the Interest Rate
Determination Date the principal Tokyo office, if any, of each of the Reference Banks (as defined below) to provide the Issuer with the offered quotation (expressed as a rate per annum) for six (6)-month Japanese yen deposits commencing on the second London Business Day following such Interest Rate Quotation Date offered by its principal London office to leading banks in the London interbank market at approximately 11:00 a.m. (London time) on such Interest Rate Quotation Date. In such case:
- If on such Interest Rate Determination Date six (6) or more Reference Banks provide the Issuer with such offered quotations, the Rate of Interest for such Interest Period shall be the rate equal to 0.40% per annum plus the arithmetic mean (rounded, if necessary, to the nearest 4th decimal place with five or more in the 5th decimal place to be rounded upwards) of such offered quotations (disregarding two of the lowest and two of the highest of such quotations), as ascertained by the Issuer.
- If on such Interest Rate Determination Date not less than two (2) but not more than five (5) Reference Banks provide the Issuer with such offered quotations, the Rate of Interest for the relevant Interest Period shall be the rate equal to 0.40% per annum plus the arithmetic mean (rounded, if necessary, to the nearest 4th decimal place with five or more in the 5th decimal place to be rounded upwards) of the quotations of those Reference Banks providing such quotations.
- If on such Interest Rate Determination Date only one (1) or none of the Reference Banks provides the Issuer with such offered quotations, the Issuer shall ascertain the offered rate (rounded, if necessary, to the nearest 4th decimal place with five or more in the 5th decimal place to be rounded upwards) for six (6)-month Japanese yen deposits in the London interbank market which appears on the Reuters Page LIBOR01 as of 11:00 a.m. (London time) on the London Business Day most closely preceding the relevant Interest Rate Quotation Date (if the offered rate for six (6)-month Japanese yen deposits in the London interbank market does not appear on
the Reuters Page LIBOR01 or the Reuters Page LIBOR01 is unavailable on such day, on the preceding but closest London Business Day on which the offered rate appears). The Rate of Interest for the relevant Interest Period shall be the rate equal to 0.40% per annum plus such rate so ascertained by the Issuer; provided that, if such London Business Day falls on or before the preceding Interest Rate Quotation Date, if any, the Rate of Interest shall be the Rate of Interest in effect for the last preceding Interest Period.
In this Section, "Reference Bank" means a bank which provided its offered quotation used to calculate the offered rate for six (6)-month Japanese yen deposits in the London interbank market which appeared on the Reuters Page LIBOR01 as of 11:00 a.m. (London time) on the London Business Day most closely preceding the Interest Rate Quotation Date in respect of the relevant Interest Rate Determination Date (if the offered rate for six (6)-month Japanese yen deposits in the London interbank market does not appear on the Reuters Page LIBOR01 or the Reuters Page LIBOR01 is unavailable on such day, on the preceding but closest London Business Day on which the offered rate appears).
(iii) The Issuer shall, at approximately 10:00 a.m. (Tokyo time) on each Interest Rate Determination Date, calculate the amount of interest per currency unit for the relevant Interest Period (the "Interest Amount Per Currency Unit") with respect to the Bonds for the purpose of the JASDEC Business Regulations. The Interest Amount Per Currency Unit shall be calculated, pursuant to the JASDEC Business Regulations, by multiplying the Rate of Interest by a fraction, the numerator of which is the actual number of days in the Interest Period concerned and the denominator of which is 360. The calculation of the Interest Amount Per Currency Unit for a part of any Interest Period shall be made for the actual number of days included in such part on the basis of a 360-day year.
(iv) As soon as practicable after the determination of the Rate of Interest for any Interest Period, but in no later than five (5) Tokyo Business Days following the
commencement of any Interest Period, the Issuer shall notify the Fiscal Agent in writing of such Rate of Interest and the relevant Interest Amount Per Currency Unit and Interest Payment Date; provided that public notices for these matters for any Interest Period need not be given. Without delay after receiving such notice, the Fiscal Agent shall make such matters available for perusal by the Bondholders at the head office of the Fiscal Agent during normal business hours.
(v) If, after giving notice of any Rate of Interest, the relevant Interest Amount Per Currency Unit and Interest Payment Date pursuant to sub-paragraph (iv) above, the relevant Interest Period is lengthened or shortened, the Issuer shall promptly
determine what adjustment is appropriate. As soon as practicable after the
determination of such adjustment, the Issuer shall notify the Fiscal Agent in writing of the Interest Amount Per Currency Unit and the Interest Payment Date, as amended pursuant to such adjustment; provided that public notices for such amendment need not be given. As soon as practicable after the date on which the Fiscal Agent receives such notice, the Fiscal Agent shall make such matters available for perusal by the Bondholders at the head office of the Fiscal Agent during normal business hours. (vi) Any Rate of Interest, Interest Amount Per Currency Unit or Interest Payment Date
determined in accordance with the provisions of this paragraph (1) shall in the absence of manifest error be final and binding upon all parties, including the Bondholders. (vii) The Bank of Tokyo-Mitsubishi UFJ, Ltd. acts as the Issuer's reference agent (the
"Reference Agent") at its head office in Tokyo, Japan in respect of the Bonds.
Pursuant to the Fiscal Agency Agreement, the Issuer shall entrust the Reference Agent with the performance of all of its obligations (other than those to give public notices) under this paragraph (1) relating to the ascertainment, calculation and determination of any offered quotation or interest rate (including, but not limited to, the Rate of
Interest). The Reference Agent shall act solely on behalf of the Issuer and shall assume no obligation towards or relationship of agency or trust for or with the
Bondholders. Any notice required to be given by the Issuer to the Fiscal Agent under this paragraph (1) need not be given if and so long as the Fiscal Agent and the
Reference Agent are one and the same bank. The Issuer may from time to time vary the appointment of the Reference Agent; provided that the appointment of the Reference Agent shall continue until the replacement Reference Agent is duly appointed. In such case the Issuer shall give prior public notice thereof.
(2) The Bonds shall cease to bear interest after the date on which they become due for redemption; provided, however, that should the Issuer fail to redeem any of the Bonds when due, then the Issuer shall pay accrued interest on the unpaid principal amount in Japanese yen for the actual number of days of the period from and including the due date to but excluding the date of the actual redemption of such Bond, computed on the basis of such actual number of days divided by 360 at the interest rate to be determined applying the provisions in the paragraph (1) above mutatis mutandis as if the Interest Payment Dates continued to occur after such due date. Such period, however, shall not exceed the date on which the Fiscal Agent (in the capacity of paying agent under the JASDEC Book-Entry Transfer System) allocates the necessary funds for the full redemption of the Bonds received by it among the relevant JASDEC Participants (as defined in the JASDEC Business Regulations; the
"JASDEC Participants"); provided that if such overdue allocation is not possible under the JASDEC Business Regulations, such period shall not exceed 14 days commencing the date on which a public notice is given by the Fiscal Agent in accordance with Condition 6. The
Issuer shall notify each interest rate so determined to the Fiscal Agent in writing in
accordance with the provisions of the paragraph(1)(iv) above, whereupon, in no later than 5 Tokyo Business Days following such due date, the Fiscal Agent shall make such interest rate available for perusal by the Bondholders at the head office of the Fiscal Agent during normal business hours. Public notice for such interest rate need not be given.
Method of Redemption
(1) Redemption at Maturity <Japanese Yen Bonds-1st Series>
Unless previously redeemed or purchased and cancelled, the Bonds shall be redeemed on July 19, 2012 at a price equal to their principal amount.
<Japanese Yen Floating Rate Bonds-1st Series>
Unless previously redeemed or purchased and cancelled, the Bonds shall be redeemed on July 19, 2012 at a price equal to their principal amount; provided that, if such date would otherwise fall on a day which is not a Tokyo Business Day, the due date for redemption of the Bonds shall be postponed to the next succeeding Tokyo Business Day, unless it would
thereby fall into the next calendar month, in which event such due date shall be brought forward to the immediately preceding Tokyo Business Day,.
(2) Redemption for Taxation Reasons
If (i) as a result of any change in or amendment to the laws, regulations or rulings of The Netherlands or the Kingdom of Spain ("Spain") or of any political subdivision thereof or any authority or agency therein or thereof having power to tax or in the interpretation or administration of any such laws, regulations or rulings which becomes effective on or after the date of issue of the Bonds, (x) the Issuer or, as the case may be, the Guarantor would be required to pay any Additional Amount (as defined in Section (3) of "Remarks" below) or (y) the Guarantor or any Subsidiary(as defined in Section (1)Negative Pledge Clause of "Financial Covenants" below) of the Guarantor is or would be required to deduct or withhold tax on any payment to the Issuer to enable the Issuer to make any payment (whether in respect of principal, interest or otherwise); (ii) in each case, the payment of such Additional Amount in the case of (x) above or such deduction or withholding in the case of (y) above cannot be avoided by the Issuer or the Guarantor or such Subsidiary taking reasonable measures available to; and (iii) such circumstances are evidenced by the delivery by the Issuer or the Guarantor to the Fiscal Agent of a certificate signed by one director of the Issuer or the Guarantor stating that the said circumstances prevail and describing the facts leading thereto and an opinion of independent legal advisers of recognized standing to the effect that such
circumstances prevail, the Issuer may, at its option and having given no less than 30 nor more than 60 days' notice to the Bondholders in accordance with "Method of Public Notice" above (which notice shall be irrevocable), redeem all (but not some only) of the outstanding Bonds at their principal amount, together with accrued interest (if any) thereon provided, however, that no such notice of redemption may be given earlier than 90 days prior to the earliest date on which the Issuer or, as the case may be, the Guarantor would be obliged to pay such Additional Amounts were a payment in respect of the Bonds then due.
If, pursuant to”Remarks (2) (A) Substitution, Merger, Consolidation, etc. by the Issuer and ”Remarks (2) (B) Substitution, Merger, Consolidation, etc. by the Issuer, a Person (as defined in Financial Covenants (1) (B) ) into which the Issuer or the Guarantor is merged or to whom the Issuer or the Guarantor has conveyed, transferred or leased its properties or assets has been or would be required to pay any Additional Amounts, the outstanding Bonds may be redeemed at the option of such Person in whole, but not in part, in accordance with this Condition 5(2), which provision shall apply mutatis mutandis.
The Issuer shall ensure that the Fiscal Agent will notify JASDEC of the exercise of the redemption option provided in this Section (2) forthwith upon the determination of such exercise.
The above certificate and opinion delivered to the Fiscal Agent pursuant to this Section (2) shall be kept at its head office and made available for perusal and photocopying by any Bondholder during normal business hours; provided that all expenses incurred for such photocopying shall be borne by the applicant therefor.
All reasonable expenses necessary for the procedures under this section (2) shall be borne by the Issuer or the Guarantor, as the case may be.
(3) Purchase and Cancellation
The Issuer, the Guarantor or any of the Guarantor's other Subsidiaries may at any time purchase in whole or in part the Bonds at any price in the open market or otherwise and retain, resell or cancel them, except as otherwise provided for by applicable laws and regulations or the JASDEC Business Regulations.
(4) Non-Prepayment
Except as otherwise provided in the Conditions of Bonds, the Issuer may not prepay the principal of or interest on the Bonds in whole or in part.
Security
Except where any security is provided pursuant to Section (2) of "Financial Covenants" below, the Bonds shall not be secured by collateral of the Issuer.
(2) Guarantee
The due and punctual payment by the Issuer of the principal of and interest on the Bonds and all other amounts payable under the Conditions of Bonds is guaranteed (rentai hosho) by Telefónica, S.A. (the "Guarantor") in accordance with the conditions of guarantee (the "Conditions of Guarantee"). Such guarantee is hereinafter referred to as the
"Guarantee".
The Guarantor guarantees (rentai hosho) to the holders of the Bonds (the "Bondholders") the due and punctual payment by Issuer of principal of and interest on the Bonds and all other amounts payable under the Conditions of the Bonds (such principal, interest and other amounts being hereinafter referred to as the "Guaranteed Amounts") as and when the same shall be due and payable whether at maturity or otherwise.
The Guarantor covenants that should the Issuer fail to make the due and punctual payment of any Guaranteed Amount, the Guarantor shall make such payment as and when the same shall become due and payable whether at maturity or otherwise, and as if such payment were made by the Issuer.
If any payment received by any Bondholder pursuant to the Conditions of Bonds shall, on the subsequent bankruptcy ("faillissement"), insolvency ("surséance van betaling"), reorganization or other such similar events of the Issuer, be avoided or set aside under any laws relating to bankruptcy, insolvency, reorganization or other similar events, such payment shall not be considered as discharging or diminishing the liability of the Guarantor and the Guarantee shall continue to apply as if such payment had at all times remained owing by the Issuer and the Guarantor shall indemnify the Bondholders in respect thereof.
The Guarantee being rentai hosho, the category of guarantee provided for under Article 454 of the Civil Code of Japan (Law No. 89 of 1896, as amended) (the "Civil Code"), the Guarantor shall not be entitled to the rights provided for under Articles 452 (Right to Request to First Claim against Principal Debtor) and 453 (Right to Request to First Enforce against Assets of Principal Debtor) of the Civil Code.
No Bondholder shall be required to give any notice to or make any demand on the Issuer or to proceed against the Issuer's assets prior to the performance by the Guarantor of its obligations under the Conditions of Guarantee. The Guarantor agrees that the Guarantor's obligations under the Conditions of Guarantee will not be discharged except by complete
performance of the monetary obligations set forth in the Conditions of Bonds and the Conditions of Guarantee.
The Guarantor agrees that it will not exercise any rights of indemnification or
subrogation or any other right relating to the payment of monies which it may have under or by virtue of any contract or law against the Issuer as a result of or in relation to the
performance of the obligations of the Guarantor in accordance with the Conditions of Guarantee unless and until the Guaranteed Amounts have been paid in full.
Financial Covenants
(1) Covenants by the Issuer
(A) Pari Passu
The Bonds constitute direct, unconditional, (except where any security is provided for the Bonds pursuant to the provisions in “Financial Covenants (1) (B)” below) unsecured and unsubordinated obligations of the Issuer and rank and (except as aforesaid) will rank pari passu without any preference among themselves and with all other outstanding unsecured and unsubordinated obligations of the Issuer, present and future, except as may be preferred by law.
(B) Negative Pledge Clause
So long as any of the Bonds remains outstanding, the Issuer undertakes that it will not create or have outstanding any mortgage, pledge, lien or other charge (the "Encumbrance") upon the whole or any part of its assets, present or future, in order to secure any Relevant Indebtedness (as defined below) issued or guaranteed by the Issuer or by any other Person (as defined below) or to secure any guarantee of or indemnity in respect of any Relevant Indebtedness unless (a) the outstanding Bonds are equally and rateably secured therewith, or (b) such other security is provided as the Bondholders shall approve by the Bondholders' meeting, in each case for as long as such Relevant Indebtedness shall be so secured; provided, however, that the foregoing restriction shall not apply to any Encumbrance upon the assets of the Issuer securing Relevant Indebtedness issued or guaranteed by the Issuer or by any other Person if the Relevant Indebtedness so secured (i) was originally offered, distributed or sold primarily to residents of The Netherlands, (ii) by its terms matures within one year of its date of issue, or (iii) the Encumbrance affects the assets of an entity which, when the Encumbrance was created, was unrelated to the Issuer, and which was subsequently acquired by the Issuer; and provided, further, that nothing herein shall limit the ability of the Issuer to grant or permit to subsist Encumbrances over any or all of its present or future assets to secure Relevant Indebtedness issued or guaranteed by the Issuer or by any other Person, to the extent that the
aggregate principal amounts so secured do not exceed 5% of the consolidated net tangible assets (as defined below) of the Guarantor, as reflected in the most recent balance sheet (prepared in accordance with such accounting principles as are generally accepted in Spain at the date of such computation and as applied by the Guarantor) prior to the time such Relevant Indebtedness was incurred.
"Relevant Indebtedness" means any obligation for the payment of borrowed money which is in the form of, or represented or evidenced by, a certificate of indebtedness or in the form of, or represented or evidenced by, bonds, notes or other securities which, in any of the above cases, is or are, or is or are capable of being, quoted, listed, dealt in or traded on a stock exchange or other recognized securities market, and “Person” means any individual, corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof. For the purposes of avoiding any doubt in respect of asset-backed financings originated by the Issuer or the Guarantor, the expressions "assets" and "obligations for the payment of borrowed money" as used in the definition of consolidated net tangible assets or Relevant Indebtedness do not include assets or obligations of the Issuer or the Guarantor which, pursuant to the requirements of law and accounting principles generally accepted in The Netherlands or Spain, as the case may be, need not, and are not, reflected in the balance sheet of the Issuer or the Guarantor, as the case may be. "Consolidated net tangible assets" means the total amount of assets of the Guarantor and its consolidated Subsidiaries, including investments in unconsolidated Subsidiaries, after deduction of (i) deferred charges, (ii) goodwill in consolidation, (iii) intangible assets, and (iv) amounts due from stockholders for uncalled capital. "Subsidiary" means any company in respect of which the Guarantor owns, directly or indirectly, more than half of the voting rights of the shares of such company, or, when the Guarantor owns half or less of the voting power, controls such company, i.e. has the power to govern the financial and operating policies of such company so as to obtain benefits from its activities.
If any security is provided for the Bonds under this Section, the Issuer shall take, or cause to be taken, any and all steps and procedures necessary for creation and perfection of such security for the benefit of the Bondholders in accordance with this Section and applicable laws and regulations. Upon creation of such security, the Issuer shall give public notice to the Bondholders in accordance with "Method of Public Notice" below, stating that such security by the Issuer has been duly and validly created and perfected for the benefit of the Bondholders in accordance with this Section and applicable laws and regulations. All expenses incurred in connection with the creation, perfection, maintenance and execution of such security (including expenses relating to the above public notice) shall be borne by the Issuer.
The provisions of this Section shall not apply when the Fiscal Agent (in its capacity of paying agent under the JASDEC Book-Entry Transfer System) allocates the necessary funds for the full redemption of the Bonds received by it among the relevant JASDEC Participants (as defined in the JASDEC Business Regulations; the "JASDEC Participants").
(2) Covenants by the Guarantor
(A) Pari Passu
The obligations of the Guarantor under the Guarantee constitutes direct, unconditional, (except where any security is provided for the Guarantee pursuant to "Financial Covenants (2)(B)" below) unsecured and unsubordinated obligations of the Guarantor and ranks and (except as aforesaid) will rank pari passu with all other outstanding unsecured and unsubordinated obligations of the Guarantor, present and future, except as may be preferred by law.
(B) Negative Pledge Clause
So long as any of the Bonds remains outstanding, the Guarantor undertakes that it will not create or have outstanding any mortgage, pledge, lien or other charge (the "Encumbrance") upon the whole or any part of its assets, present or future, in order to secure any Relevant Indebtedness (as defined below) issued or guaranteed by the Guarantor or by any other Person (as defined below) or to secure any guarantee of or indemnity in respect of any Relevant Indebtedness unless (a) the Guarantor's payment obligations under the Guarantee are equally and rateably secured therewith, or (b) such other security is provided as the Bondholders shall approve by the Bondholders' meeting, in each case for as long as such Relevant Indebtedness shall be so secured; provided, however, that the foregoing restriction shall not apply to any Encumbrance upon the assets of the Guarantor securing Relevant Indebtedness issued or guaranteed by the Guarantor or by any other Person if the Relevant Indebtedness so secured (i) was originally offered, distributed or sold primarily to residents of Spain, (ii) by its terms matures within one year of its date of issue, or (iii) the Encumbrance affects the assets of an entity which, when the Encumbrance was created, was unrelated to the Guarantor, and which was subsequently acquired by the Guarantor; and provided, further, that nothing in this paragraph in this Section shall limit the ability of the Guarantor to grant or permit to subsist Encumbrances over any or all of their respective present or future assets to secure Relevant Indebtedness issued or guaranteed by the Guarantor or by any other Person, to the extent that the aggregate principal amounts so secured do not exceed 5% of the consolidated net tangible assets (as defined below) of the Guarantor, as reflected in the most recent balance sheet (prepared in accordance with such accounting principles as are generally accepted in Spain at the date of such computation and as applied by the Guarantor) prior to the time such Relevant Indebtedness was incurred.
If any security is provided for the Guarantee under this Section, the Guarantor shall take, or cause to be taken, any and all steps and procedures necessary for creation and perfection of such security for the benefit of the Bondholders in accordance with this Section and applicable laws and regulations. Upon creation of such security, the Guarantor shall give public notice to the Bondholders in accordance with “Method of Public Notice” above, stating that such security by the Guarantor has been duly and validly created and perfected for the benefit of the Bondholders in accordance with this Section and applicable laws and regulations. All expenses incurred in connection with the creation, perfection, maintenance and execution of such security (including expenses relating to the above public notice) shall be borne by the Guarantor.
The provisions of this Section shall not apply if the Fiscal Agent (in its capacity of paying agent under the JASDEC Book-Entry Transfer System) allocates the necessary funds for the full redemption of the Bonds received by it among the relevant JASDEC Participants.
Bondholders' Meetings
When the Bondholders holding one-tenth or more of the aggregate amount of the Bonds (excluding the redeemed amount), acting either jointly or individually, make a written request therefor to the Fiscal Agent at its head office on behalf of the Issuer, stating the matters having a material effect on the interests of the Bondholders that are the purpose of a Bondholders' meeting and the reasons for convocation, with certificates (the "Certificates") issued by the Nearest Upper Positioned Institutions (as defined in the JASDEC Business Regulations) showing the holding of the Bonds held by such Bondholders being presented to the Fiscal Agent on behalf of the Issuer at its head office, or should the Issuer deem it necessary, the Issuer will convene a Bondholders' meeting to consider any of the matters that may have a material effect on the interests of the Bondholders, including the modification of the Conditions of Bonds, by giving written notice at least thirty-five (35) days prior to the proposed date of the meeting to the Fiscal Agent; provided that any such modification shall require consent of the Issuer except for waivers of the rights of the Bondholders under the Bonds. The convocation of a Bondholders' meeting shall be made by giving public notice at least 21 days prior to the date of such meeting. The provisions of the Book-Entry Transfer Law shall apply mutatis mutandis to the Bonds in respect of which the Certificate has been issued. Bondholders' meeting shall be held in Tokyo, Japan.
The Bondholders may be present at a Bondholders' meeting in person or by proxy. The Issuer may have its representative(s) attend such meeting and express its opinion thereat. Any Bondholder who will not be present in person or by proxy at such meeting may exercise his voting rights upon submission of the document stating the matters prescribed in the above public notice of the meeting or transmission by way of an electromagnetic means of the matters to be stated in such document, pursuant to the rules established by the Issuer or the
Fiscal Agent on behalf of the Issuer or as instructed by the Fiscal Agent. The amount of voting rights exercised by such document or electromagnetic means shall be taken into account for the purpose of calculation of the amount of voting rights held by the Voting Rights Holders (as defined below) who were present. At such meeting, each Bondholder shall have a voting right corresponding to the total amount of the Bonds (excluding the redeemed amount) held by him; provided, however, that the Certificates shall be presented to the Fiscal Agent on behalf of the Issuer at least 7 days before such meeting and also at the date of such meeting.
Adoption of resolutions at a Bondholders’ meeting shall require consent of the holders of voting rights of more than one-half of the aggregate amount of voting rights held by the Bondholders who are entitled to exercise their voting rights (the "Voting Rights Holders") and present at the meeting; provided that in case of (a) giving a period of grace for payment, release or settlement of any liability resulted from default with respect to the entire Bonds (other than the matters referred to in (b)), (b) legal actions or bankruptcy, corporate reorganization or any other similar proceedings, and (c) the election or dismissal of representative(s) of the Bondholders who may be appointed and authorized by resolution of a Bondholders' meeting to make decisions on matters to be resolved at a Bondholders’ meeting (provided such person(s) must hold one-thousandth or more of the aggregate amount of the Bonds (excluding the redeemed amount)) (the "Representative(s) of the Bondholders") or an executor (the "Executor") who may be appointed by resolution of a Bondholders' meeting so as to execute the resolutions of the Bondholders’ meeting, or the change in any matters entrusted to them, adoption of the resolutions thereof shall require consent of the holders of voting rights of (i) at least one-fifth of the aggregate amount of voting rights held by the Voting Rights Holders and (ii) at least two-thirds of the aggregate amount of voting rights held by the Voting Rights Holders who were present at the meeting. Such resolutions shall, to the extent permitted by Japanese law, be binding on all the Bondholders whether present or not at such meeting and shall thereupon be carried out by the Representative(s) of the Bondholders or the Executor.
For the purpose of this Section , the Bonds, if any, then held by the Issuer, the
Guarantor or any of the Guarantor's other Subsidiaries shall be disregarded and deemed not to be outstanding.
All reasonable expenses necessary for the procedures under this Section shall be borne by the Issuer.
Governing Law and Jurisdiction
The Bonds and all the rights and obligations of all the parties concerned, including the Bondholders, arising under the Conditions of Bonds and all the rights and obligations of all the parties concerned, including the Bondholders, arising thereunder shall in all respects be governed by the laws of Japan.
Except as otherwise provided in the Conditions of Bonds and the Conditions of Guarantee, the place of performance of obligations pertaining to the Bonds and the Guarantee is Tokyo, Japan.
Any legal action or other court procedure against the Issuer relating to the Bonds or the Conditions of Bonds and any legal action or other court procedure against the Guarantor relating to the Guarantee or the Conditions of Guarantee or the Conditions of Bonds may be instituted in the Tokyo District Court, to the jurisdiction of which the Issuer and the Guarantor expressly, unconditionally and irrevocably submits.
The Issuer and the Guarantor appoint Fumiaki Shimazaki, attorney-at-law, of Shimazaki International Law Office in Tokyo, Japan as the authorized agent of the Issuer upon whom process and any judicial or other court documents may be served in any such action or other court procedural action arising from or relating to the Bonds or the Conditions of Bonds and any such action or other court procedural action arising from or relating to the Guarantee or the Conditions of Guarantee that may be instituted in Japan; the Issuer and the Guarantor designates the address from time to time of Shimazaki International Law Office currently at 2nd Floor, Teral-Koraku Building, 3-27, Koraku 2-chome, Bunkyo-ku, Tokyo, Japan, as the address to receive such process and any judicial or other court documents; and the Issuer and the Guarantor agrees to take, from time to time and so long as any of the Bonds shall remain outstanding, any and all action (including the execution and filing of any and all documents and instruments) that may be necessary to effect and to continue such appointment and designation in full force and effect. If at any time such agent shall not, for any reason, serve as such authorized agent, the Issuer and the Guarantor shall immediately appoint, and it hereby undertakes to take any and all action that may be necessary to effect the appointment of a successor authorized agent in Tokyo, Japan and the Issuer shall notify the Fiscal Agent of the appointment of such successor agent, and give a public notice thereof to the Bondholders.
Nothing in this Section shall affect the right of the Bondholders to institute legal action in any court of competent jurisdiction under applicable laws or to serve process in any manner otherwise permitted by law.
Credit Rating Obtained
In respect of the Bonds, the Issuer has obtained credit rating of Baa1 from Moody’s Investors Service, Inc.as of June 29, 2007, BBB+ from Standard & Poor's Ratings Services as of July 4, 2007, and received a notice from Fitch Rating to the effect that it will give the credit rating of BBB+ subject to its receipt of the definitive conditions of onds relating to the Bonds. Also the Issuer has obtained credit rating of A- from JCR as of July 11, 2007,
Remarks
(1) Events of Default
If any of the events or circumstances (the "Events of Default") specified in the following paragraphs (a) through (f) shall have occurred and be continuing, any Bondholder may, by written notice to the Fiscal Agent at its head office on behalf of the Issuer and the Guarantor, declare that any Bond held by such Bondholder and all accrued interest shall immediately become due and payable:
(a) if the Issuer fails to pay, and the Guarantor fails to honor the Guarantee with respect to payments of, any principal or interest due in respect of the Bonds or any of them and such default continues for a period of 21 days; or
(b) if the Issuer or the Guarantor fails to perform or observe any of its other obligations under the Conditions of Bonds or the Conditions of Guarantee, as the case may be, and (except where such failure is incapable of remedy when no such notice or continuation as is hereinafter mentioned will be required) such failure continues for more than 60 days (90 days if the failure to perform relates to an obligation of the Issuer or the Guarantor arising under ”Remarks (2) (A) Substitution, Merger, Consolidation, etc. by the Issuer” and ”Remarks (2) (B) Substitution, Merger, Consolidation, etc. by the Guarantor” below) after written notice thereof shall have been given to the Fiscal Agent at its head office on behalf of the Issuer or the Guarantor by a Bondholder or by Bondholders acting jointly, in either case, holding at least 25% in aggregate principal amount of the Bonds then outstanding (at the time of giving such notice, such Bondholder(s) shall present, at the head office of the Fiscal Agent, the Certificates (as defined in" Bondholder's Meeting" above) showing its or their holding of at least 25% in aggregate principal amount of the Bonds then outstanding); or
(c) if the Issuer or the Guarantor fails to fulfill (taking into account any applicable grace periods) any payment obligation in excess of €100,000,000 or its equivalent in any other currency under any Relevant Indebtedness or under any guarantee or suretyship provided for under any Relevant Indebtedness of others, and this failure remains uncured for 30 days; or
(d) if the holders of any Relevant Indebtedness of the Issuer or the Guarantor accelerate any payment obligation in excess of €100,000,000 or its equivalent in any other currency as a result of the Issuer or the Guarantor entering into a transaction described under ”Remarks (2) (A) Substitution, Merger, Consolidation, etc. by the Issuer” and ”Remarks (2) (B) Substitution, Merger, Consolidation, etc. by the Guarantor”
above, which transaction constitutes an event of default in respect of such other Relevant Indebtedness; or
(e) if (1) the Issuer or the Guarantor announces its inability to meet its financial obligations or files a petition before a court for a suspension of payments (surséance van betaling in The Netherlands, concurso in Spain); or (2) if a court opens insolvency proceedings against the Issuer or Guarantor or imposes special measures (bijzondere voorzieningen) on the Issuer within the meaning of Chapter X of the Netherlands Act on the Supervision of Credit Institutions (Wet toezicht kredietwezen 1992, as amended or re-enacted from time to time) and any such proceeding or measure is not discharged or dismissed within 60 days; or (3) if the Issuer or Guarantor goes into liquidation, unless it is done in connection with such transaction as permitted pursuant to ”Remarks (2) (A) Substitution, Merger, Consolidation, etc. by the Issuer” and ”Remarks (2) (B) Substitution, Merger, Consolidation, etc. by the Guarantor” above; or (4) if the Issuer or Guarantor makes a filing seeking relief under any applicable bankruptcy or insolvency laws; or
(f) if the Guarantee ceases to be valid or legally binding for any reason.
Upon the receipt of such notice (which must be accompanied by a Certificate) by the Fiscal Agent at its head office, all such Bonds shall immediately become due and payable at the principal amount thereof together with accrued interest (and the Additional Amounts, if any), unless prior to such date all such Events of Default shall have been cured. For the purpose of thisSection, the Bonds then held by the Issuer, the Guarantor or any of the Guarantor's other Subsidiaries shall be disregarded and deemed not to be outstanding.
(2) Substitution, Merger, Consolidation, etc.
(A) Substitution, Merger, Consolidation, etc. by the Issuer
The Guarantor or any of its Subsidiaries (each a "Substitute Debtor" as used herein in this (2) (A) Substitution, Merger, Consolidation, etc. by the Issuer) may, without the consent of the Bondholders, assume the obligations of the Issuer under the Bonds, provided that: (i) the Substitute Debtor shall expressly assume such obligations for the benefit of the
Bondholders, which assumption shall provide that the Substitute Debtor shall pay to the Bondholders such Additional Amount as may be necessary in order that every net payment of the principal of and interest on the Bonds will not be less than the amount provided for in the Bonds to be then due and payable; provided that, subject to the restrictions and limitations set out above in Condition 7, such obligation shall extend to any withholding or deduction for or on account of any present or future Taxes
imposed or levied by or on behalf of The Netherlands, Spain or any country of other jurisdiction in which any Substitute Debtor is organized or any political subdivision thereof or any authority or agency therein or thereof having power to tax; except that the Substitute Debtor shall not be obligated to make any indemnification or payment in respect of any tax consequences to any individual Bondholder as a result of such assumption of rights and obligations and which arise as a result of the domicile or residence of such holder in, or connection of such holder with, such other jurisdiction; (ii) (if the Substitute Debtor is not the Guarantor) the Guarantor shall unconditionally and
irrevocably guarantee the due and punctual payment of all amounts payable by the Substitute Debtor under the Bonds;
(iii) immediately after giving effect to such assumption, no Event of Default shall have occurred and be continuing;
(iv) all actions, conditions and things required to be taken, fulfilled and done by the Issuer, the Guarantor and (if the Substitute Debtor is not the Guarantor) the Substitute Debtor to ensure that the Bonds constitute legally valid and binding and enforceable
obligations of the Substitute Debtor have been taken, fulfilled and done and are in full force and effect;
(v) a certificate, signed by a duly authorized officer of the Guarantor and a written opinion of the independent legal advisers of recognized standing selected by the Guarantor, each stating that such assumption by the Substitute Debtor comply with all the conditions (i) through (iv) above, shall have been delivered to the Fiscal Agent who shall keep them at its head office and make them available for perusal and
photocopying by any Bondholder during normal business hours (all expenses incurred for such photocopying to be borne by the applicant therefor);
(vi) the Guarantor and (if the Substitute Debtor is not the Guarantor) the Substitute Debtor shall enter into an agreement amending the Fiscal Agency Agreement to reflect such assumption and (if the Substitute Debtor is not the Guarantor) the giving of such guarantee; and
(vii) a public notice to the Bondholders in respect of such assumption shall have been given by the Issuer at least 14 days prior to the effective date of such assumption. As at the effective date of such assumption (subject to satisfaction with the above conditions (i) through (vii)), the Issuer shall be released from such obligations and, thereafter, all references in the Bonds to the Issuer shall be deemed to be references to the Substitute Debtor.
The Issuer shall not consolidate with or merge (which term shall include for the avoidance of doubt a scheme of arrangement) into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and the Issuer shall not permit any Person to consolidate with or merge into the Issuer or convey, transfer or lease its properties and assets substantially as an entirety to the Issuer without the consent of the Bondholders, unless:
(i) in the case the Issuer shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Issuer is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Issuer substantially as an entirety shall be a corporation, partnership or trust, shall be organized and validly existing, under the laws of the jurisdiction of its organization and shall expressly assume the due and punctual payment of the principal and interest due in respect of the Bonds and the performance or observance of every covenant under the Conditions of Bonds on the part of the Issuer to be performed or observed; (ii) if the Person formed by such consolidation or into which the Issuer is merged or to
whom the Issuer has conveyed, transferred or leased its properties or assets is a Person organized and validly existing under the laws of a jurisdiction other than The Netherlands, such Person agrees to indemnify the Bondholders against (a) any Tax imposed on any such holder or required to be withheld or deducted from any payment to such holder as a consequence of such consolidation, merger, conveyance, transfer or lease; and (b) any costs or expenses of the act of such consolidation, merger, conveyance, transfer or lease;
(iii) immediately prior to the consummation of such transaction, no Event of Default, and no event which would with the lapse of time or the giving of notice or both or fulfillment of other conditions constitute an Event of Default, shall have occurred and be continuing;
(iv) the consummation of such transaction must not cause an Event of Default under the Conditions of Bonds which the Issuer does not reasonably believe that can be cured within 90 days from the date of such transaction; and
(v) the Issuer has delivered to the Fiscal Agent a certificate signed by one director of the Issuer and an opinion of counsel (as defined below), each stating that such consolidation, merger, conveyance, transfer or lease comply with this (2) (A) Substitution, Merger, Consolidation, etc. by the Issuer and that all conditions precedent herein provided for relating to such transaction have been complied with. The Fiscal Agent shall keep such certificate and opinion of counsel at its head office and make them available for perusal and photocopying by any Bondholder during normal business hours (all expenses incurred for such photocopying to be borne by the applicant therefor).
Upon any consolidation of the Issuer with, or merger of the Issuer into, any other Person or any conveyance, transfer or lease of the properties and assets of the Issuer substantially as an entirety in accordance with this (2) (A) Substitution, Merger, Consolidation, etc. by the Issuer, the successor Person formed by such consolidation or into which the Issuer is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under the Conditions of Bonds with the same effect as if such successor Person had been named as the Issuer herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under the Conditions of Bonds.
For the purposes of this (2) (A) Substitution, Merger, Consolidation, etc. by the Issuer , "opinion of counsel" means a written opinion of independent legal advisers of recognized standing or internal legal counsel for the Issuer.
(B) Substitution, Merger, Consolidation, etc. by the Guarantor
The Guarantor or any of its Subsidiaries (each a "Substitute Debtor", as used herein in this (2) (B) Substitution, Merger, Consolidation, etc. by the Guarantor) may, without the consent of the Bondholders, assume the obligations of the Issuer under the Bonds, provided that:
(i) the Substitute Debtor shall expressly assume such obligations for the benefit of the Bondholders, which assumption shall provide that the Substitute Debtor shall pay to the Bondholders such Additional Amount as may be necessary in order that every net payment of the principal of and interest on the Bonds will not be less than the amount provided for in the Bonds to be then due and payable; provided that, subject to the restrictions and limitations set out above in Condition 7 of the Conditions of Bonds, such obligation shall extend to any withholding or deduction for or on account of any present or future Taxes imposed or levied by or on behalf of The Netherlands, Spain or any country of other jurisdiction in which any Substitute Debtor is organized or any political subdivision thereof or any authority or agency therein or thereof having power to tax; except that the Substitute Debtor shall not be obligated to make any indemnification or payment in respect of any tax consequences to any individual Bondholder as a result of such assumption of rights and obligations and which arise as a result of the domicile or residence of such holder in, or connection of such holder with, such other jurisdiction;
(ii) (if the Substitute Debtor is not the Guarantor) the Guarantor shall guarantee (rentai hosho) the due and punctual payment of all amounts payable by the Substitute Debtor under the Bonds;
