-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N0tahdU7Q3JCjFgt/TT73zYi1VX4IX5uebt3gmIMw5Ed/QXcwtxgIf3QgOJmtMsN j12gqhOM37qWZRxuscD9ww== 0000898822-06-001112.txt : 20061019 0000898822-06-001112.hdr.sgml : 20061019 20061019153650 ACCESSION NUMBER: 0000898822-06-001112 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20061019 DATE AS OF CHANGE: 20061019 GROUP MEMBERS: ACCIONA, S.A. GROUP MEMBERS: FINANZAS, DOS, S.A. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ENDESA SA CENTRAL INDEX KEY: 0001046649 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 000000000 STATE OF INCORPORATION: U3 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-80961 FILM NUMBER: 061153400 BUSINESS ADDRESS: STREET 1: CALLE RIBERA DEL LOIRA 60 CITY: MADRID STATE: U3 ZIP: 28042 BUSINESS PHONE: 34-91-2131000 MAIL ADDRESS: STREET 1: 410 PARK AVE STREET 2: STE 410 CITY: NEW YORK STATE: NY ZIP: 10022 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Acciona, S.A. CENTRAL INDEX KEY: 0001377408 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: BUSINESS PHONE: 011 34 91 663 3093 MAIL ADDRESS: STREET 1: AVENIDA DE EUROPA, 18 STREET 2: PARQUE EMPRESARIAL LA MORALEJA CITY: ALCOBENDAS, MADRID STATE: U3 ZIP: 28108 SC 13D/A 1 accio13d.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D/A (RULE 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. 1)* Endesa, S.A. - ------------------------------------------------------------------------------- (NAME OF ISSUER) American Depositary Shares, each representing the right to receive one ordinary share, nominal value EUR 1.20 each Ordinary Shares, nominal value EUR 1.20 each (TITLE OF CLASS OF SECURITIES) - ------------------------------------------------------------------------------- 00029274F1 - ------------------------------------------------------------------------------- (CUSIP NUMBER) Acciona, S.A. Avenida de Europa, 18 Empresarial La Moraleja, Alcobendas Madrid, Spain 28108 Attention: Jorge Vega-Pinechet +34 91 663 2850 Copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Adam O. Emmerich (212) 403-1000 - ------------------------------------------------------------------------------- (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS) October 12, 2006 - ------------------------------------------------------------------------------- (DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [_] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the "Act"), or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). This Amendment No. 1 (the "Amendment") amends and supplements the Statement on Schedule 13D filed on October 5, 2006 (the "Original Schedule 13D", and, as amended, the "Schedule 13D") by Acciona, S.A. ("Acciona") and Finanzas Dos, S.A. ("Finanzas" and together with Acciona, the "Reporting Persons"), with respect to the American Depositary Shares (the "ADSs"), each representing the right to receive one ordinary share, nominal value EUR 1.20 each (a "Share") and Shares, of Endesa, S.A. (the "Issuer"). Capitalized terms used and not defined in this Amendment have the meanings set forth in the Original Schedule 13D. Except as specifically provided herein, this Amendment does not modify any of the information previously reported in the Original Schedule 13D. ITEM 2. IDENTITY AND BACKGROUND. Item 2 is hereby amended to add the following supplemental information: On October 12, 2006, E.ON AG and E.ON Zwolfte Verwaltungs GmbH (together, "E.ON"), which in February 2006 announced their intent to launch a tender offer for the Issuer, commenced a lawsuit against the Reporting Persons by filing a complaint in the U.S. District Court of the Southern District of New York alleging that the Original Schedule 13D was materially false and misleading. E.ON's complaint is attached as Exhibit 99.1 hereto and incorporated herein by reference. A more detailed description of the complaint and the related proceedings is included in Item 4 below and incorporated in this Item 2 by reference. In a Spanish language press release issued on October 16, 2006, Acciona responded to E.ON's complaint stating, "E.ON's attempt to initiate litigation in the United States with respect to this entirely Spanish and European issue demonstrates its inability to achieve its objectives in the markets or courts of Europe and Spain." The Reporting Persons believe that plaintiffs' claims are without merit and intend to contest them vigorously. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Item 3 is hereby amended and restated as follows: On September 25, 2006, Finanzas, a wholly owned subsidiary of Acciona, purchased, through Banco Santander Central Hispano, S.A. ("Banco Santander") as broker, using the services of a number of other financial institutions, including Bear Stearns, 105,875,211 Shares, which constitute 10% of the outstanding Shares, for EUR 3.388 billion (or EUR 32.00 per Share). The EUR 3.388 billion investment was financed by Banco Santander through a bridge facility to Finanzas, which was guaranteed by Acciona. The bridge facility consists of a loan, due no later than February 28, 2007, with an interest rate of EURIBOR plus 25 basis points per annum. An English translation of this bridge facility is attached hereto as Exhibit 10.1 and incorporated herein by reference. Banco Santander has also committed to provide bridge financing on similar terms for the acquisition of up to an additional 10% of the outstanding Shares. An English translation of this bridge commitment is attached hereto as Exhibit 10.2 and incorporated herein by reference. Banco Santander has further committed to partially refinance the bridge facilities with senior term loans and senior revolving loan facilities (the "Long-Term Financing") having a final maturity of six years. The Long-Term Financing commitment requires Finanzas to be funded with EUR 656 million of capital and subordinated loans, and requires Acciona to commit (the "Coverage Ratio Commitment") to make additional subordinated loans to Finanzas of up to EUR 435 million as needed to pay down the revolving loan facility so as to maintain a 115% coverage ratio of the market value of the Shares held by Finanzas to the outstanding balance of the Long-Term Financing loans. Acciona is not required to guarantee the Long-Term Financing. The Shares held by Finanzas, Finanzas' own shares, Finanzas' bank 1 of 9 accounts and Finanzas' rights under the Coverage Ratio Commitment will be pledged to the lenders to secure Finanzas' obligations under the Long-Term Financing. The interest rate payable by Finanzas for the largest term loan tranche is initially EURIBOR plus 60 basis points per annum and increases over the term of the loan to EURIBOR plus 90 basis points per annum; the interest rate for the revolving loans is EURIBOR plus 50 basis points per annum. Banco Santander has also provided a commitment to Acciona to finance Acciona's capital contributions and subordinated loans to Finanzas (including the subordinated loans required by the Coverage Ratio Commitment) contemplated by the Long-Term Financing with a senior term loan and a senior revolving loan facility as recourse financing having a final maturity of six years (the "Acciona Financing"). Loans under the Acciona Financing would bear interest at EURIBOR plus 50 basis points per annum. The definitive documentation with respect to the Long-Term Financing and the Acciona Financing has not yet been completed. Banco Santander's commitment with respect to the Long-Term Financing and the Acciona Financing is subject to customary conditions including the completion of definitive documentation and the absence of a material adverse change with respect to Acciona and Finanzas. An English translation of the commitment letter from Banco Santander and the term sheets describing the Long-Term Financing and the Acciona Financing are attached hereto as Exhibit 10.3 and incorporated herein by reference. ITEM 4. PURPOSE OF TRANSACTION. Item 4 is hereby amended and restated as follows: Acciona, through Finanzas, acquired the Shares for investment purposes as part of its strategic interest in the energy sector. The Reporting Persons believe that their investment in the Issuer represents a unique opportunity to invest in excellent energy assets in a leading company. The Reporting Persons' investment in the Issuer fits within Acciona's ongoing strategy to become a key player in the renewable energy sector generally and, in particular, in the power sector, which Acciona believes has significant growth potential in coming years, particularly in Spain due to increasing demand and rising prices. According to a recent International Energy Agency Report, world primary energy demand is expected to grow by 60% by 2030. The global power sector will need 4,800 gigawatts of new generation capacity to be installed by 2030, which represents more than $9 trillion of investment. The Reporting Persons believe that the Spanish power sector is particularly well poised for growth, that electricity demand in Spain is expected to grow on a compound annual growth basis of more than 4% until 2010, and that prices are expected to increase between 3% and 6% on a compound annual growth basis from 2006 to 2010. The Reporting Persons view the Issuer as a global leader in the electricity sector, having one of the most efficient generation portfolios in the sector, a world diversified generation mix, positive cash flow generation in all businesses, a strong commitment to value creation and shareholder return, and an attractive business plan. On September 5, 2005, Gas Natural SDG, S.A. ("Gas Natural"), the largest supplier of natural gas in Spain, announced its intention to commence a tender offer for the Issuer. On February 21, 2006, E.ON announced its intention to launch a EUR 27.50 per share, all cash tender offer for the Issuer. On October 6, 2006, E.ON increased its proposed tender offer from EUR 25.405 per share (the original EUR 27.50 per share reduced to adjust for a EUR 2.095 dividend paid by the Issuer since E.ON's previous bid announcement) to EUR 35.00 per share. The Reporting Persons believe that the Shares are a valuable investment and that the current time is a particularly propitious one in which to be a significant shareholder of the Issuer. Additional information about the Reporting Persons' investment in the Issuer has been made publicly available by Acciona in the context of its normal and ongoing communications with its own shareholders and investors, and is available on the internet at http://www.acciona.es/secciones/0002040308/Es/Acciona_presentation.pdf. 2 of 9 The Reporting Persons continue to evaluate their options with respect to the proposed E.ON tender offer and may or may not choose to tender Shares or ADSs held by them in such offer. The Reporting Persons have had discussions with the Issuer and with E.ON regarding E.ON's proposed tender offer and the Issuer and may continue to discuss this and other matters with such persons. The Reporting Persons presently intend to become a key shareholder of the Issuer. To this end, assuming they continue to hold or acquire sufficient Shares or ADSs, and subject to compliance with regulatory, legal and other requirements, the Reporting Persons presently intend to seek to take an active role with respect to the management and operations of the Issuer, and may seek representation on the Issuer's board of directors and/or management team. Of course, there can be no assurance that the Reporting Persons will be able to achieve any of these objectives and the Reporting Persons may change their plans at any time based on their continuing evaluation of their options with respect to the Issuer and the Shares and ADSs and changing circumstances more broadly. Due to provisions of Spanish corporate law providing for proportional representation for shareholder nominees on boards of directors, and assuming that the Issuer has 13 seats on its Board of Directors (as is currently the case), a shareholder of the Issuer holding 7.692% of the outstanding Shares would be entitled to appoint a director to the Issuer's board of directors when there exists a vacancy on the board, which would be expected to occur no earlier than the Issuer's ordinary shareholders meeting within the first six months of 2007. If they continue to hold a sufficient percentage of the outstanding Shares, the Reporting Persons may choose to avail themselves of these procedures, which would entitle them to nominate and elect one director at their current holding of 10%, two directors if their holdings reach 15.384%, or three directors if their holdings reach 23.076%. Outside of the context of this right to appoint directors, however, the Issuer's organizational documents provide that no shareholder of the Issuer may vote over 10% of the Shares regardless of its level of ownership. Therefore, unless this provision in the Issuer's organizational documents is repealed or amended, the Reporting Persons will be prohibited from voting more than 10% of the outstanding Shares, on any merger or otherwise, outside of the context of appointing directors pursuant to the proportional representation rights referred to above. The Reporting Persons have no present plans or proposals regarding the elimination or amendment of this provision of the Issuer's organizational documents; they may in the future seek or support such elimination or amendment (whether to decrease or increase the current 10% limitation) depending on their view of their best interests and other factors in light of marketplace, industry and other conditions. Similarly, the Reporting Persons have no present plans or proposals regarding the provisions in the Issuer's organizational documents regulating the composition of and eligibility of persons to serve on the Issuer's board; they may in the future seek or support changes in such provisions depending on their view of their best interests and other factors in light of marketplace, industry and other conditions. The Reporting Persons expect to acquire additional Shares and/or ADSs, in open market, privately negotiated or other purchases, up to a percentage that does not require the formulation of a mandatory offer under current Spanish law (that is, up to 25%). There is currently legislation pending in Spain that would increase to 30% the level of ownership permitted without the formulation of a mandatory offer. If such legislation comes into effect, the Reporting Persons may acquire additional Shares or ADSs, in open market, privately negotiated or other purchases, up to 30%. There can be no assurance as to whether the Reporting Persons would or would not effect any acquisitions of any additional Shares or ADSs, and the Reporting Persons' attitudes toward any such acquisitions would be subject to the factors described in the following paragraph. As described under Item 3 above, Acciona, through its wholly owned subsidiary Finanzas, has binding commitments of financing for the acquisition of up to an additional 10% of the capital stock of the Issuer. Additionally, as described under Item 6 below, Finanzas has entered into a number of total-return swap agreements (the "Total Return Swaps") with Banco Santander, relating to a total of 9.63% of the outstanding Shares. Any increase in the Reporting Persons' ownership in the Issuer is subject to obtaining prior approval of the Comision Nacional de la Energia (the "CNE"), which under the laws of Spain is required to approve acquisitions of 3 of 9 over 10% of the securities of energy providers such as the Issuer. The Reporting Persons have sought such authorization, with respect to which they expect a response shortly. The Reporting Persons will evaluate the Issuer and their holdings in the Issuer on a continuing basis. Whether the Reporting Persons make any proposals related to the Issuer or the Shares or ADSs or purchase any additional Shares or ADSs or dispose of any Shares or ADSs, and the amount and timing of any such transactions, will depend upon the Reporting Persons' continuing assessment of pertinent factors, including the Issuer's and the Reporting Persons' respective businesses and prospects, other business investment opportunities available to the Reporting Persons, economic conditions, stock market conditions, the attitudes and actions of the board of directors and management of the Issuer and of other investors in and potential investors in and purchasers of the Issuer, the availability of Shares or ADSs for purchase at particular price levels, and the availability and nature of opportunities to dispose of the Reporting Persons' interest in the Issuer to realize trading profits or minimize trading losses. Depending upon their assessments of these factors from time to time, the Reporting Persons may change their present intentions and reserve the right to, among other things, (a) hold their investments in the Issuer; (b) dispose of some or all of the ADSs or Shares held by the Reporting Persons or acquire additional ADSs or Shares from third parties (by means of open market, privately negotiated or other transactions, for cash or for other consideration); (c) seek to acquire or influence control of the Issuer, the means of which may include Issuer board representation; (d) seek to enter into business relations or transactions with the Issuer; (e) engage in short selling of, swap agreements with respect to or any hedging or similar transaction with respect to the Shares or ADSs; (f) enter into contracts, arrangements, understandings or relationships with other investors in and potential purchasers of the Issuer; or (g) take any other action similar or in addition to those listed above or as further described below in this Item. Items 5 and 6 below are hereby incorporated in this Item 4 by reference. Except as otherwise disclosed in those items or in this Item 4, the Reporting Persons do not currently have any contracts, arrangements, understandings or relationships with any person with respect to the voting or holding of the Issuer's securities or that would be related to or would result in any of the matters described in Items 4(a)-(j) of Schedule 13D; however, as disclosed above, as part of the ongoing evaluation of this investment and investment alternatives, including in connection with the possible acquisition of Shares referred to herein, the Reporting Persons may consider such matters and, subject to applicable law, may formulate a plan with respect to such matters, and, from time to time, may hold discussions with or make formal proposals to management or the board of directors of the Issuer, other shareholders of the issuer, E.ON or other third parties regarding such matters. The Reporting Persons may also take any other action with respect to the Issuer or any of its debt or equity securities in any manner permitted by law. As mentioned under Item 2 above, on October 12, 2006, E.ON, which in February 2006 announced its intent to launch a tender offer for the Issuer, filed a complaint in the U.S. District Court of the Southern District of New York against the Reporting Persons alleging that the Original Schedule 13D was materially false and misleading. E.ON's complaint is attached as Exhibit 99.1 hereto and incorporated herein by reference. The complaint alleges, among other things: 1. that the Original Schedule 13D falsely states that Acciona is the beneficial owner of securities constituting 10% of the outstanding ordinary shares of the Issuer, when, in fact, as a result of its derivative arrangements with Banco Santander, Acciona is the beneficial owner of up to at least another 5% of additional Issuer shares or ADSs, for a total of at least 15% of the Issuer's equity; 2. that the Original Schedule 13D falsely states that Acciona does not have any contracts, arrangements, understandings or relationships (legal or otherwise) with any person with respect to any securities of the Issuer, when, in fact, Acciona's derivative contracts with Banco Santander relate to the Issuer's securities and constitute such contracts, arrangements, understandings or relationships, and that the Original Schedule 13D misleadingly omits any 4 of 9 mention of alleged contracts, arrangements, or understandings between Acciona and other persons (such as Gas Natural, Gas Natural's shareholders or Bear Stearns) to purchase Issuer securities in order to block E.ON's offer; 3. that the Original Schedule 13D falsely states that Acciona's purchase of Issuer stock was only for investment purposes and expressly disclaims any plans or proposals relating to an extraordinary corporate transaction involving the Issuer, when, in fact, Acciona bought Issuer stock for the express strategic purpose of blocking E.ON's acquisition; 4. that the Original Schedule 13D falsely disclaims any plans or proposals relating to changes in the present board of directors or management of the Issuer, when, in fact, Acciona intends to use its interest in the Issuer to attempt to influence the selection of the Issuer's directors and officers of its choosing and is already in discussions with the Issuer's management; and 5. that the Original Schedule 13D falsely states that Acciona's purchase of the Issuer's securities was financed by Banco Santander and that Acciona has secured financing to acquire up to 20% of the issued and outstanding Issuer's shares, when, in fact, Acciona has failed to disclose a sufficient description of the transaction, as Section 13(d) requires. Additionally, the complaint alleges, Banco Santander has provided extremely generous financing terms, the details of which would indicate to investors the extent to which Acciona's purchases are backed by third parties in Spain in an effort to keep the Issuer under Spanish ownership. The complaint seeks relief in the form of (1) a declaration that the Original Schedule 13D violates Section 13(d) of the Act; (2) an order requiring that Acciona and Finanzas, their officers, agents, servants, employees, and attorneys, and those persons in active concert or participation with them: (a) correct by public means their material misstatements and omissions, including by filing with the U.S. Securities and Exchange Commission (the "SEC") and sending to the Issuer complete and accurate disclosures required by Section 13(d) of the Act, (b) be enjoined from purchasing or making any arrangement to purchase, such as through a forward contract, any Issuer securities until such time as they have filed with the SEC and sent to the Issuer accurate disclosures required by Section 13(d) of the Act and the market has had adequate time to digest that new information, (c) rescind the purchase (or arrangement to purchase) of or sell any Issuer securities they acquired (or arranged to acquire) after the October 5, 2006 filing of the Original Schedule 13D and up until such time as they have filed with the SEC and sent to the Issuer accurate disclosures required by Section 13(d) of the Act and the market has had adequate time to digest that new information, (d) are enjoined from voting any Issuer securities they currently own until such time as they have filed with the SEC and sent to the Issuer accurate disclosures required by Section 13(d) of the Act and the market has had adequate time to digest that new information, and (e) be enjoined from making any additional material misstatements or omissions in connection with Issuer securities; and (3) granting such other and further relief as the Court may deem just and proper. On October 13, 2006, plaintiffs filed a motion for a preliminary injunction as well as a motion for expedited scheduling and discovery. Also on October 13, 2006, the parties participated in an initial hearing with the court to discuss the litigation. The court did not order any substantive relief other than discovery of documents in the possession of the parties. The court scheduled a second hearing for October 20, 2006 to consider plaintiffs' motions and schedule further proceedings in connection with plaintiffs' application for a preliminary injunction. In a Spanish language press release issued on October 16, 2006, Acciona responded to E.ON's complaint stating, "E.ON's attempt to initiate litigation in the United States with respect to this entirely Spanish and European issue demonstrates its inability to achieve its objectives in the markets or courts of Europe and Spain." The Reporting Persons believe that plaintiffs' claims are without merit and intend to contest them vigorously. 5 of 9 ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. Item 5 is hereby amended and restated as follows: On September 25, 2006, Finanzas, a wholly owned subsidiary of Acciona, purchased, through Banco Santander as broker, using the services of a number of other financial institutions, including Bear Stearns, 105,875,211 Shares, which constitute 10% of the outstanding Shares, for EUR 3.388 billion (or EUR 32.00 per Share). Acciona, through its wholly owned subsidiary, Finanzas, has the sole power to vote or direct the vote and dispose or direct the disposition of the Shares. Other than pursuant to the financing arrangements described in Item 6 below, no other person has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Shares owned by the Reporting Persons. As described under Item 3 above, the Reporting Persons have secured financing that will provide sufficient capital for them to acquire Shares and/or ADSs representing up to an additional 10% of the outstanding Shares (for a total of 20%), and, as described in Item 4 above, the Reporting Persons may acquire Shares and/or ADSs representing up to 25% of the outstanding Shares. Additionally, as described under Item 6 below, Finanzas has entered into the Total Return Swaps with Banco Santander relating to a total of 9.63% of the outstanding Shares. The Total Return Swaps neither give Finanzas or Acciona the right to acquire, dispose of or vote, nor require Banco Santander to hold, any Shares or ADSs. On September 29, 2006, Banco Santander disclosed to the Comision Nacional del Mercado de Valores that it owned Shares and/or ADSs representing a total of 5.254% of the outstanding Shares. Since that time, press reports have speculated that Banco Santander has continued to increase its holdings of Shares and ADSs at rate similar to the incremental increases in the number of Shares covered by the Total Return Swaps. While neither party is committed by a legally binding agreement or otherwise with respect to such purchase or sale, following receipt of approval from the CNE, the Reporting Persons expect to have the opportunity to purchase in the market, at a cost reflecting the amounts payable by Finanzas under the Total Return Swaps, a number of Shares equivalent to the number of Shares and ADSs that Banco Santander has accumulated or will accumulate in the future as a hedge in connection with the Total Return Swaps. The Reporting Persons disclaim any beneficial ownership of the Shares and/or ADSs held by Banco Santander or as result of the Total Return Swaps or otherwise. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Item 6 is hereby amended and restated as follows: In addition to the financing arrangements described under Item 3 above (such description being hereby incorporated in this Item 6 by reference), Finanzas and Banco Santander have entered into a number of Total Return Swaps relating to a total of 101,983,965 Shares or 9.63% of the outstanding Shares. Each Total Return Swap is evidenced by a confirmation under a Master Agreement dated as of September 25, 2006. These agreements are attached hereto as Exhibit 10.4 and are incorporated herein by reference. The trade date of the first Total Return Swap is September 25, 2006, the effective date of such Total Return Swap is September 26, 2006 and it (a) entitles Finanzas to receive from Banco Santander on the "Closing Date" referred to below the market value as of December 29, 2006 (the "Valuation Date") of 39,089,488 of the outstanding Shares and (b) obligates Finanzas to pay to Banco Santander on the Closing Date EUR 1,250,863,616.00, which is the number of such shares multiplied by EUR 32.00 per share. The trade and effective date of the second Total Return Swap is September 27, 2006 and it (a) entitles Finanzas to receive from Banco Santander on the Closing Date the market value as of the Valuation Date of 13,953,993 of the outstanding Shares and (b) obligates Finanzas to pay to Banco Santander on the Closing Date EUR 485,459,416.47, which is the number of such shares multiplied by EUR 34.79 per share. The trade and effective date of the third Total Return Swap is October 3, 2006 and it (a) entitles Finanzas to receive from Banco Santander on the Closing Date the market value as of the 6 of 9 Valuation Date of 1,363,592 of the outstanding Shares and (b) obligates Finanzas to pay to Banco Santander on the Closing Date EUR 45,803,055.28, which is the number of such shares multiplied by EUR 33.59 per share. The trade and effective date of the fourth Total Return Swap is October 4, 2006 and it (a) entitles Finanzas to receive from Banco Santander on the Closing Date the market value as of the Valuation Date of 5,536,028 of the outstanding Shares and (b) obligates Finanzas to pay to Banco Santander on the Closing Date EUR 187,948,150.60, which is the number of such shares multiplied by EUR 33.95 per share. The trade and effective date of the fifth Total Return Swap is October 5, 2006 and it (a) entitles Finanzas to receive from Banco Santander on the Closing Date the market value as of the Valuation Date of 8,466,349 of the outstanding Shares and (b) obligates Finanzas to pay to Banco Santander on the Closing Date EUR 287,432,548.55, which is the number of such shares multiplied by EUR 33.95 per share. The trade and effective date ofthe sixth Total Return Swap is October 6, 2006 and it (a) entitles Finanzas to receive from Banco Santander on the Closing Date the market value as of the Valuation Date of 1,600,000 of the outstanding Shares and (b) obligates Finanzas to pay to Banco Santander on the Closing Date EUR 54,240,000.00, which is the number of such shares multiplied by EUR 33.90 per share. The trade and effective date of the seventh Total Return Swap is October 9, 2006 and it (a) entitles Finanzas to receive from Banco Santander on the Closing Date the market value as of the Valuation Date of 3,671,735 of the outstanding Shares and (b) obligates Finanzas to pay to Banco Santander on the Closing Date EUR 124,655,403.25, which is the number of such shares multiplied by EUR 33.95 per share. The trade and effective date of the eighth Total Return Swap is October 10, 2006 and it (a) entitles Finanzas to receive from Banco Santander on the Closing Date the market value as of the Valuation Date of 3,430,824 of the outstanding Shares and (b) obligates Finanzas to pay to Banco Santander on the Closing Date EUR 116,442,166.56, which is the number of such shares multiplied by EUR 33.94 per share. The trade and effective date of the ninth Total Return Swap is October 11, 2006 and it (a) entitles Finanzas to receive from Banco Santander on the Closing Date the market value as of the Valuation Date of 2,650,000 of the outstanding Shares and (b) obligates Finanzas to pay to Banco Santander on the Closing Date EUR 89,914,500.00, which is the number of such shares multiplied by EUR 33.93 per share. The trade and effective date of the tenth Total Return Swap is October 12, 2006 and it (a) entitles Finanzas to receive from Banco Santander on the Closing Date the market value as of the Valuation Date of 1,830,435 of the outstanding Shares and (b) obligates Finanzas to pay to Banco Santander on the Closing Date EUR 62,198,181.30, which is the number of such shares multiplied by EUR 33.98 per share. The trade and effective date of the eleventh Total Return Swap is October 13, 2006 and it (a) entitles Finanzas to receive from Banco Santander on the Closing Date the market value as of the Valuation Date of 8,712,000 of the outstanding Shares and (b) obligates Finanzas to pay to Banco Santander on the Closing Date EUR 297,776,160.00, which is the number of such shares multiplied by EUR 34.18 per share. The trade and effective date of the twelfth Total Return Swap is October 16, 2006 and it (a) entitles Finanzas to receive from Banco Santander on the Closing Date the market value as of the Valuation Date of 1,064,786 of the outstanding Shares and (b) obligates Finanzas to pay to Banco Santander on the Closing Date EUR 36,202,724.00, which is the number of such shares multiplied by EUR 34.00 per share. The trade and effective date of the thirteenth Total Return Swap is October 17, 2006 and it (a) entitles Finanzas to receive from Banco Santander on the Closing Date the market value as of the Valuation Date of 2,114,735 of the outstanding Shares and (b) obligates Finanzas to pay to Banco Santander on the Closing Date EUR 71,900,990.00, which is the number of such shares multiplied by EUR 34.00 per share. The trade and effective date of the fourteenth Total Return Swap is October 19, 2006 and it (a) entitles Finanzas to receive from Banco Santander on the Closing Date the market value as of the Valuation Date of 7,500,000 of the outstanding Shares and (b) obligates Finanzas to pay to Banco Santander on the Closing Date EUR 258,750,000.00, which is the number of such shares multiplied by EUR 34.50 per share. Until the Closing Date, Finanzas will make monthly payments to Banco Santander equivalent to interest earned at one-month EURIBOR plus 25 basis points on the amounts payable by it on the Closing Date as described above, and Finanzas will receive from Banco Santander any dividends actually paid by the Issuer on the shares covered by the Total Return Swaps. The Closing Date for the Total Return Swaps is the third business day after the Valuation Date, at which point the agreements provide that they will be settled in cash. Acciona has guaranteed the performance of Finanzas' 7 of 9 obligations under the Total Return Swaps. The Total Return Swaps neither give Finanzas or Acciona the right to acquire, dispose of or vote, nor require Banco Santander to hold, any Shares or ADSs. Other than as described in this Item 6 and Items 3, 4 and 5 above, neither Acciona nor Finanzas has any contracts, arrangements, understandings or relationships with any person with respect to any securities of the Issuer, including but not limited to transfer or voting of any of the securities, finder's fees, joint ventures, loan or option agreements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS 10.1 English Translation of Bridge Credit Contract, dated September 26, 2006, between, Finanzas Dos, S.A. as guaranteed party, Acciona, S.A as guarantor, Banco Santander Central Hispano, S.A. as financing entity. 10.2 English Translation of Bridge Credit Commitment, dated September 26, 2006, from Banco Santander Central Hispano, S.A. to Acciona, S.A. 10.3 English Translation of Commitment Letter, dated September 26, 2006, from Banco Santander Central Hispano, S.A. to Acciona, S.A. and Finanzas Dos, S.A and related Term Sheets. 10.4 International Swaps and Derivatives Association, Inc. Master Agreement, dated as of September 25, 2006, between Banco Santander Central Hispano, S.A. and Finanzas Dos, S.A. (with confirmations dated September 25, 2006, September 27, 2006, October 3, 2006, October 4, 2006, October 5, 2006, October 6, 2006, October 9, 2006, October 10, 2006 and October 11, 2006).* 99.1 Complaint filed on October 12, 2006 by E.ON AG and E.ON Zwolfte Verwaltungs GmbH against Acciona, S.A. and Finanzas Dos, S.A. (Civil Action No. 06 CV 8720). - ----------------------- * Additional confirmations with respect to the Total Return Swaps entered into on October 12, 13, 16, 17 and 19, 2006 will be filed by amendment when available. They each will be in the form of the attached confirmations, and will contain the terms set out in Item 6 above. 8 of 9 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: October 19, 2006 ACCIONA, S.A. By: /s/ Jorge Vega-Penichet ------------------------ Name: Jorge Vega-Penichet Title: Company Secretary FINANZAS DOS, S.A. By: /s/ Vicente Santamaria de Paredes Castillo ------------------------ Name: Vicente Santamaria de Paredes Castillo Title: Company Secretary 9 of 9 EX-10 2 exhib101.txt EXHIBIT 10.1 EXHIBIT 10.1 [Transperfect Translations Logo] City of New York, State of New York, County of New York I, Jessica Majestic, hereby certify that the following is, to the best of my knowledge and belief, a true and accurate translation of the attached document "Contracto De Credito Puente", from Spanish to English. /s/ Jessica Majestic - ------------------------- Jessica Majestic Sworn to before me this 18th day of October, 2006 /s/ Heather Bosley - ------------------------- Signature, Notary Public [NOTARY PUBLIC STAMP] /s/ Heather Bosley - ------------------------- Stamp, Notary Public THREE PARK AVENUE, 39TH FLOOR, NEW YORK, NY 10016 T 212.689.5555 F 212.689.1059 WWW.TRANSPERFECT.COM City of New York, State of New York, County of New York EXHIBIT 10.1 BRIDGE CREDIT CONTRACT BETWEEN FINANZAS DOS, S.A. as Guaranteed Party ACCIONA, S.A. as Guarantor and BANCO SANTANDER CENTRAL HISPANO, S.A. as Financing Entity In Madrid, September 26, 2006 TABLE OF CONTENTS APPEARING .............................................................. 5 DECLARATION ............................................................ 5 CLAUSES ................................................................ 5 1. AMOUNT AND PURPOSE OF THE BRIDGE CREDIT ......................... 5 1.1. AMOUNT AND ACCEPTANCE ................................... 5 1.2. PURPOSE ................................................. 6 2. DISPOSITION OF THE BRIDGE CREDIT ................................ 6 2.1. CONDITIONS OF DISBURSEMENT............................... 6 2.2. DISBURSEMENT OF THE BRIDGE CREDIT ....................... 6 2.3. DELIVERY OF FUNDS MADE AVAILABLE ........................ 7 2.3.1. AVAILABILITIES DESIGNED FOR THE PURPOSES ESTABLISHED IN PARAGRAPHS (I) AND (II) OF CLAUSE 1.2:............. 7 2.3.2. AVAILABILITIES DESIGNED FOR THE PURPOSES ESTABLISHED IN PARAGRAPH (III) OF CLAUSE 1.2:..................... 7 2.3.3. BREAK-UP OF MARKET.................................... 7 3. SPECIAL BRIDGE CREDIT ACCOUNT ................................... 8 4. INTEREST ........................................................ 8 4.1. ACCRUAL AND PAYMENT OF INTEREST ......................... 8 4.2. PERIODS OF INTEREST ..................................... 8 4.3. ELECTION OF THE DURATION OF INTEREST PERIODS............. 9 4.4. RATE OF INTEREST ........................................ 9 A) REFERENCE INTEREST RATE AND MARGIN ............. 9 B) MARGIN ......................................... 10 C) REGULAR REFERENCE INTEREST RATE ................ 10 D) PREFERRED SUBSTITUTE REFERENCE INTEREST RATE ... 11 E) SUBSIDIARY SUBSTITUTE REFERENCE INTEREST RATE .. 12 4.5. CALCULATION AND COMMUNICATION OF RATE OF INTEREST ....... 12 4.6. EQUIVALENT ANNUAL RATE .................................. 12 4.7. CALCULATION ............................................. 12 5. OPENING COMMISSION .............................................. 13 6. AMORTIZATION .................................................... 13 6.1. REGULAR AMORTIZATION .................................... 13 6.2. VOLUNTARY ACCELERATED AMORTIZATION ...................... 13 6.3. ACCELERATED AMORTIZATION BY REFINANCING ................. 13 7. PAYMENTS ........................................................ 14 8. DISBURSEMENT OF PAYMENTS ........................................ 14 9. DELAY IN COMPLIANCE WITH OBLIGATIONS ............................ 15 9.1. LATE PAYMENT INTEREST PENALTIES ......................... 15 9.2. RATE OF INTEREST PENALTIES .............................. 15 9.3. ACCRUAL, CAPITALIZATION AND PAYMENT ..................... 15 9.4. OTHER LATE AND NON-COMPLIANCE RIGHTS RESERVED ........... 15 2 [INITIALS] 10. COMPENSATION .................................................... 15 11. TAXES AND EXPENSES .............................................. 16 11.1. INDIRECT TAXES .......................................... 16 11.2. TAX ON CORPORATIONS OF THE FINANCING AGENCY ............. 16 11.3. NET PAYMENT OF TAXES AND EFFECT ON THE GROSS ............ 16 11.4. OTHER COSTS AND EXPENSES ................................ 16 12. ADDITIONAL COST AND ILLEGALITY SUPERVENED ....................... 17 12.1. ADDITIONAL COST.......................................... 17 12.2. ILLEGALITY SUPERVENED ................................... 17 13. DECLARATIONS OF THE GUARANTEED PARTY AND GUARANTOR .............. 18 13.1 DEMONSTRATIONS ........................................... 18 13.2 VALIDITY OF DEMONSTRATIONS ............................... 19 14. OBLIGATIONS OF THE GUARANTEED PARTY AND OF ADDITIONAL SHAREHOLDERS OF PAYMENT OBLIGATIONS .............................. 19 14.1 OBLIGATIONS OF INFORMATION ............................... 19 14.2 OBLIGATIONS OF THE GUARANTEED PARTY TO DO OR NOT DO ...... 19 14.3 OBLIGATIONS OF THE SHAREHOLDER ........................... 21 15. EARLY PAY OFF .................................................... 21 15.1. EARLY PAY OFF SUPPOSITIONS ............................... 21 15.2. EFFECTS OF TOTAL EARLY PAY OFF ........................... 22 16. PERSONAL GUARANTEE ............................................... 22 17. LIQUIDATION OF THE SUM OWED AND JUDICIAL EXECUTION ............... 23 1.7. LIQUIDATION AND EXECUTION AGAINST THE GUARANTEED PARTY ... 23 1.8. LIQUIDATION AND EXECUTION AGAINST THE GUARANTOR .......... 24 18. COMPENSATION ..................................................... 24 19. COMPUTATION OF DEADLINES ......................................... 24 20. NOTIFICATIONS .................................................... 25 21. CESSIONS ......................................................... 26 21.1 CESSION BY FINANCIAL ENTITIES ............................ 26 21.2 CESSION BY THE GUARANTEED PARTY AND THE SHAREHOLDER ...... 26 22. CONFIDENTIALITY .................................................. 26 23. JURISDICTION ..................................................... 27 24. APPLICABLE LEGISLATION ........................................... 27 ANNEX 1 .......................................[ERROR! MARKER NOT DEFINED] 29 ANNEX 2 ................................................................. 29 ANNEX 3 ................................................................. 30 3 [INITIALS] PETITION FOR DISBURSEMENT ............................................... 29 ANNEX 3 ................................................................. 30 NOTIFICATIONS ........................................................... 30 4 [INITIALS] In Madrid on September 26, 2006 APPEARING PARTIES OF THE FIRST PART: (i) FINANZAS DOS, S.A. (hereinafter the "GUARANTEED PARTY"), a corporation of Spanish nationality, domiciled at Calle Juan de Mena, No. 8, C.I.F. A-80062755, represented in this act by Mr. Jorge Vega-Penichet Lopez, of legal age and D.N.I. No. 02195235T, and by Mr. Valentin Montoya Moya, of legal age and D.N.I. No. 50539787R, in their function as legal representatives with sufficient powers to enter into this Contract as accredited by means of a protocol document of corporate agreements notarized by Madrid Notary Mr. Manuel Rodriguez Marin on September 20, 2006, under No. 2,932 of his protocol. (ii) ACCIONA DOS, S.A. (hereinafter the "SHAREHOLDER"), a corporation of Spanish nationality, domiciled at Avenida de Europa 18 and C.I.F. A-08001851, represented in this act by Mr. Valentin Montoya Moya, of legal age and D.N.I. No. 50539787R, and by Mr. Juan Gallardo Cruces, of legal age and D.N.I. No. 691950H, in their function as legal representative with sufficient powers to enter into this Contract as accredited by means of a protocol document of corporate agreements notarized by Madrid Notary Mr. Manuel Rodriguez Marin on October 26. 1998, under No. 2,911 of his protocol. (iii) BANCO SANTANDER CENTRAL HISPANO, S.A. (hereinafter the "FINANCING ENTITY"), a corporation of Spanish nationality, domiciled at Paseo Pereda, 9-12, 39004 Santander, Cantabria, C.I.F. A-39000013, represented in this act by Ignacio Dominguez-Adame Bozzano, of legal age and D.N.I. No. 1,391,826M, and by Jose Antonio Aguirre Fernandez, of legal age and D.N.I. No. 7,490,875-M, with sufficient powers to enter into this Contract. DECLARE: I. That the Guaranteed Party wishes to acquire on the market a maximum of 105,875,211 shares of the corporation ENDESA, S.A. (the "CORPORATION AFFECTED"), which constitutes 10 % of its corporate capital (the "ACQUISITION"). II. That, in order to finance the Acquisition until the time that the long-term financing materializes, the Guaranteed Party has requested of the Financing Entity a bridge credit in an amount up to (euro) 3,475,000,000. III. That the Shareholder has made a commitment in solidarity to consolidate the obligations of the Guaranteed Party in virtue of the bridge credit referred to in the exposition above. CLAUSES 1. AMOUNT AND PURPOSE OF THE BRIDGE CREDIT 1.1. AMOUNT Subject to the terms and conditions set forth in this Contract, the Financing Entity grants to the Guaranteed Party, which accepts, a credit, commercial in nature (the "BRIDGE CREDIT") for a maximum amount of (euro) 3,475,00,000 (THREE BILLION FOUR HUNDRED SEVENTY-FIVE MILLION EUROS) (the "AMOUNT OF THE CREDIT"): 5 [INITIAL] The Guaranteed Party commits itself to employ the Bridge Credit in accordance with the terms and conditions established in the present Contract, to repay the principal provided and to pay the interest; furthermore, it is committed to satisfy the commissions, costs, taxes and expenses assumed in the Bridge Credit and to comply with its other obligations in accordance with the provisions of the present Contract. 1.2. PURPOSE The Bridge Credit shall be devoted exclusively to finance (i) the purchase price of the shares of the Corporation Affected that are acquired by the Guaranteed Party in the framework of the Acquisition; (ii) expenses associated with the Acquisition; and (iii) interest, commissions and other expenses generated by this Contract. 2. DISBURSEMENT OF THE BRIDGE CREDIT 2.1. DISBURSEMENT CONDITIONS The Guaranteed Party may obtain of the Bridge Credit in one or more parcels (each one of them a "DISBURSEMENT") so long as the following conditions are met with respect to each of them, not only on the date of the request for the corresponding disbursement but also on the date projected for the pay out of that disbursement: (a) The formal declarations made by the Guaranteed Party and the Shareholder in Clause 13 continue to be certain, correct and truthful in their entirety. (b) There are no causes for the early resolution of this Contract in conformity with Clause 15 and neither are any such causes going to arise as a consequence of the Disbursement. In addition, in the case of Disbursements for purposes established in paragraphs (i) and (ii) of Clause 1.2, they must also comply with the following conditions: (a) The Financing Entity must have received from the Guaranteed Party either a purchase order for the shares of the Corporation Affected (in its function as credit entity member of the Madrid Stock Market), or the confirmation of a stock purchase order to purchase shares of the Corporation Affected executed by some other intermediary (a "PURCHASE ORDER"). (b) The disbursement is devoted to pay for shares of the Corporation Affected and to pay the expenses of intermediation. 2.2. DISBURSEMENT OF BRIDGE CREDIT The Bridge Credit must be disbursed by the Business Day prior to the Date of Final Maturity. Each request for a Disbursement must be linked to one of the purposes established in Clause 1.2. Disbursements devoted to the purposes established in paragraphs (i) and (ii) of Clause 1.2 may take place only with a prior request to such effect by the Guaranteed Party. Disbursements devoted to the purposes established in paragraph (iii) of Clause 1.2 shall be realized automatically in conformity with the provisions of Clause 2.3.2. If a Disbursement should be devoted to the purposes established in paragraphs (i) and (ii) of Clause 1.2 the date of delivery of the funds requested shall be the date communicated in the corresponding request for Disbursement, which must necessarily coincide with the date on which the price of the shares to which the Disbursement applies, as well as the corresponding expenses associated with the stock purchase, must be paid. For those Disbursements the purpose of which is established in paragraph (iii) of Clause 1.2, the date of delivery of the funds shall be the date on which the corresponding interest, commissions and expenses are owed by the Guaranteed Party (in all cases, the date of the delivery of the funds shall be considered as the "DATE OF DISBURSEMENT") with respect to each Disbursement. 6 [INITIALS] The request for Disbursement, which must be received by the Financing Entity by at least the second Business Day prior to the Date of Disbursement, shall be in conformity with the model attached hereto as ANNEX I; it shall be irrevocable, as the Guaranteed Party is obliged to avail itself of the amount solicited on the date and in the quantities indicated, and it must be signed by a person or persons with sufficient powers to represent the Guaranteed Party. In no case may the amount of a Disbursement, when added to the amounts of Disbursements that may have been made earlier, amount to more than the Amount of the Credit. 2.3. DELIVERY OF THE FUNDS OF THE DISBURSEMENT 2.3.1. DISBURSEMENTS DESTINED TO THE PURPOSES ESTABLISHED IN PARAGRAPHS (I) AND (II) OF CLAUSE 1.2: The funds disbursed to the Guaranteed Party with respect to the Disbursements destined to the purposes established in paragraphs (i) and (ii) of Clause 1.2 must be disbursed on the corresponding Date of Disbursement, which will be the date of the payment for the purchase of the stock the financing of which was the reason that the Disbursement was requested (along with the satisfaction of expenses associated with the stock purchase, as the case may require). The funds disbursed shall be applied by the Financing Entity directly to the payment of the price of acquisition of the shares of the Corporation Affected and to the other expenses associated with the acquisition; that payment shall be realized, when appropriate, through the compensation and liquidation systems or, as the case may be, outside those systems if the holder of the shares of the Corporation Affected has accepted the transfer in that manner. The Financing Entity may refuse to deliver the funds the object of the Disbursement that do not have the destination provided for in this Clause or if there has not been full compliance with the provisions of Clause 2.1. 2.3.2. DISBURSEMENTS DESTINED TO THE PURPOSES ESTABLISHED IN PARAGRAPH (III) OF CLAUSE 1.2: Disbursements destined to the purposes established in paragraph (iii) of Clause 1.2 shall be realized through a debit of the amounts owed by the Guaranteed Party for the concept of interest, commissions and expenses derived from the present Contract applied against the Bridge Credit. That Disbursement being expressly authorized by the Guaranteed Party to that effect, once the Financing Entity has carried out the Disbursement, it shall be binding upon the Guaranteed Party, the Guaranteed Party being obliged to repay the amounts disbursed on its behalf on the date, in the amount and under the other conditions indicated in this Contract. The aforesaid debit shall be realized on the same date on which the interest, commissions and/or expenses in question are owed by the Guaranteed Party under the present Contract. 7 [INITIALS] The Guaranteed Party recognizes and accepts that the payments carried out in conformity with the stipulations of this Clause shall produce all the legal effects of delivery of funds and will imply the most efficacious letter of payment and recognition of the delivery of the funds charged to the Disbursement on behalf of the Guaranteed Party. 3. SPECIAL BRIDGE CREDIT ACCOUNT The Financing Entity shall open a special account in which it will record each one of the Disbursements, the accruals and the payments that are effected with respect to the Bridge Credit. The following items shall be posted to this account, as appropriate: DEBITS: - The amounts disbursed for the Guaranteed Party by way of Bridge Credit principal; and - The interest, commissions and any other debits accrued and charged to the Bridge Credit; being authorized to post annotations that correspond to amounts that accrue each day pending maturity or to group the debits in periods of time of any length; CREDITS: - The payments received by the Financing Entity for the liquidation or amortization of obligations arising from the Bridge Credit; The balance of the therefore account establishes the liquid amount the Guaranteed Party owes to the Financing Entity at all times as a consequence of the Bridge Credit. 4. INTEREST 4.1. ACCRUAL AND PAYMENT OF INTEREST The amount of the Bridge Credit disbursed and pending repayment shall be subject to daily interest based on a year consisting of three hundred sixty (360) days, which will be calculated in conformity with the provisions of Clause 4.7. The rate of interest shall be fixed separately for each Interest Period, applying the corresponding rate to the principal of the Bridge Credit during the period in question. Interest accrued during each one of the Interest Periods shall become due and payable on the last day of the corresponding Interest Period, without the necessity of any prior billing, in the manner established in Clause 7 of this Contract." 4.2. INTEREST PERIODS The time included between each Disbursement Date and its Final Due Date shall be divided into successive periods of time with the name "INTEREST PERIODS. The duration of the Interest Periods that correspond to each Disbursement shall be in conformity with the following rules: (a) Interest Periods shall have a duration of one (1) or three (3) months, at the option of the Guaranteed Party. (b) The first Interest Period of each Disbursement shall begin on the corresponding Disbursement Date. Each one of the following Interest Periods of the aforementioned Disbursement shall begin on the last day of the immediately prior Interest Period of that Disbursement. A new Interest Period shall begin at the end of each Interest Period. For the purposes of accrual, calculation and liquidation of interest during the different Interest Periods, the first day of the period shall be understood and included and the last day as excluded. 8 [INITIALS] (c) The dates fixed in this Contract for the realization of any payment that should come to fall on a non-business day shall be understood as transferred to the first immediately following Business Day, unless that Business Day should fall within the following month on the calendar; in that case it shall be understood to be transferred to the Business Day immediately prior to the due date. If that should bring about a greater or lesser duration of an Interest Period during a time period that should conclude on the payment date, the extension or reduction of the period of time thus caused is to be deducted, or added, from or to, respectively, the period immediately following that is continuous with the period coming due. The exact computation of each Interest Period shall be carried out in conformity with the rules, practices and conventions in effect at the time on the Euro Monetary Market. The following Interest Period shall end on the same date as the date that would have corresponded to it had there been no adjustment of the immediately prior Interest Period in accordance with the rules mentioned here. (d) The duration of the Interest Periods shall necessarily be adjusted in regard to having their conclusion coincide with their Final Due Date. (e) Until the end of the Disbursement Period the duration of the Interest Period of the second and successive Disbursements shall be for a period of time equal to the time measured between the date of the Disbursement in question and the due date of the Interest Period in effect at that time. Consequently, on that due date the totality of the Disbursements in effect at that time shall be consolidated into one single Disbursement. As a consequence of the provisions of paragraphs (d) and (e) above, the duration of an Interest Period may differ from those provided for in paragraph (a) and have a duration of weeks or days, less than one (1) month. 4.3 ELECTION OF THE DURATION OF INTEREST PERIODS The Guaranteed Party shall communicate to the Financing Entity the duration it chooses for a new Interest Period before 10:30 a.m. on the fifth Business Day prior to the beginning of each Interest Period that begins, within the options indicated in paragraph 4.2, sub-paragraph (a) and with the other limitations established above. If it does not choose, it shall be understood to be opting for the duration of the Interest Period to be three (3) months (or, as the case may be, for that other, lesser period that complies with the provisions of paragraph 4.2, sub-paragraph (d) above). 4.4 RATE OF INTEREST A) REFERENCE INTEREST RATE AND MARGIN: The rate of interest shall be equal to the sum of (a) the "REFERENCE INTEREST RATE" plus (b) the "MARGIN." The Reference Rate of Interest applicable (the "REGULAR REFERENCE INTEREST RATE") shall be EURIBOR, calculated in conformity with the provisions of paragraph D) of this Clause. Lacking the Regular Interest Rate, the Reference Interest Rate shall be the result of the rates quotations calculated by Reference Entities in conformity with the provisions in paragraph E) of this Clause ("PREFERRED SUBSTITUTE REFERENCE INTEREST RATE"); and lacking that, the Reference Interest Rate shall be that agreed to by the Parties in conformity with the provisions in paragraph F) of this Clause ("SUBSIDIARY SUBSTITUTE REFERENCE INTEREST RATE"). Substitute Reference Interest Rates, whether Preferred or Subsidiary, shall be applied throughout the duration of the Interest Period to which that rate may be applied, the duration to be determined by the rate in question. The application of the Substitute Reference Interest Rate shall cease at the moment on which an Interest Period begins during which there is an absence of the exceptional circumstances that had given rise to their application; the applicable Regular Reference Interest Rate is therefore reinstated as of that moment. 9 [INITIALS] The rate of interest that results from the addition of the Margin to the Reference Interest Rate shall be increased by: - the amount of any tax or surcharge imposed by a state or non-state, present or future, that affects the obtaining of funds on the Euro Monetary Market; and - as the case may be, the following duly justified costs of obtaining of funds on the Euro Monetary Market in the form of (i) intermediation brokerage commission; and (ii) fund transfer costs. B) MARGIN: "MARGIN" is understood to be 25 (TWENTY-FIVE) base points that shall be added to the Reference Interest Rate. C) REGULAR REFERENCE INTEREST RATE "EURIBOR" (EURO INTERBANK OFFERED RATE) is understood as the reference rate of interest of the Euro Monetary Market that results from the application of the convention in effect at the moment in question under the auspices of the FBE (FEDERATION BANCAIRE DE L'UNION EUROPEENE) and the FINANCIAL MARKET ASSOCIATION (ACI) published at the present time on the Reuter "EURIBOR 01" screen, or whatever convention may replace that screen at the time, at approximately 11:00 a.m. on the morning of the second Business Day immediately before the day that begins each Interest Period, for deposits in Europe for a period of time equal to the Interest Period in question with deliver of funds on the second Business Day after the day the rate is fixed, in accordance with the calendar of TARGET (TRANS-EUROPEAN AUTOMATED REAL-TIME GROSS SETTLEMENT EXPRESS TRANSFER SYSTEM). In case, due to extraordinary circumstances or any other cause, the EURIBOR quotation is not available for the period of time requested by the Guaranteed Party or the period of time that may be applicable in accordance with the provisions of this Contract, in spite of such period of time being one of those usually quoted in that market, but there is a quotation for another period of time of inferior duration, the Reference Interest Rate to be taken shall be that of those quoted in conformity with the convention and on the screen indicated (or on the source of information that may replace that panel) that corresponds to the period immediately inferior in duration to the corresponding period requested by the Guaranteed Party. The duration of the Interest Period shall necessarily be in conformity with that of the Reference Interest Rate period. For the specific case of Interest Periods that, due to the effect of the adjustments of duration required by Clause 4.2, have a duration other than those of the periods for which reference rates are usually offered in conformity with the convention and on the screen indicated in the paragraph above, the rate of interest applicable to such a period shall be calculated by means of a lineal interpolation of the two types that correspond to the period immediately inferior in duration and to the one immediately superior among the quotations usually offered; if there is no immediately inferior period, the rate of the immediately superior period shall be taken. 10 [INITIALS] D) PREFERRED SUBSTITUTE REFERENCE INTEREST RATE: In the event that it is not possible to determine the Ordinary Reference Interest Rate applicable to an Interest Period as per the terms of item C) above, then the Financing Entity will inform the Borrower of this circumstance, and the reference interest rate shall be the "PREFERRED SUBSTITUTE REFERENCE INTEREST RATE" determined in accordance with the quotations provided by the Reference Entities. The Preferred Substitute Reference Interest Rate shall be calculated as the arithmetic mean of the interest rates notified (either publicly or to the Financing Entity) by Banco Popular, Banco Sabadell and Barclays (hereinafter, the "REFERENCE ENTITIES") as the rates being offered to first-line banks in the Euro Currency Market [for] Constitution of Euro deposits over a period equal to the duration of the Interest Period in question, at approximately 11:00 a.m. on the second Working DAY immediately prior to the commencement of the Interest Period in question. In the event that any of the Reference Entities does not provide its interest rate, the Substitute Interest Rate shall be calculated on the basis of the race provided by the remaining Reference Entities. And, if only one of the Reference Entities can provide its interest rate, then that is the rate to be used. Whether due to extraordinary circumstances or some other reason, no rate quotation is supplied by any of the Reference Entities for deposits over the same period requested by the Borrower or if such rate is not acceptable as per the terms of this Contract, in spite of being one of the rates usually quoted by the Euro Currency Market, but a rate is supplied instead for another lesser period, then the Reference Interest Rate shall be deemed to be the rate quoted by at least two of the reference entities for a period as usually quoted in that respective market, with a duration immediately less than the duration requested. The duration of the Interest Period shall be strictly adjusted to the period corresponding to the Reference Interest Rate. In the particular case of Interest Periods which, due to the adjustments in duration required by clause 4.2, have a duration other than the periods over which reference rates are usually offered, the interest rate applicable to that period shall be calculated via linear interpolation between the two interest rates corresponding to the period of immediately lesser duration and immediately greater duration, respectively, than the Interest Period; the rates used in this calculation are to be taken from amongst those usually used in this sector and for which quotations are supplied by at least two of the Reference Entities; if no lesser period exists, the rate quoted for the greater period shall apply. Reliable proof of the Substitute Reference Interest Rate will be constituted by releases published by or addressed to the Financing Entity by the Reference Entities. Substitution of the Reference Entities is possible via a new appointment proposed by the Financing Entity and accepted by the Borrower, who may not oppose such designation if the new Reference Entity (i) is a member of the panel of banks that quote on the EURIBOR, as either listed or mentioned at any time on the web page www.euribor.org for Euro deposits; and (ii) is not the Financing Entity itself. In the event that any of the Reference Entities merges with, or is acquired by, any other credit institution, then the new resulting entity - or the acquirer, as the case may be - shall substitute the former entity for the purposes of this Contract. If any of the Reference Entities undergoes a split off, then all the entities resulting from that split off that continue to exist as credit institutions shall be deemed to be Reference Entities. In the event that any of the Reference Entities is dissolved or ceases to exist for any cause other than those described in the preceding paragraph, or if BANCO SANTANDER CENTRAL HISPANO, S.A. [...] in its capacity as Financing Entity 11 [INITIALS] under this Contract, then the credit institution selected to replace the missing reference entity shall be chosen in accordance with the preceding rules. E) ALTERNATE SUBSTITUTE REFERENCE INTEREST RATE: In the event that it is not possible to determine the Preferred Substitute Interest Rate for an Interest Period, the Financing Entity will notify the Borrower of this circumstance, and the Reference Interest Rate shall be as negotiated and determined in good faith by the Borrower and the Reference Entity within a period of 15 Working Days; if, following this period, the Parties have not reached agreement concerning the Alternate Substitute Reference Rate, the Bridging Loan shall be rendered without effect whatsoever and the Borrower is obligated thereafter to repay the loan together with the interest accrued at the last Reference Interest Rate, in addition to any other amount owing by the Borrower under the Contract. 4.5. CALCULATION AND NOTIFICATION OF INTEREST RATE The Financing Entity will calculate the Reference Interest Rate applicable for the corresponding Interest Period, and will notify the Borrower of this rate on the same day it is set. The Reference Interest Rate set by the Financing Entity shall be binding upon the Borrower, except in the case of error. In the case of a proven error in the calculation of the Reference Interest Rate shown to exist at any time during the Interest Period under way, such error shall be immediately corrected by the Financing Entity, with the effects of such correction to apply from the initial date of application of the erroneous rate. 4.6. EQUIVALENT ANNUAL RATE For informative purposes, as per the requirements of Banco de Espana Circular 8/1990, published in Official State Gazette [BOE] number 226 on September 20th 1990, as expressed in the wording of Circular 4/1998 of January 27th 1998, it is hereby noted that the annual equivalent rate corresponding to the nominal interest rate applicable to this Bridging Loan shall be determined in accordance with the formula set out in Annexure V of said Circular, as per the new system of mathematical symbols contained in Banco de Espana Circular 13/1993 of December 21 1993, which is herewith deemed expressly reproduced. This calculation shall exclude taxes and expenses. 4.7. CALCULATION The total amount of interest on the pending principal that shall be paid daily to the Financing Entity shall be calculated, for each Drawdown, in accordance with the following formula: Interest = P x ANIR x d ------------ 36,000 Where "P" is the amount of the pending principal for each Drawdown. "ANIR" is the applicable nominal Interest Rate for the Interest Period in question "d" is the number of days comprising the Interest Period in question 12 [INITIALS] 5. ARRANGEMENT FEE The Financing Entity shall receive an arrangement fee in the sum of (euro) 1,737,500, which must be paid by the Borrower on the same date as the first Drawdown is made. 6. REPAYMENT TERMS 6.1. ORDINARY REPAYMENT The total amount of the Bridging Loan shall be repaid by the Borrower on February 28th 2007 (the "Final Maturity Date"). On the same date, the Borrower must reimburse the total amounts owing under this Contract including, in addition to repayment of the principal, the respective interest, penalty interest, commissions, fees, taxes, expenses and any other amount owed by the Borrower under the terms of this Contract. 6.2. VOLUNTARY PREPAYMENT The Borrower may voluntarily repay the Bridging Loan in advance, either in whole or in part, without premium or penalty, provided that the following conditions are met: (a) That the Borrower notifies the Financing Entity of its decision (which shall be irrevocable), to be received in writing not less than ten (10) Working Days prior to the date on which it is proposed to make the voluntary prepayment in question. (b) That said notification specify the amount to be repaid, which is to be equal to the total active remaining balance of the Bridging Loan, or, failing this, a minimum sum of E 10,000,000 or if a larger quantity is proposed, multiples of this amount. (c) That the prepayment date coincides with a maturation date of an Interest Period. Said notification shall be binding an irrevocable for the Borrower, which shall be obligated to make effective payment of the amount due. The amounts repaid can in no case be drawn down again by the Borrower. When on the maturation date of a Interest Period, repayments are made of Drawdowns whose Interest Periods mature on a different date, then pursuant to the terms of clause 10 (a), the Borrower must pay to the Financing Entity any breaching costs that the prepayment of the said Drawdowns may generate. 6.3. PREPAYMENT BY REFINANCING Any new financing that substitutes the present financing in its entirety shall cause advance termination and repayment of the loan, together with payment of the interest accrued, without premium or penalty, on the same date as this occurs, provided that the Financing Entity participates in said refinancing, together with other lending entities. The date of any prepayment made under the terms of this clause must coincide with a due date of the Interest Period. The amounts repaid can in no case be drawn down again by the Borrower. 13 [INITIALS] When, on an Interest Period due date, repayments are made of Drawdowns whose Interest Periods mature on a different date, then under the terms of clause 10 (a) the Borrower must pay the Financing Entity any breaching costs that the prepayment of the said Drawdowns may generate. 7. PAYMENTS On each date when the Borrower must pay any sum owing under the terms of this Contract, it shall do so before 10 a.m. that day without need for prior request, with [the] value [calculated on] that same day according to Banco de Espana valuation rules. For the purpose of effecting any payment owing under this Contract, the Borrower must possess sufficient funds in the current account opened to this effect with the Financing Entity, which is irrevocably authorized to debit this account for any amount owing. Payments thus made by the Borrower to the Financing Entity shall constitute the most effective form of payment receipt in favor of the Lender. The amounts owing under this Contract shall be paid by the Borrower in Euros. 8. APPORTIONMENT OF PAYMENTS All payments made by the Borrower to the Financing Entity under the terms of the present Contract, shall be apportioned over the following categories and in the same of order as shown below: (a) Default Interest. (b) Ordinary Interest Accrued and Due. (c) Expenses Described under Clause 11. (d) Commissions. (e) Taxes. (f) Additional Costs Described under Clause 12. (g) Legal Costs. (h) Capital. Within each of the preceding categories, apportionment of payments shall commence with the oldest debts; however in no case shall payment made for particular debts signify the waiving of others, even if these are older, or whether they arise under the same or another category. In particular, and even if the right to the agreed interest is not expressly reserved, the receipt by the Financing Entity of any payment on the principal of the Bridging Loan shall not extinguish the payment obligation of the interest owing by the Lender, which shall continue to remain payable. 14 [INITIALS] 9. BREACH ON MEETING OBLIGATIONS 9.1. PENALTY INTEREST Any sum of money not paid upon its due date shall automatically accrue default interest, or penalty interest, in accordance with the terms of article 316 of the Commercial Code, at the rate as specified below. No prior payment demand by the Financing Entity shall be necessary for such breach to be declared. 9.2. PENALTY INTEREST RATE The penalty interest rate applying to any due and unpaid amount shall be calculated by adding one (1) percentage point to the interest applicable at each moment to the sums owing, from the date on which breach has occurred until full payment is made. In the event that the breach of payment concerns any category other than the principal of the Bridging Loan, and if at that moment there are different interest rates applying to the amounts drawn down on the Bridging Loan, the default interest applying to these sums shall be calculated by adding one (1) percentage point to the average interest value of all those in force for the different drawdowns. 9.3. ACCRUAL, COMPOUNDING AND PAYMENT Default interest shall accrue daily on sums whose payment is overdue, on the basis of a 360-day year and according to the number of days effectively transpired; said interest shall be computed and paid monthly in arrears from the moment default occurs until the date on which it is ceases. Default interest that is due and unpaid shall be compounded monthly (including the date that default ceases and the date on which payment on account is made), as per the terms of article 317 of the Commercial Code. 9.4. OTHER RIGHTS ARISING FROM DEFAULT OR BREACH The terms of this clause may not be interpreted as any waiving or weakening of the rights corresponding to the Financing Entity as a result of non-payment, as established under other clauses of this Contract. 10. INDEMNITY The Borrower undertakes to indemnify the Financing Entity: (a) Against any damages or losses it may suffer arising from the occurrence of any Event of Accelerated Maturity and, if applicable, a statement of accelerated maturity and the receipt of any sum on a date other than the date it ought to have been received if the Contract had been fulfilled by the Borrower without incident. To this effect, and without prejudice to the possible consequences arising from breach of this Contract, the Borrower shall pay the Financing Entity such damages it may incur as a result of repayments or payments made on a day different to the normal maturation date of the obligation, or a day that is not the final day of an Interest Period; such damages shall in all cases include Breach or Funding Costs, subject to their due verification. Breach or Funding Costs shall be understood to mean (i) the loss incurred by Financing Entity expressed as the differential between the investment of the prepaid amounts on the Euro Currency Market, and the cost of those funds which would have been used 15 [INITIALS] in determining the interest rate for the Interest Period in which the prepayment was made; and (ii) any other losses to the Financing Entity arising as a direct result of the cancellation, renewal or alteration of the liability operations directed at financing the present operation. (b) against any cost that any of them incur as a result of obtaining the necessary funds to fulfill a request for a Drawdown which is not delivered to the Borrower for causes attributable to the borrower; and (c) against any damages or losses it may incur for acting upon or giving credit to any notification made by the Borrower. 11. TAXES AND EXPENSES 11.1. INDIRECT IMPOSTS All imposts, taxes, contributions, levies, fees and charges of any nature, present or future, which apply to the formalization, application, performance and extinction of this Contract, or to its fulfillment, are to be borne exclusively by the Borrower. 11.2. COMPANY TAX INCURRED BY FINANCING ENTITY In all cases the Company Tax incurred by the Financing Entity shall be payable by it. 11.3. PAYMENTS NET OF TAXES AND WRITTEN TO GROSS ACCOUNTS All payments made by the Borrower under this Contract by way of repayments, interest, commissions, expenses or any other kind, shall be net of any type of tax, charge or burden and must be made without any deduction whatsoever, with all such amounts to be borne by the Borrower, excepting the taxes described under clause 11.2. If the Borrower should be legally impelled to make some withholding or payment on account of any kind concerning the interest payments it must make under the present Contract, the Borrower shall increase said interest payments in the necessary amount so that, once the withholding or payment on account has been made, the Financing Entity receives an amount equal to the amount owing, as if the said withholding or payment on account had never existed. In such event the Borrower shall, as soon as possible, forward verification to the Financing Entity of the payments made to the corresponding authority. In the event that, following an additional payment by the Borrower under the terms of the present clause, the Financing Entity effectively and definitively recovers all or part of the amount that was withheld or debited on account and gave rise to the aforesaid additional payment, then the net amount recovered shall be delivered to the Borrower. The foregoing shall in no way entitle the Borrower to access the accounting books and records of the Financing Entity except in the context of a dispute before the courts. 1.1.4. OTHER COSTS AND EXPENSES Independently of the payment obligations acquired under this Contract in respect of the principal, interest, commissions and indemnities, the Borrower assumes the obligation to pay any other expenses, brokerages, imposts, levies, tariffs, duties, charges, fees and all such other present or future items that may arise or accrue as a consequence of the formalization, amendment, performance or extinction of the present Contract, specifically including: 16 [INITIALS] (a) The fees, brokerages and disbursements charged by any public notaries involved in the making of this Contract, in addition to any modifications or notifications, official demands or procedures necessary for the fulfillment thereof. (b) The Borrower shall in all cases bear the expenses of any audit or public registration of the Contract, the obtaining of transcriptions or originals audited BY the Notary for the Financing Entity. Via the present undertaking, the Borrower authorizes the Financing Entity to obtain, at the Borrower's expense, howsoever many copies and certifications of agreement with notarial records it may require, with due reference to the requirements of the Law of Civil Procedures to permit enforcement, and may request such items of its own accord, on behalf of and expressly authorized by the Borrower, to which effect the borrower accordingly confers this right and gives its express and irrevocable consent. (c) All taxes, levies, surcharges and tariffs, whether federal, provincial, local, or regional which attracted now or in future by the Contract and the constitution, modification, performance and extinction thereof. (d) Such expenses, costs and tariffs, legal or otherwise, including attorney fees and counsel retainers that arise as a direct consequence of this Contract and are incurred when, in response to a breach by the Borrower, the Financing Entity engages in defending, conserving or claiming any of its rights stemming from the present Contract. 12. ADDITIONAL COST AND UNFORESEEN ILLEGALITY 12.1. ADDITIONAL COST In the event that, owing to a legal or regulatory provision, whether federal or otherwise, the Financing Entity is subjected to obligations (such as ratios, reserves or statutory deposits, etc.) which imply a reduction or negative variation in the profitability of the operation for the Financing Entity or; involves an increase in the cost of the funds acquired on the market used by the Financing Entity for the financing of the present Contract, or; if limitations are imposed, whether on the interest rate or commissions, or limitations of some other kind, yielding a reduction in the revenues to which the Financing Entity is entitled under this contract, the Borrower shall be obliged to compensate the Financing Entity to the same extent as the cost of the aforementioned funds increases and the revenues decrease. For this to apply the Financing Entity must provide documentary verification that it has incurred the aforementioned cost increase or revenue reduction, and give a detailed and justifiable assessment of such increased costs or reduced revenues, provided that this does not contravene the law. Conversely, if OWING to analogous provisions the Financing Entity should no longer be subject to certain obligations (such as ratios, reserves or statutory deposits, etc.), causing an increase or positive variation in the profitability of the operation for the Financing Entity, or a reduction in the cost of the funds acquired on the market used by the Financing Entity for the financing of the present Contract, or; if limitations are removed, whether on the interest-rate or commissions, or limitations of some other kind, yielding an increase in the revenues to which the Financing Entity is entitled under this contract, and provided these circumstances suppose an additional benefit to the Financing Entity, then it shall be obligated to compensate the Borrower by returning to it the real proven advantage perceived by the Financing Entity. 12.2. UNFORESEEN ILLEGALITY When the fulfillment of any of the obligations arising under this Contract entails violation by the Financing Entity of any legal or regulatory provision, or legally-ordered regulatory measure, or binding interpretative opinion issued by a competent 17 [INITALS] official authority or body, then after notifying the Borrower of the circumstances causing said violation or illegality, the Financing Entity may declare all of its obligations canceled within not more than thirty (30) Working Days from the date of notification to the Borrower, or within the maximum period allowed by the legislation in respect of the corresponding innovation or alteration, should that be the lesser. The Financing Entity shall adopt all reasonable measures in order to avoid or mitigate the effects of the circumstances described in the present clause, and shall consult with the Borrow in good faith in order to find the means to achieve the aforesaid outcome, including - if so agreed by the Borrower - the transfer of its participation in the present Contract to some other credit entity or entities not affected by the circumstances in question. Should it not be possible to find a satisfactory alternative measure for the Financing Entity, the borrower shall be obliged to reimburse the Bridging Loan to the Financing Entity and, at the same time, effect payment of the corresponding interest calculated up to the date when payment effectively takes place, in addition to the expenses (including Breach or Funding Costs) and all other quantities which the Borrower is obliged to make good to the Financing Entity under this Contract. 13. REPRESENTATIONS OF THE BORROWER AND THE SHAREHOLDER 13.1. REPRESENTATIONS The Borrower and the Shareholder make the following representations in favor of the Financing Entity, said representations being deemed essential for the granting of the Bridging Loan (a) The Borrower is a corporation validly organized and registered with the Commercial Registry, being a juristic person with sufficient legal capacity and standing to enter into the present Contract and assume all obligations attaching to it under said contract. (b) The Borrower possesses all necessary permits, licenses, authorizations and other approvals for pursuing its commercial activities in the manner and to the extent currently conducted by it, and to the best of its knowledge and belief there exists no reason or cause that may result in the revocation of any of the aforesaid permits etc. The present representation does not include any permits, licenses, authorizations and approvals whose absence does not suppose any Significant Detrimental Effect. for the purposes of this Contract, "SIGNIFICANT DETRIMENTAL EFFECT" means any fact or circumstance that (i) significantly affects the financial or commercial condition of the Borrower and the capacity of the Borrower to fulfill its payment obligations in respect of the Bridging Loan, or that (ii) implies the invalidity or [in]efficacy of the Contract (c) That the subscription and performance of the Contract (i) does not violate any existing legal provision which may apply to the Borrower, the Shareholder or their business or Corporate Bylaws, nor any other contract or undertaking entered into by the Borrower or by the Shareholder (ii) does not require any authorization, approval or registration whatsoever by any person, body or entity to which the Borrower, Shareholder or their business may be subject. (d) That the person(s) who are signatories hereto on behalf of the Borrower and the Shareholder are legally authorized to obligate the entity they represent in this Contract. (e) That all the information supplied by the Borrower and the Shareholder to the Financing Entity, including financial information, is correct and is a true reflection of their situation, there being no facts or omissions adversely affecting the truthfulness and accuracy of that information. 18 [INITIALS] (f) That the Borrower has sufficient legal title to employ the assets necessary to perform its respective commercial activity in the manner it has been performing said activity until now. (g) That the Borrower has not assumed any type of financial debt other than the Bridging Loan. (h) That, to the best of their knowledge and belief, there is no fact or circumstance having any Significant Detrimental Effect on the Borrower or the Shareholder. (i) That the Borrower and the Shareholder have fulfilled all obligations of a commercial, civil (both contractual and extra-contractual), social, labor, environmental and taxation nature, whose non-fulfillment may have a Significant Detrimental Effect. (j) That neither the Borrower nor the Shareholder have taken any step towards declaring or causing a declaration of a creditor arrangement or insolvency, cessation of trading, dissolution, receivership or reorganization, nor for the appointment of a trustee, receiver, bailee or similar officer, in respect of all or part of its assets or business. (k) That the Borrower and the Shareholder are not subject to any lawsuit, proceedings or measure of an administrative, judicial or arbitration nature whose outcome might reasonably produce a Significant Detrimental Effect. (l) That there does not exist any motive whatsoever that may constitute an Event of Accelerated Maturity, or which over time or subject to some notification may constitute an Event of Accelerated Maturity. For the purposes of this Contract, "BEST KNOWLEDGE AND BELIEF" means what an organized and diligent businessman ought to know or have known after conducting prudent research. 13.2. EFFECTIVE PERIOD OF REPRESENTATIONS The representations set forth in clause 13.1 shall be deemed as reiterated by the Borrower and the Shareholder on the final day of each Interest Period and at each Drawdown with reference to the facts and circumstances existing at that date. 14. OBLIGATIONS OF THE BORROWER AND THE SHAREHOLDER IN ADDITION TO PAYMENT OBLIGATIONS 14.1. OBLIGATIONS CONCERNING INFORMATION Without prejudice to the other undertakings made in this Contract, the Borrower and the Shareholder undertake to meet the information obligations set forth in this clause. (a) Whenever so reasonably requested by the Financing Entity, and as soon as reasonably possible, to provide all information about the Borrower and the Shareholder that is reasonably relevant to verify the truthfulness of their representations and their fulfillment of the obligations contained in this Contract. (b) As soon as the Borrower or the Shareholder become aware of the existence of any Event of Accelerated Maturity, to notify the Financing Entity of same. 14.2. POSITIVE AND NEGATIVE COVENANTS OF BORROWER Without prejudice to the other undertakings assumed in this Contract, the BorrTower undertakes to fulfill the positive and negative covenants contained in this clause. 19 [INITIALS] (a) To use the money from the Bridging Loan for the purposes set forth in clause 1.2. (b) Not to commence any procedure aimed at the merger, split-off, liquidation or dissolution of the Borrower, except in the case of corporate reorganizations which exclusively involve companies within the same group as the Borrower. (c) To not permit or authorize any transformation of its corporate structure, nor any reduction in its capital stock. (d) To not carry out or permit any substantial modification to the activity constituting the corporate purpose of the Borrower. (e) To maintain and ensure maintenance of all authorizations, permits, licenses or approvals that may be necessary under any regulation, or required by any authority, for the normal conduct of the Borrower's activities. (f) To fulfill, ensure fulfillment and keep effective all contracts and obligations to which it is a party and whose non-fulfillment or termination may have a Significant Detrimental Effect. (g) To not grant loans, provide guarantees nor transfer funds in favor of third parties under any legally or economically equivalent arrangement. (h) To not assume or acquire any type of financial debt other than that arising under the present Contract. (i) To not secure, underwrite or guarantee obligations of third parties. (j) To not offer, grant or establish any type of guarantee, pledge, mortgage or any other type of lien or encumbrance upon its rights and assets in favor of third party creditors. (k) To not make capital reductions or purchase its own shares. (1) To comply with all applicable legislation of a civil, commercial, administrative, environmental, fiscal or any other nature, and comply with and maintain all permits and authorizations relating to its activity. (m) To keep and maintain whatsoever licenses, permits or authorizations as necessary for the normal conduct of its activities, and seek whatsoever licenses, authorizations or permits as may be necessary, either now or in future, for the formalization and fulfillment of this Contract. (n) To not distribute dividends to the Shareholder (or remunerate same in any other way in its capacity as shareholder or non-commercial creditor), nor pay the interest or principal on any subordinated debt or loan until such time as the obligations assumed by the Borrower under the present Contract have been completely discharged. (o) To not dispose of shares in the Encumbered Company that it may acquire through funds from the Bridging Loan except where, on the maturity date of the Interest Period immediately following the disposal date of said shares, the Borrower allocates the entire amount obtained (net of expenses and taxes) to voluntary prepayment of the Bridging Loan under the terms set forth in clause 6.2 (excepting item (b) thereof, which shall not be applicable to repayments made in accordance with the present clause). 20 [INITALS] 14.3 SHAREHOLDER'S OBLIGATIONS Without prejudice to the other obligations assumed in this Contract, the Shareholder undertakes to (a) Enforce the affirmative and negative covenants established in clause 14.2 for the Borrower. (b) Comply with, enforce and maintain the validity of the contracts and obligations to which it is a party of and whose non-compliance or termination may have a Significant Detrimental Impact. (c) Not to pledge the shares of the Borrower. 15. EARLY EXPIRATION 15.1 EARLY EXPIRATION EVENTS The events or circumstances listed below constitute cases of non-compliance with the Bridge Loan ("EARLY EXPIRATION EVENTS"). (a) If any payment obligation, whether of capital, interests, commissions, expenses or any other concept owed by virtue of this Contract, is unpaid by its expiration date. (b) If the Bridge Loan is not applied to the purpose agreed upon, whether in total or in part. (c) If any significant obligation is not complied with that is not a payment obligation assumed by the Borrower or the Shareholder in the Contract, and in particular, by way of example and without limitation, if any of the obligations included in clause 14 are not fulfilled. (d) In the event that the statements made by the Borrower in the Contract are false or, in the event that they are repeated pursuant to the stipulations of clause 13.2, they become false in some substantial aspect. (e) If the Borrower or the Shareholder stop paying any debt because of borrowed funds or reimbursable funds obtained through other means (including any debt stemming from cover agreements or derivatives), other than those undertaken in this Contract, for an amount that individually or in its whole is larger than (euro)75,000,000 (or its equivalent in another currency); (f) If a legal procedure is filed against the Borrower or the Shareholder which entails the execution or attachment for an amount that, together with the amounts of other procedures with those characteristics, is larger than (euro)75,000,000 (or its equivalent in another currency); (g) If, due to a legal stipulation, of a general or special nature, or due to the decision of a competent authority, any of the obligations undertaken by the parties in the Contract turn out to be illegal, or are not valid, binding, claimable or they arise from impossible compliance and, within a maximum term of thirty (30) natural days, an alternative solution is not agreed upon between the Borrower and the Financial Entity. (h) If the Borrower or the Shareholder submit a request to be declared in suspension of payments, bankruptcy or bankruptcy proceedings or if, under the proceedings of a third party request, it is admitted through legal resolution, or if any of said companies is subject to receivership or legal attachment, or it is the object of seizure or intervention, or if its shares or a substantial part of its assets are expropriated, or if it acknowledges its incapacity to settle its debts on expiration, or if a re-negotiation is initiated for all or a substantial part of its payment obligations, or any other action or similar act is performed, 21 [INITIALS] whether legal or private, which may produce similar effects, or that due to any reason the Borrower or Shareholder's insolvency situation becomes evident and, when filed by third parties, is not stopped or filed within a term of twenty (20) Business Days as of the moment on which they become known. (i) If for any reason the Borrower or the Shareholder cease their business activity completely, they reduce it substantially, or they modify it radically, or if they call upon or hold a shareholders' general meeting in order to decide on any of these measures, or if they are facing legal procedures for dissolution or settlement. (j) If the Shareholder stops being the titleholder of 100% of the Borrower's capital stock. (k) If the Personal Guarantee granted by the Borrower in clause 16 of this Contract becomes invalid or ineffective for any reason. The Borrower shall have a period of twenty (20) natural days from the moment of receipt of the notification for the Expiration Event or from the moment in which it becomes aware of the existence of an Early Expiration Event (whichever occurs first) in order to repair said Early Expiration Event so that an early expiration of the Bridge Loan does not occur, except in the cases of (a), (b), (g), (h), (i), (j) and (k) in which there will be no grace period for the effects stipulated herein to occur. 15.2 EFFECTS OF THE TOTAL EARLY EXPIRATION Once the Borrower has been notified, the early expiration shall produce the following effects: (i) the cancellation of the Bridge Loan availability if it has not been disbursed; (ii) the Borrower's obligation to reimburse immediately the total amount of the outstanding balance used and pending reimbursement; (iii) the immediate accountability of the interests accrued and of any commissions, expenses and other concepts owed by the Borrower; (iv) the Borrower's obligation to indemnify the Financial Entity for the damage stipulated in sub-clause 10 (a) which may produce the reimbursement of the Bridge Loan by the Borrower on a different date to those dates on which the interests in progress would have expired, as a consequence of a lower profitability of its investment till the anticipated expiration in comparison with the cost attributable to obtaining those funds when they were granted to the Borrower, according to the supporting settlement that the Financial Entity shall submit; (v) the accrual of late interests over the amounts owed according to the previous sections if they are not paid immediately when the early expiration is declared. 16. PERSONAL GUARANTEE (A) The Shareholder is hereby appointed as the joint obligor of any obligation that the Borrower may have towards the Financial Entity arising from this Contract (including, without limitation, capital, interests, commissions, costs, expenses, damages and any other concept.) The guarantee referred to in this section (A) shall be called the "PERSONAL GUARANTEE." (B) The Personal Guarantee shall be valid while all the obligations arising from the Contract are not complied with, to the satisfaction of the Financial Entity. 22 [INITIALS] (C) The Shareholder expressly waives the benefits of priority, division and excussion. The Shareholder also expressly waives the right to claim compensation and any personal exception, of its own or of any other obligor. The Financial Entity shall have the right to claim the Shareholder's compliance with the obligations directly, in accordance with article 1.144 of the Civil Code, and without the need of a prior claim from the Borrower, or of jointly claiming from the Borrower and the Shareholder. (D) In the event of the execution of the Personal Guarantee and its effective payment by the Shareholder, the Shareholder shall be subrogated in the rights that the Financial Entity may have against the Borrower. The rights acquired in this manner due to subrogation or that for any other reason are derived from the payment of the Personal Guarantee shall be subordinated to the rights that the Financial Entity is able to maintain towards the Borrower by virtue of this Contract so that the Shareholder shall not be able to make its rights effective as a creditor over the Borrower until the total settlement of the debts of these parties takes place towards the Financial Entity by virtue of this Contract. (E) The Shareholder acknowledges that any amounts owed to the Financial Entity as a consequence of the execution of the Personal Guarantee may be compensated by the Financial Entity with any balances, rights or credits that the Shareholder may have at each time with the Financial Entity. (F) The Shareholder expressly accepts that its Personal Guarantee shall continue to be valid in all its terms in the event of any cessions, novations, modifications or extensions to the Contract. (G) In the event of a tender from the Borrower, the responsibility of the Shareholder shall not be reduced due to any agreements, reductions of the amounts or extensions of the terms of payment that may have had a positive vote from the Financial Entity. 17. SETTLEMENT OF THE OUTSTANDING BALANCE AND LEGAL EXECUTION 17.1 SETTLEMENT AND EXECUTION AGAINST THE BORROWER In the event of ordinary or early expiration of the Bridge Loan or of total or partial termination of the Contract, the Financial Entity shall have the right to settle the account referred to in clause 3, and it is expressly agreed that the balance resulting from said settlement, duly certified by the Financial Entity, shall be a net, overdue and payable amount (in accordance with the stipulations of article 571 and 572 of Law 1/2000 dated January 7th, on Civil Procedures), for payment and enforcement order purposes or for the purposes of judicial or extra-judicial claims. The resulting payable amount from said settlement shall be notified to the Borrower and the Shareholder, pursuant to the stipulations of art. 572.2 at the end of the aforementioned Law. A copy of this Contract shall be an executory document notarized as a public instrument with the formalities established by Law 1/2000, dated January 7th, on Civil Procedures, to which the following documents must be attached: (a) Certification issued by the Notary Public who was involved in the notarization as a public instrument or who keeps its Register Book, which credits the compliance of the copy of the Contract notarized as a public document with the entries of the Register Book and their dates. (b) The certification referred to in the first paragraph of this clause, where the balance of the account mentioned in clause 3 is stated, which results from the settlement executed by the Financial Entity. In said certification, it shall be stated by the Notary Public intervening at the request of the Financial Entity, that the settlement of the Borrower's debt has been performed as agreed by the Parties in this Contract. 23 [INITIALS] (c) The statement of debit and credit entries and of those corresponding to the application of interest determined by the specific balance for which the execution order is requested. (d) The document that verifies having notified the Borrower and the Share Holder of the callable amount in accordance with the provisions of the first paragraph of this clause. 17.2. LIQUIDATION AND EXERCISE AGAINST THE SHARE HOLDER In accordance with the provisions of articles 572.2 and concordant with the Civil Procedure Act, for the purpose of carrying out any claim (judicial or extra judicial), or of proceeding with the exercise of the Guarantee against the Share Holder, the parties expressly agree the following: (a) The amounts owed at any time by the Borrower and guaranteed by the Guarantee shall be those that are determined in accordance with the procedure established in foregoing clause 17.1. This amount shall be on legal record and shall serve for all legal effects and purposes. (b) The Financing Entity shall notify the Borrower and the Share Holder of the amount of the balance resulting from the calculation made according to this clause. The amounts demandable from the Share Holder shall be the total sum of the resulting balance. The original policy of this contract shall be an executable instrument, free of the formalities established in articles 517.5 of the Civil Procedure Act, accompanied by the certification issued by the intervening Notary in which conformity with this policy is verified by the entries in his registry book and their dates. The Share holder shall be responsible for all costs arising from the exercise in their entirety. 18. COMPENSATION The Borrower and the Share Holder expressly authorize the Financing Entity to apply monetary balances that could exist with the Financing Institution in their favor, whether in checking or savings accounts or any other present or future cash deposit, to the payment of any amounts due and unpaid by either of them arising from this Contract. The authority provided for in this clause shall be directly applicable to the balances described in the foregoing paragraph even if they are not denominated in Bridge Loan currency, in which case the Lending Entity may make the corresponding conversion at the market rates valid at that time as informed by the Reference Entities. 19. CALCULATION OF TERMS The definitions contained in this clause shall be used or the purposes of calculating the terms provided for in this Contract. "TIME": understood as Madrid time, except if specifically established otherwise. "CALENDAR DAY": every day on the Gregorian calendar. Periods indicated in days shall be understood as calendar days except if indicated to the contrary. "BUSINESS DAY": (i) for payments anticipated by this Contract, the days on which the Trans-European Automated Real Time Gross Settlement Express Transfer (TARGET) System is in operation, (ii) for cases not provided for in subsection (i), every day of the week, except Saturday, Sunday, Madrid holidays, and days on which the Trans-European Automated Real Time Gross Settlement Express Transfer (TARGET) System is closed or not in operation. "WEEK": the period included between a determined day and the same day of the following week, both of which are inclusive. 24 [INITIALS] "MONTH": the period included between a determined day and the same date of the following month, both of which are inclusive, except if the month that follows does not have the same date, in which case it shall be concluded on the final day of the following month. "QUARTER" or "THREE MONTHS": the period of time included between a determined day and the same date of the third month that follows consecutively on the calendar, both of which are inclusive, except if such third month does not have the same date, in which case it shall be concluded on the final day of said third month. "SEMESTER" or "SIX MONTHS": the period of time calculated from any determined day and the same date of the sixth month that follows consecutively on the calendar, both of which are inclusive, except if such six month does not have the same date, in which case it shall be concluded on the final day of said sixth month. "YEAR" or "TWELVE MONTHS": the period of time calculated from any determined date and the same date of the twelfth month following consecutively on the calendar, both of which are inclusive, except if such twelfth month does not have the same date, in which case it shall be concluded on the final day of said twelfth month. The dates established in this Contract for carrying out any payment that falls on a non-business day shall be understood as carried over to the immediately following Business Day, except if it falls within the following calendar month, in which case it shall be understood as carried over to the Business Day immediately before such date. If this results in greater or lesser duration of a period of time that should conclude on this payment date, the extension or reduction of the term operated as such shall be reduced or extended respectively by the immediately following period for continuity. 20. NOTIFICATIONS 20.1. METHOD OF DISPATCHING COMMUNICATIONS The communications arising from this Contract between the Borrower and the Financing Entity and that are not provided for in a special manner shall be carried out by any means that allows its dispatch and reception to be evidenced. Written communications shall be understood as properly dispatched out when they are carried out by means of dispatching a telegram, burofax, or telefax directed to the respective domiciles and numbers indicated in the following paragraphs with the anticipation necessary in each case, or by hand by means of a messenger service that obtains an acknowledgment of receipt from the recipient. The telegram dispatch stub or the burofax or telefax original in which its reception at its indicated destination is evidenced shall constitute sufficient proof of the communication, with the exception that telegraphic or telefax communications (not those sent by the burofax service offered by public Mail services) must be confirmed be means of letters signed by the person authorized for the communication that was dispatched, sent by certified mail or messenger service that obtains an acknowledgment of receipt by the recipient or by means of an acknowledgment of receipt responded to by the recipient through the same means. 20.2. ADDRESSES AND ACCOUNTS The domiciles, telefax numbers, contact persons, and as the case may be, bank account numbers of all parties to this Contract are those summarized in Appendix 2. 20.3. NEW ADDRESSES Any modification to those addresses indicated in this Contract shall not be effective until they have been properly notified to the other party with five (5) days anticipation. 25 [INITIALS] 21. ASSIGNMENTS 21.1. ASSIGNMENT BY THE FINANCING ENTITIES The Financing Entity may totally or partially assign its contractual position to third parties, provided that they comply with the following requirements: a) That the assignee is a European Union financial or credit entity. b) That the Borrower is notified of the assignment five (5) days prior to the date of its being officiated. c) That the Borrower does not assume greater obligations before the assignee than those which it had contracted with the assignor nor that the assignment entails any additional cost for the Borrower, including in particular, that the assignment does not entail greater obligations or costs than those that would corresponded to the assignor according to clauses 10, 11 and 12. d) That the amount of the assignment is for a minimum of (euro) 100,000,000, except in the case that the total participation of the Financing Institution is assigned, in which case the assignment may be carried out for the amount of the total active participation of the assignor. e) That the Borrower consents to the proposed assignment which it may not deny without just cause. The consent of the Borrower shall not be necessary when (i) it is an assignment that the Financing Entity carries out in favor of a corporation in its group or (ii) the Borrower is found to be subject to the Early Termination Circumstances of foregoing clause 15.1. The assignments referred to in this clause 21.1 shall only be binding and become effective in respect to the Borrower and the Share Holder when all of the requirements indicated in the foregoing paragraphs have been complied with. The Borrower and the Share Holder commit to appear before the Notary that the assignee or the assignor designates at the cost of the assignee or the assignor to provide consent of any assignment carried out and to officiate the subjective novation produced in this Contract upon being required to do so by the assignee or the assignor and provided that the requirements provided for in this clause are complied with, as well as to notify the Bank of Spain of the assignment if the assignee or the assignor are not residents of Spain according to the provisions called for by applicable legislation at all times. The assignor commits to issue a certified copy of the intervening deed or policy of assignment to the Borrower and the Share Holder within the term of five (5) days prior to the date that the assignment becomes effective. 21.2. ASSIGNMENT BY THE BORROWER AND THE SHARE HOLDER The contractual position, rights, and obligations of the Borrower or the Share Holder shall not be assignable or transferable in any manner under any circumstances. 22. CONFIDENTIALITY The Financing Entity commits to maintain confidentiality in regards to officiating this Contract, the terms and conditions contained in it, and all other confidential information that has been furnished by the Borrower for the purpose of the preparation, negotiation, officiating, and compliance with this Contract. Without prejudice to that provided for in the foregoing paragraph, the Financing Entity may reveal any type of information: 26 [INITIALS] (i) to banking oversight entities, to the tax administration authority or to any other administrative or judicial authority with jurisdiction over the Financing Entity; (ii) to the auditors or legal counsel of the Financing Entity; or (iii) to any other entity, if (x) demanded by legal or regulatory regulation; (y) the revelation of the confidential information is made subsequent to the notarization of the Acquisition in the context of the structure of the Syndicated Financing; or (z) authorized by the Borrower in advance and in writing, with the understanding that the concession of such authorization by the Borrower may not be differed, delayed, or denied without just cause. 23. JURISDICTION The Parties expressly submit to the jurisdiction and authority of the Courts and Tribunals of the City of Madrid, waiving jurisdiction that could correspond to them. 24. APPLICABLE LEGISLATION This Contract shall be governed and interpreted according to Spanish common law. 25. NOTARIZATION Any of the Parties may require the other to notarize this Contract. The costs arising from notarization shall be the responsibility of the requesting party. In witness whereof, the Parties sign this and the following pages of this Contract in three original copies, one for the Borrower, another for the Share Holder, and another for the Financing Entity. BANCO SANTANDER CENTRAL HISPANO, S.A. 1 /s/ Ignacio Dominguez-Adame Bozzano /s/ Jose Antonio Aguirre Fernandez - ------------------------------------- ---------------------------------- Name: Mr. Ignacio Dominguez-Adame Bozzano Mr. Jose Antonio Aguirre Fernandez ACCIONA, S.A. /s/ Valentin Montoya Moya /s/ Juan Gallardo Cruces - ------------------------------------- ---------------------------------- Name: Mr. Valentin Montoya Moya Mr. Juan Gallardo Cruces 27 [INITIALS] /s/ Jorge Vega-Penichet Lopez /s/ Valentin Montoya Moya - ------------------------------------- ---------------------------------- Name: Jorge Vega-Penichet Lopez Mr. Valentin Montoya Moya 28 [INITIALS] APPENDIX 1 DRAWDOWN REQUEST [Place and date] To: [Financing Institution] [Domicile] Attn: Mr. [ ] From: [Borrower] RE: BRIDGE LOAN CONTRACT OFFICIATED ON ****, 2006 (THE "CONTRACT") Dear Sirs: In accordance with the provisions of the Contract, specifically in clause 2, we request a Drawdown under the terms that are detailed blow. The terms and definitions in this communication shall have the same meaning as in the Contract. a) Date of Drawdown: o b) Amount of Drawdown: (euro) o c) Interest period: o months. d) Objective: [To finance the acquisition price of the purchase order dispatched on o over o shares of the Concerned Corporation that was exercised on the same day for a total amount of (euro) o]. [To finance (euro) o as costs incurred by the Borrower associated with the aforementioned acquisition] [To finance the payment of interest, costs, and/or commissions generated by the Bridge Loan in the amount of (euro) o] In accordance with the provisions of clause 2.2 of the Contract, we expressly declare that the previous conditions established in clause 2.1 of the Contract are in effect. Sincerely, [Signature of the legal representatives of the Borrower] 29 [INITIALS] APPENDIX 2 NOTIFICATIONS TO BANCO SANTANDER CENTRAL HISPANO, S.A. - INES GARCIA REVILLA - STRUCTURED FINANCES DEPARTMENT - CIUDAD GRUPO SANTANDER - EDIFICIO AMAZONIA, SEGUNDA PLANTA [SECOND FLOOR] - 28660 BOADILLA DEL MONTE, MADRID - TELEPHONE: 91 2893188 - FAX: 912893188 - EMAIL: INESEARCIA@ERNPOSANTANDER.COM TO FINANZAS DOS, S.A. AND ACCIONA, S.A. - JOSE ANGEL TEJERO SANTOS - AVENIDA EUROPA, 18 - 28108 ALCOBENDAS, MADRID - TELEPHONE: 916632360 - FAX: 916632929 EMAIL: JTEJERO@ACCIONA.ES 30 [INITIALS] EX-10 3 exhib102.txt EXHIBIT 10.2 EXHIBIT 10.2 [GEOTEXT TRANSLATIONS, INC. LETTERHEAD] STATE OF NEW YORK ) ss ) ) COUNTY OF NEW YORK ) CERTIFICATION This is to certify that the attached translation is, to the best of my knowledge and belief, a true and accurate translation from Spanish into English of the attached Financing Offer of Banco Santander Central Hispano, S.A., dated September 26, 2006. /s/ Emerson Hoff ---------------- Emerson Hoff, Project Manager Geotext Translations, Inc. Sworn to and subscribed before me this 18th day of October, 2006. /s/ Kristin D. Plonka - --------------------- [NOTARY PUBLIC STAMP] New York San Francisco London 259 West 30th Street, 220 Montgomery Street, 107-111 Fleet Street 17th Floor 3rd Floor New York, NY 10001 San Francisco, CA 94104 London EC4A 2AB tel 212.631.7432 tel 415.576.9500 tel+44(0)20 7936 9002 fax 212.631.7778 fax 415.520.0525 fax +44(0)20 7990 9909 www.geotext.com www.geotext.com www.geotext.com e-mail e-mail e-mail translations@geotext.com sanfrancisco@geotext.com london@geotext.com [Banco Santander Letterhead] Madrid, September 26, 2006 Dear Sirs, This is with regard to the Bridge Loan Agreement signed on the date hereof between Finanzas Dos, S.A. as Borrower, Acciona, S.A. as Guarantor, and BANCO SANTANDER CENTRAL HISPANO, S.A. as Financing Entity, in an amount of up to (euro)3,475,000,000, the terms and conditions of which we do not need to reiterate since they are known to the parties. We hereby inform you of the irrevocable commitment of BANCO SANTANDER CENTRAL HISPANO, S.A. to grant additional bridge financing under the same terms and conditions as those established in the Bridge Loan in question for the purpose of acquiring an additional 10%, along with the expenses associated therewith. The terms and conditions of this letter are strictly confidential and must not be disclosed or communicated to third parties, with the exception of legal advisers, without the express prior consent of the parties. This Financing Offer is valid until February 29, 2007. Yours faithfully, BANCO SANTANDER CENTRAL HISPANO, S.A. pp /s/ Ignacio Dominguez-Adame Bozzano ACCEPTED AND IN AGREEMENT Date:................................. ACCIONA S.A. pp EX-10 4 exhib103.txt EXHIBIT 10.3 EXHIBIT 10.3 [GEOTEXT TRANSLATIONS, INC. LETTERHEAD] STATE OF NEW YORK ) ss ) ) COUNTY OF NEW YORK ) CERTIFICATION This is to certify that the attached translation is, to the best of my knowledge and belief, a true and accurate translation from Spanish into English of the attached Financing Offer of Banco Santander Central Hispano, S.A., dated September 26, 2006. /s/ Emerson Hoff --------------------------------------- Emerson Hoff, Project Manager Geotext Translations, Inc. Sworn to and subscribed before me this 18th day of October, 2006. /s/ Kristin D. Plonka - -------------------------------- [NOTARY PUBLIC STAMP] New York San Francisco London 259 West 30th Street, 220 Montgomery Street, 107-111 Fleet Street 17th Floor 3rd Floor New York, NY 10001 San Francisco, CA 94104 London EC4A 2AB tel 212.631.7432 tel 415.576.9500 tel+44(0)20 7936 9002 fax 212.631.7778 fax 415.520.0525 fax+44(0)20 7990 9909 www.geotext.com www.geotext.com www.geotext.com e-mail translations@ e-mail sanfrancisco@ e-mail london@ geotext.com geotext.com geotext.com [LETTERHEAD OF BANCO SANTANDER] Madrid, September 26, 2006 Dear Sirs, RE: LONG-TERM FINANCING FOR THE ACQUISITION OF UP TO 20% OF ENDESA ("ELE") BY THE SPV WHOLLY OWNED BY ACCIONA, S.A. ("ACC") The ACC Group has informed Banco Santander Central Hispano (the "Bank") of its interest in acquiring up to 20% of ELE. Per our conversations and in response to your request, the Bank is pleased to submit a FIRM OFFER TO UNDERWRITE 100% OF THE FINANCING of reference. Although the offer is initially planned for a 10% block of shares of ELE, the Bank will maintain the terms of the offer for its adjustment if the acquisition is increased up to 20% of ELE, maintaining the corresponding proportions of financing and guarantees contained in this document. The commitment of the Bank is established in the Terms and Conditions Annexes to this letter. In this respect, we are attaching an Annex on financing without recourse to ACC and an Annex on financing with recourse to ACC . Please note that the amounts shown in the Annexes are based on an average acquisition price for ELE shares, with a maximum of (euro)31.00. If this average price is increased, the financing structure would be adjusted with an increase in the financing with recourse to ACC. Moreover, please note that the tranche of financing without recourse could be structured, at the request of ACC, as a tranche with recourse in full, abiding by the terms indicated in the Annex on Financing with recourse to ACC. By signing this letter to indicate agreement, the Bank is appointed on an exclusive basis by you as Underwriter, Bookrunner and Mandated Lead Arranger of the Financing. You consequently undertake not to appoint other entities as Underwriter, Bookrunner and Mandated Lead Arranger for the same purpose without our prior written consent. The Bank may syndicate the operation with other credit institutions before or after closing the operation, after consulting with you. The underwriting by the Bank is subject: (i) to satisfactory contractual documentation, with the parties undertaking to negotiate in good faith on the contractual documentation for the Financing; (ii) to receiving such information as may reasonably be required in order to structure the Financing. This Offer of Financing is further subject to no negative change taking place up to the signing date of the Financing Agreement in the credit market or in the financial situation of ACC and/or members of the Borrower and/or their shareholder group which could adversely affect the current operating framework. [INITIALS] Page 1 of 15 The terms and conditions of this letter are strictly confidential and must not be disclosed or communicated to third parties, except for legal advisers, without the prior express consent of the parties. This Offer of Financing is valid until February 28, 2007. We would be grateful if you would sign this letter to indicate your agreement with its contents and the Terms and Conditions Annexes. Yours faithfully, BANCO SANTANDER CENTRAL HISPANO, S.A. By power of attorney, pp /s/ Jose Antonio Aguirre Fernandez /s/ Ignacio Dominguez-Adame Bozzano ACCEPTED AND IN AGREEMENT Date:................... ACCIONA S.A. pp /s/ Juan Gallardo Curces /s/ Valentin Montoya Moya Page 2 of 15 FINANCING FOR THE SPV (WHOLLY OWNED BY ACCIONA S.A.) TERMS AND CONDITIONS FOR FINANCING UNDERWRITING (PARTIAL REFINANCING OF A BRIDGE LOAN OF (EURO)3,475,000,000 GRANTED ON 09/26/06, FOR ACQUISITION OF UP TO 10% OF ELE) TOTAL AMOUNT: UP TO A MAXIMUM OF (EURO)2,732,000,000 (portion corresponding to the outstanding risk under the Bridge Loan) plus the Underwriting, Structuring and Opening Commission on this Financing, plus expenses associated with implementation of the Transaction. (SUBJECT TO PROPORTIONATE INCREASE IF THE BLOCK OF ELE STOCK ACQUIRED EXCEEDS 10%, WITH A MAXIMUM OF 20%). TRANCHE A: (EURO)2,297 MILLION LONG-TERM SENIOR LOAN. TRANCHE B: (EURO)435 MILLION REVOLVING SENIOR LINE OF CREDIT. BORROWER: A Spanish SPV, wholly owned (directly or indirectly) by Acciona S.A. (hereinafter "ACC" or the "Shareholder"), with no activity other than the acquisition of up to 20% of the shares of ELE. This SPV will have funds of (euro)656 million in the form of Capital and a Subordinated Loan. (*) In addition, the Shareholder irrevocably undertakes, in the amount of (euro)435 million (deriving from the financing with recourse to the Shareholder), to make periodic adjustments to the bank financing coverage so that the Senior Debt Coverage Ratio (as defined hereinafter) is met. The adjustments will be instrumented by means of a Subordinated Facility Agreement with the Shareholder as the lender and the SPV as the borrower. PURPOSE: Partial refinancing of the outstanding balance of the Bridge Loan of (euro)3,475,000,000 (granted on 26/09/06 for acquisition of 10% of the shares of ELE made by the SPV wholly owned by ACC and, in the event of the increase indicated in the section on Total Amount, the acquisition of up to an additional 10% of shares of ELE. In addition, financing the Underwriting, Structuring and Opening Commission for this financing and expenses associated with implementation of the Transaction. TRANCHE A: Partial refinancing of the bridge loan of (euro)3,475 million. TRANCHE B: Partial refinancing of the bridge loan of (euro)3,475 million, in the portion serving as the instrument for adapting the structure of Funds Contributed by the Shareholders to the trading price of ELE, so that the Debt Coverage Ratio is met. GUARANTEE: Facility agreement to be held by ACC so that it can comply with the irrevocable commitment to contribute up to (euro)435 million to the SPV in the circumstances established in this Term Sheet (Debt Coverage Ratio). Pledge of 100% of the shares of the SPV. Pledge of credit rights arising from the Subordinated Loan and the Subordinated Facility Agreement to be granted by ACC to the SPV. [INITIALS] Page 3 of 15 Pledge of the shares of ELE acquired by the SPV (voting rights in any event for ACC). The securities acquired from ELE will be deposited with SAN (after reaching an agreement on terms and conditions of custody); irrevocable order to pay dividends of ELE into SAN account, which will be pledged. Pledge of the bank accounts of the SPV. DRAWDOWN PERIOD: After the corresponding conditions precedent are proven to have been met: TRANCHE A: One month from the signing date. TRANCHE B: During the entire lifetime of the operation. TERM: TRANCHE A: 6 YEARS, repayment on expiry. TRANCHE B: 6 YEARS, repayment on expiry. UNDERWRITER: Banco Santander Central Hispano, S.A. AGENT: Banco Santander Central Hispano, S.A. LENDERS: Bank Syndicate formed by the Underwriter and other Financial Institutions which may eventually join in the operation. INTEREST PERIOD: 1, 3 and 6 months at the election of the Borrower. INTEREST RATE: EURIBOR for the period + applicable margin. MARGIN: TRANCHE A: The initial margin will be 60 annual basis points. The margin will subsequently evolve as follows: --------------------------------------------------- EVOLUTION OF THE MARGIN OVER EURIBOR --------------------------------------------------- Between months 19 and 36 from signing 70 bp --------------------------------------------------- Between months 37 and 54 from signing 80 pb --------------------------------------------------- Between months 55 and 72 from signing 90 bp --------------------------------------------------- TRANCHE B: The margin will be 50 annual bp. [INITIALS] Page 4 of 15 UNDERWRITING, STRUCTURE AND OPENING COMMISSION: TRANCHE A: ------------------------------------------------------ ACQUISITION UP TO ACQUISITION UP TO 10% OF ELE 20% OF ELE ------------------------------------------------------ Commissions 0.70% 0.85% ------------------------------------------------------ On the Total Amount, payable on the first Drawdown or 15 days after the signing date of the financing agreement, whichever occurs first. TRANCHE B: 0.40%. On the Total Amount, payable on the first Drawdown or 15 days after the signing date of the financing agreement, whichever occurs first. AGENCY COMMISSION: (euro)10,000 + VAT, payable annually. TRANCHE B AVAILABILITY COMMISSION: 30% of the applicable margin on a basis of ACTUAL/360. Applicable to the amount not drawn down of Line of Credit B and provided the sum of the outstanding risk under this Tranche B and the outstanding risk under the Subordinated Line of Credit granted by ACC to the SPV is lower than the limit of the former. VOLUNTARY EARLY REPAYMENT: The borrower will have the option to make early repayment of the amount (in whole or in part) of the financing without penalty provided it coincides with an interest payment date and is made with minimum prior notice to the Agent Bank of 15 business days. Early repayment of Tranche A must be for a minimum amount of (euro)25 million and multiples of (euro)5 million. Early payoff of Tranche B must be for a minimum amount of (euro)5 million and multiples of (euro)1 million. OBLIGATORY EARLY REPAYMENT: The amount of the financing must be repaid in advance in the following events: o In full, in the event of loss of ownership (direct or indirect) of 100% of the SPV by ACC. o In full, if the SPV merges, is taken over, takes over another or changes its activity. o In full, if the SPV proceeds with the sale of all or part of the shares of ELE acquired in the context of this financing. [INITIALS] Page 5 of 15 o In full, in the event of failure to comply with the Senior Debt Coverage Ratio. MARKET VALUE OF THE SHARES OF ELE: The result of multiplying the number of shares acquired and pledged by the SPV by the closing price on the Spanish Stock Exchange Interconnection System. SENIOR DEBT COVERAGE RATIO: Defined as the Market Value of the Shares of ELE acquired and pledged by the SPV at the end of each Measurement Period divided by the outstanding balance of Tranche A and of Tranche B at that time, net of cash and banks and equivalent in the SPV. MAINTENANCE OF COVERAGE LEVEL: If the Market Value of the Shares of ELE at the end of each Coverage Level Measurement Period has undergone a reduction which causes the Senior Debt Coverage Ratio to fall under 115%, the Shareholder of the SPV must contribute funds up to the limit of the Subordinated Facility Agreement ((euro) 435 million). This contribution shall reduce the amount drawn down under Tranche B by an amount such that the value of the pledged ELE shares secures 115% of the outstanding balance of Tranche A and of Tranche B, net of cash and banks and equivalent in the SPV. If, at the end of the following Measurement Period, the trading price of ELE has increased, the Line of Credit B shall be drawn down by the corresponding amount up to the maximum limit thereof, provided the value of the shares of ELE pledged is at least 115% of the outstanding balance of Tranche A and of Tranche B, with reduction by the same amount of the Subordinated Line of Credit and consequently of the financing with recourse to ACC. After the limit of the Subordinated Facility Agreement is exhausted and in order to maintain the Debt Coverage Ratio, the Shareholder of the SPV may continue contributing funds in order to bring the Senior Debt Coverage Ratio to 115% in the manner determined. The following are proposed in any event, at the election of the borrower and/or ACC: -> debt reduction -> contribution of shares of ELE, pledged -> contribution of cash or equivalent -> bank guarantee (minimum S&P: A+) -> any other acceptable to the Financing Institution. COVERAGE RATIO MEASUREMENT PERIOD: MONTHLY, unless amounts have been drawn down under the Subordinated Facility Agreement, in which case the following would apply: [INITIALS] Page 6 of 15 -> FORTNIGHTLY if the amount drawn down under the Subordinated Facility Agreement is below 25% of the limit. -> WEEKLY if the amount drawn down under the Subordinated Facility Agreement is between 25% and 75% of the limit. -> DAILY if the amount drawn down under the Subordinated Facility Agreement is above 75% of the limit. CONDITIONS PRECEDENT PRIOR TO CLOSING AND PAYMENT: The Senior Debt Coverage Ratio must be equal to or greater than 115%, without having to draw down for that purpose under the Subordinated Facility Agreement. Before drawdown of funds, the Agent Bank must have received, among other documents: Authorizations: incorporation, registration, company resolutions and powers of attorney of the SPV. Evidence of paid-up Capital, the Subordinated Loan and establishment of the Subordinated Facility Agreement. Provision of the guarantees. Representations: legal status; absence of breach, infringement, litigation, insolvency situations, compliance with tax legislation, absence of events of early termination, absence of financial indebtedness other than this financing (including the subordinated financing from the Shareholder). Absence of Adverse Material Change. Any circumstances or facts which may or do have a significant negative affect on the financial situation, net worth or ability of the SPV to comply with obligations arising from the Financing. Evidence of payment of all commissions due to the banks. OBLIGATIONS OF THE BORROWER: During the term of the financing, the SPV must comply with the following obligations, among others: o To devote the amount of the financing to the stipulated purposes. o Compliance with legislation, maintenance of authorizations. Page 7 of 15 o Punctual information on the existence of grounds for early termination. o Negative Pledge, PARI PASSU. o Maintenance of ownership of 100% of the [INITIALS] shares of ELE acquired by the SPV, free of liens, encumbrances, rights IN REM, options, etc., except for the pledge granted in favor of the Financing Banks. o Prohibition on incurring indebtedness other than that contemplated by these terms and conditions except for indebtedness which is subordinated to the bank financing granted by the Shareholder. o Prohibition on granting financing and/or sureties and/or other types of guarantees. o Prohibition against making investments with the sole exception of acquiring new blocks of ELE and provided that the Subordinated Line of Credit has not been drawn down. o Prohibition on passing resolutions for the purpose of dissolution, liquidation, transformation, merger or demerger of the company. o Prohibition on entering into contracts with connected persons. o Prohibition on distribution of dividends. o Restriction on payment of principal and interest under the Subordinated Loan and the Subordinated Facility. o Exercise of voting rights in relation to the shares of ELE with due diligence so that at no time are the obligations assumed under this Financing prejudiced, and in any event on the premise of facilitating a distribution of dividends which permits the payment of interest on the bank financing. o Commitment to a tax consolidation of the SPV with the consolidated group of ACC and contribution by the Shareholder of the corresponding funds to the SPV for tax credit for losses, if any, and provided that it is offset by the Tax Group, but not any other tax benefit which the SPV or the Tax Group may obtain as a result of being the owner of the SPV. This commitment must be instrumented in such a manner that it is foreseeable that the sum of the contribution of funds by the Shareholder under this mechanism and the dividends on the shares of ELE acquired by the SPV allow it to meet the payment of interest under the bank financing in accordance with financial projections and to the satisfaction of the Financing Banks. o Financial Covenants: the value of the Senior Debt Coverage Ratio at the end of each Measurement Period must be greater than or equal to 115%. o Commitment to provide financial and annual information (within 180 days following closing) and to annually audit its Annual Financial Statements and Management Report by a firm of acknowledged prestige. o Establishment of interest rate coverage mechanisms (for at least 2/3 of the amount of the financing and 100 percent of the financing period) which will be determined by mutual agreement with the Bank. Contracting thereof to take place with said entity under market terms and conditions. [INITIALS] Page 8 of 15 OTHER NORMAL CLAUSES IN THIS TYPE OF FINANCING: Funding Disruption Costs, Substitute Interest, Market Disruption, Late Payment Interest, Change of Circumstances. Supervening legal breach, qualified Credit Institution (for tax purposes). Loan accounts. ASSIGNMENTS: The Financial Institutions may assign and transfer their participation in this Agreement in whole or in part, and therefore the rights and obligations arising herefrom, to other credit or financial institutions, securitization funds created or to be created in Spain or abroad (in any event within the EU) and to any other entity and, specifically, to companies or entities, whether regulated or not, created for the purpose of participating in the credit and securities market by securitization processes or others similar to the rights and obligations under this Agreement, provided the assignment does not result in higher costs to the Borrower. Only entities domiciled or with a permanent establishment in the EU may be assignees. TAXES AND EXPENSES: The Borrower will assume all taxes and levies, present or future ("Increased Costs") which may accrue in relation to this financing Operation, including legal expenses, the expenses of external advisers and of movements of funds in Bank of Spain accounts, if they take place, or any other system used to comply with payment obligations between the parties to the agreement. The entities will lend from a permanent establishment in the European Union. Standard gross up clause. GROUNDS FOR EARLY TERMINATION: Breach by the Borrower of any commitment, obligation, etc. established in the agreement, on the basis and with an assessment in each case of the substance/materiality of each one. A grace or rectification period may be established for each ground for early termination, to be negotiated by the parties, which in any event shall not exceed 5 business days for default in payment and 15 calendar days for all others. o Cross Default: With the corporate operation of ACC, which completes the financing devoted to the acquisition of shares of ELE. o General default in payment of debts. o Change in 100% ownership, direct or indirect, by ACC. o Breach or supervening inefficacy of any representation or warranty. o Illegality. o Nullity or inefficacy of the guarantees. o Adverse Material Change. Any circumstances or events which may or do have a significant negative effect on the financial situation, net worth or ability of the SPV to comply with obligations arising from the Financing. DOCUMENTATION: The operation will be formalized by a loan agreement drawn up by a law firm of acknowledged prestige and will include the representations, obligations, conditions precedent, grounds for termination and other clauses normal in this type of operation. The documentation will be executed before Public Notary. [INITIALS] Page 9 of 15 APPLICABLE LAW AND Spanish law and the Courts of the city of Madrid. JURISDICTION: RANKING: Both the Subordinated Loan and the Subordinated Facility Agreement to be granted by ACC to the SPV must be fully subordinated in ranking. ASSISTANCE IN SYNDICATION: The Borrower undertakes to support the Underwriting Entities and use its best efforts during syndication to motivate entities to participate in order to guarantee the success thereof. [INITIALS] Page 10 of 15 FINANCING FOR ACCIONA S.A. TERMS AND CONDITIONS FOR FINANCING UNDERWRITING TOTAL AMOUNT: UP TO A MAXIMUM OF (EURO)1,091,000,000 (which in any event includes the portion corresponding to the outstanding risk under the Bridge Loan), PLUS THE UNDERWRITING, STRUCTURING AND OPENING COMMISSION FOR THIS FINANCING AND FOR THE FINANCING WITHOUT RECOURSE, IF ANY, PLUS THE COSTS OF THE TRANSACTION; (subject to proportionate increase if the block of ELE stock acquired exceeds 10%, with a maximum of 20%). TRANCHE A: (EURO)656 MILLION long-term Senior Loan. TRANCHE B: (EURO)435 MILLION revolving Senior Line of Credit. BORROWER: Acciona, S.A. (hereafter, ACC) PURPOSE: Partial refinancing of the Bridge Loan of (euro)3,475,000,000 (granted on 26/09/06 for the acquisition of 10% of the shares of ELE made by the SPV wholly owned by ACC); financing of the additional 10% in the event of acquisition of up to 20%. In addition, financing the Underwriting, Structuring and Opening Commission for this Financing, and for the financing without recourse if any, plus the costs of the Transaction; TRANCHE A: Contribution of own funds made by ACC to the SPV in the form of capital and the subordinated loan; and TRANCHE B: Cash reserve for the contribution of subordinated Credit to the SPV in accordance with the mechanism for adjusting the Debt Coverage Ratio in the financing without recourse. DRAWDOWN PERIOD: After the corresponding conditions precedent have been proven to have been met: TRANCHE A: One month from the signing date. TRANCHE B: During the entire lifetime of the operation. TERM: TRANCHE A: 6 YEARS, repayment on expiry. TRANCHE B: 6 YEARS, repayment on expiry. UNDERWRITER: Banco Santander Central Hispano, S.A. AGENT: Banco Santander Central Hispano, S.A. LENDERS: Bank Syndicate formed by the Underwriter and other Financial Institutions which may eventually join in the operation. [INITIALS] Page 11 of 15 INTEREST PERIOD: 1, 3 and 6 months at the election of the Borrower. INTEREST RATE: EURIBOR for the period + applicable margin. MARGIN: The margin for both Tranches will be 0.50 annual bp. UNDERWRITING, STRUCTURING AND OPENING COMMISSION: 0.40% On the Total Amount, payable on the first Drawdown or 15 days after the signing date of the financing agreement, whichever occurs first. AGENCY COMMISSION: (euro)10,000 + VAT, payable annually. VOLUNTARY EARLY REPAYMENT: The borrower will have the option to make early repayment of the amount (in whole or in part) of the financing without penalty provided it coincides with an interest payment date and is made with minimum prior notice to the Agent Bank of 15 business days. The early repayment of Tranche A must be for a minimum amount of (euro)25 million and multiples of (euro)5 million. Early payoff of Tranche B must be for a minimum amount of (euro)5 million and multiples of (euro)1 million. OBLIGATORY EARLY REPAYMENT: The amount of the financing must be repaid in advance in the following events: o In full, in the event of loss of ownership (direct or indirect) of 100% of the SPV by ACC. REPRESENTATIONS: o Compliance with legislation. o Incorporation and legal capacity. o Obtaining licenses and Authorizations to engage in its company purpose. o Absence of breaches of contract by signing the facility agreement. o No early termination of other credit agreements. o Absence of litigation which would result in substantial adverse changes. o Absence of insolvency situations. o Truthfulness of information. o Absence of Adverse Material Change. Any circumstances or events which do or may have a significant negative effect on the financial situation, net worth or ability of the borrower to comply with obligations arising from the Financing. [INITIALS] Page 12 of 15 OBLIGATIONS OF THE BORROWER: During the period of the financing, ACC must comply with the following obligations, among others: o To devote the amount of the financing to the stipulated purposes. o Compliance with legislation, maintenance of authorizations. o Punctual information on the existence of grounds for early termination. o Negative Pledge, PARI PASSU. o Maintenance of ownership of 100% of the shares of ELE acquired by SPV, free of liens, encumbrances, rights IN REM, options, etc., except for the pledge granted in favor of the Financing Banks. o Prohibition on passing resolutions for the purpose of the dissolution, liquidation, transformation, merger or demerger of the company. o Exercise of voting rights in relation to the shares of the SPV/ELE with due diligence so that at no time are obligations assumed under this Financing prejudiced, and in any event on the premise of facilitating a distribution of dividends which permits the payment of interest on the bank financing. o Commitment to a tax consolidation of the SPV with the consolidated group of ACC and contribution by the Shareholder of the corresponding funds to the SPV in respect of the tax credit for losses, if any, and provided it is offset by the Tax Group, but not any other tax benefit which the SPV or the Tax Group may obtain as a result of being the owner of the SPV. This commitment must be instrumented in such a manner that it is foreseeable that the sum of the contribution of funds by the Shareholder under this mechanism and the dividends on the shares of ELE acquired by the SPV allow it to meet the payment of interest under the bank financing in accordance with financial projections and to the satisfaction of the Financing Banks. o Commitment to provide financial and annual information (within 180 days following closing) and to annually audit its Annual Financial Statements and Management Report by a firm of acknowledged prestige. o Establishment of interest rate coverage mechanisms (for at least 2/3 of the amount of the financing and 100 percent of the term of Tranche A of the financing) which will be determined by mutual agreement with the Bank. Contracting thereof to take place with said entity and under market terms and conditions. o During the entire lifetime of the financing, to keep the property and installations that it owns insured and to maintain the licenses and insurance needed to engage in its activities. OTHER NORMAL CLAUSES IN THIS [INITIALS] Page 13 of 15 TYPE OF FINANCING Funding Disruption Costs, Substitute Interest, Market Disruption, Late Payment Interest, Change of Circumstances. Supervening legal breach, qualified Credit Institution (for tax purposes). Loan accounts. ASSIGNMENTS: The Financial Institutions may assign and transfer their participation in this Agreement in whole or in part, and therefore the rights and obligations arising herefrom, to other credit or financial institutions, securitization funds created or to be created in Spain or abroad (in any event within the EU) and to any other entity and, specifically, to companies or entities, whether regulated or not, created for the purpose of participating in the credit and securities market by securitization processes or others similar to the rights and obligations under this Agreement, provided the assignment does not result in higher costs to the Borrower. Only entities domiciled or with a permanent establishment in the EU may be assignees. TAXES AND EXPENSES: The Borrower will assume all taxes and levies, present or future ("Increased Costs") which may accrue in relation to this financing Operation, including legal expenses, the expenses of external advisers and of movements of funds in Bank of Spain accounts, if they take place, or any other system used to comply with payment obligations between the parties to the agreement. The entities will lend from a permanent establishment in the European Union. Standard gross up clause. GROUNDS FOR EARLY TERMINATION: Breach by the Borrower of any commitment, obligation, etc. established in the agreement, on the basis and with an assessment in each case of the substance/materiality of each one. A grace or rectification period may be established for each ground for early termination, to be negotiated by the parties, which in any event shall not exceed 5 business days for default in payment and 15 calendar days for all others. Including but not limited to the following: o Cross Default subject to minimum amounts; expressly excluding the application thereof for breach by the SPV. o Change in 100% ownership of the SPV, direct or indirect, by ACC. o Breach or supervening inefficacy of any representation or warranty. o Illegality. o Adverse Material Change. Any circumstances or events which may or do have a significant negative effect on the financial situation, net worth or ability of the SPV to comply with obligations arising from the Financing. DOCUMENTATION: The operation will be formalized by a loan agreement drawn up by a law firm of acknowledged prestige and include the representations, obligations, conditions precedent, grounds for termination and other clauses normal in this type of operation. The documentation will be executed before Public Notary. APPLICABLE LAW AND [INITIALS] Page 14 of 15 JURISDICTION: Spanish law and the Courts of the city of Madrid. RANKING: Both the Subordinated Loan and the Subordinated Facility Agreement to be granted by ACC to the SPV must be fully subordinated in ranking. ASSISTANCE IN SYNDICATION: The Borrower undertakes to support the Underwriting Entities and use its best efforts during syndication to motivate entities to participate in order to guarantee the success thereof. [INITIALS] Page 15 of 15 EX-10 5 exhib104.txt EXHIBIT 10.4 EXHIBIT 10.4 (Multicurrency-Cross Border) ISDA(R) INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION, INC. MASTER AGREEMENT DATED AS OF SEPTEMBER 25 2006 BANCO SANTANDER CENTRAL and FINANZAS DOS, S.A. HISPANO, S.A. have entered and/or anticipate entering into one or more transactions (each a "Transaction") that are or will be governed by this Master Agreement, which includes the schedule (the "Schedule"), and the documents and other confirming evidence (each a "Confirmation") exchanged between the parties confirming those Transactions. Accordingly, the parties agree as follows:- 1. INTERPRETATION (a) DEFINITIONS. The terms defined in Section 14 and in the Schedule will have the meanings therein specified for the purpose of this Master Agreement. (b) INCONSISTENCY. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement (including the Schedule), such Confirmation will prevail for the purpose of the relevant Transaction. (c) SINGLE AGREEMENT. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this "Agreement"), and the parties would not otherwise enter into any Transactions. 2. OBLIGATIONS (a) GENERAL CONDITIONS. (i) Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement. (ii) Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement. (iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other applicable condition precedent specified in this Agreement. 1 (b) CHANGE OF ACCOUNT. Either party may change its account for receiving a payment or delivery by giving notice to the other party at least five Local Business Days prior to the scheduled date for the payment or delivery to which such change applies unless such other party gives timely notice of a reasonable objection to such change. (c) NETTING. If on any date amounts would otherwise be payable:- (i) in the same currency; and (ii) in respect of the same Transaction, by each party to the other, then, on such date, each party's obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by whom the larger aggregate amount would have been payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount. The parties may elect in respect of two or more Transactions that a net amount will be determined in respect of all amounts payable on the same date in the same currency in respect of such Transactions, regardless of whether such amounts are payable in respect of the same Transaction. The election may be made in the Schedule or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions identified as being subject to the election, together with the starting date (in which case subparagraph (ii) above will not, or will cease to, apply to such Transactions from such date). This election may be made separately for different groups of Transactions and will apply separately to each pairing of Offices through which the parties make and receive payments or deliveries. (d) DEDUCTION OR WITHHOLDING FOR TAX. (i) GROSS-UP. All payments under this Agreement will be made without any deduction or withholding for or on account of any Tax unless such deduction or withholding is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, then in effect. If a party is so required to deduct or withhold, then that party ("X") will:- (1) promptly notify the other party ("Y") of such requirement; (2) pay to the relevant authorities the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from any additional amount paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such deduction or withholding is required or receiving notice that such amount has been assessed against Y; (3) promptly forward to Y an official receipt (or a certified copy), or other documentation reasonably acceptable to Y, evidencing such payment to such authorities; and (4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which Y is otherwise entitled under this Agreement, such additional amount as is necessary to ensure that the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount Y would have received had no such deduction or withholding been required. However, X will not be required to pay any additional amount to Y to the extent that it would not be required to be paid but for:- (A) the failure by Y to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d); or (B) the failure of a representation made by Y pursuant to Section 3(f) to be accurate and true unless such failure would not have occurred but for (I) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (II) a Change in Tax Law. 2 (ii) LIABILITY. If:- (1) X is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding in respect of which X would not be required to pay an additional amount to Y under Section 2(d)(i)(4); (2) X does not so deduct or withhold; and (3) a liability resulting from such Tax is assessed directly against X, then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y will promptly pay to X the amount of such liability (including any related liability for interest, but including any related liability for penalties only if Y has failed to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)). (e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party that defaults in the performance of any payment obligation will, to the extent permitted by law and subject to Section 6(c), be required to pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the same currency as such overdue amount, for the period from (and including) the original due date for payment to (but excluding) the date of actual payment, at the Default Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. If, prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party defaults in the performance of any obligation required to be settled by delivery, it will compensate the other party on demand if and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement. 3. REPRESENTATIONS Each party represents to the other party (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into and, in the case of the representations in Section 3(f), at all times until the termination of this Agreement) that:- (a) BASIC REPRESENTATIONS. (i) STATUS. It is duly organised and validly existing under the laws of the jurisdiction of its organisation or incorporation and, if relevant under such laws, in good standing; (ii) POWERS. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action to authorise such execution, delivery and performance; (iii) NO VIOLATION OR CONFLICT. Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets; (iv) CONSENTS. All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support Document to which it is a party have been obtained and are in full force and effect and all conditions of any such consents have been complied with; and (v) OBLIGATIONS BINDING. Its obligations under this Agreement and any Credit Support Document to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganisation, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)). 3 (b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party. (c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge, threatened against it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Document. (d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is furnished in writing by or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the date of the information, true, accurate and complete in every material respect. (e) PAYER TAX REPRESENTATION. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(e) is accurate and true. (f) PAYEE TAX REPRESENTATIONS. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(f) is accurate and true. 4. AGREEMENTS Each party agrees with the other that, so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party:- (a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or, in certain cases under subparagraph (iii) below, to such government or taxing authority as the other party reasonably directs:- (i) any forms, documents or certificates relating to taxation specified in the Schedule or any Confirmation; (ii) any other documents specified in the Schedule or any Confirmation; and (iii) upon reasonable demand by such other party, any form or document that may be required or reasonably requested in writing in order to allow such other party or its Credit Support Provider to make a payment under this Agreement or any applicable Credit Support Document without any deduction or withholding for or on account of any Tax or with such deduction or withholding at a reduced rate (so long as the completion, execution or submission of such form or document would not materially prejudice the legal or commercial position of the party in receipt of such demand), with any such form or document to be accurate and completed in a manner reasonably satisfactory to such other party and to be executed and to be delivered with any reasonably required certification, in each case by the date specified in the Schedule or such Confirmation or, if none is specified, as soon as reasonably practicable. (b) MAINTAIN AUTHORISATIONS. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future. (c) COMPLY WITH LAWS. It will comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement or any Credit Support Document to which it is a party. (d) TAX AGREEMENT. It will give notice of any failure of a representation made by it under Section 3(f) to be accurate and true promptly upon learning of such failure. (e) PAYMENT OF STAMP TAX. Subject to Section 11, it will pay any Stamp Tax levied or imposed upon it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is incorporated, 4 organised, managed and controlled, or considered to have its seat, or in which a branch or office through which it is acting for the purpose of this Agreement is located ("Stamp Tax Jurisdiction") and will indemnify the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other party's execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the other party. 5. EVENTS OF DEFAULT AND TERMINATION EVENTS (a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes an event of default (an "Event of Default") with respect to such party:- (i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when due, any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) required to be made by it if such failure is not remedied on or before the third Local Business Day after notice of such failure is given to the party; (ii) BREACH OF AGREEMENT. Failure by the party to comply with or perform any agreement or obligation (other than an obligation to make any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party in accordance with this Agreement if such failure is not remedied on or before the thirtieth day after notice of such failure is given to the party; (iii) CREDIT SUPPORT DEFAULT. (1) Failure by the party or any Credit Support Provider of such party to comply with or perform any agreement or obligation to be complied with or performed by it in accordance with any Credit Support Document if such failure is continuing after any applicable grace period has elapsed; (2) the expiration or termination of such Credit Support Document or the failing or ceasing of such Credit Support Document to be in full force and effect for the purpose of this Agreement (in either case other than in accordance with its terms) prior to the satisfaction of all obligations of such party under each Transaction to which such Credit Support Document relates without the written consent of the other party; or (3) the party or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, such Credit Support Document; (iv) MISREPRESENTATION. A representation (other than a representation under Section 3(e) or (f)) made or repeated or deemed to have been made or repeated by the party or any Credit Support Provider of such party in this Agreement or any Credit Support Document proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated; (v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party (1) defaults under a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction, (2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment or delivery due on the last payment, delivery or exchange date of, or any payment on early termination of, a Specified Transaction (or such default continues for at least three Local Business Days if there is no applicable notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in part, a Specified Transaction (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf); (vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule as applying to the party, the occurrence or existence of (1) a default, event of default or other similar condition or event (however 5 described) in respect of such party, any Credit Support Provider of such party or any applicable Specified Entity of such party under one or more agreements or instruments relating to Specified Indebtedness of any of them (individually or collectively) in an aggregate amount of not less than the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such agreements or instruments, before it would otherwise have been due and payable or (2) a default by such party, such Credit Support Provider or such Specified Entity (individually or collectively) in making one or more payments on the due date thereof in an aggregate amount of not less than the applicable Threshold Amount under such agreements or instruments (after giving effect to any applicable notice requirement or grace period); (vii) BANKRUPTCY. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party:- (1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (l) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or (viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer:- (1) the resulting, surviving or transferee entity fails to assume all the obligations of such party or such Credit Support Provider under this Agreement or any Credit Support Document to which it or its predecessor was a party by operation of law or pursuant to an agreement reasonably satisfactory to the other party to this Agreement; or (2) the benefits of any Credit Support Document fail to extend (without the consent of the other party) to the performance by such resulting, surviving or transferee entity of its obligations under this Agreement. (b) TERMINATION EVENTS. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any event specified below constitutes an Illegality if the event is specified in (i) below, a Tax Event if the event is specified in (ii) below or a Tax Event Upon Merger if the event is specified in (iii) below, and, if specified to be applicable, a Credit Event 6 Upon Merger if the event is specified pursuant to (iv) below or an Additional Termination Event if the event is specified pursuant to (v) below:- (i) ILLEGALITY. Due to the adoption of, or any change in, any applicable law after the date on which a Transaction is entered into, or due to the promulgation of, or any change in, the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law after such date, it becomes unlawful (other than as a result of a breach by the party of Section 4(b)) for such party (which will be the Affected Party):- (1) to perform any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of such Transaction or to comply with any other material provision of this Agreement relating to such Transaction; or (2) to perform, or for any Credit Support Provider of such party to perform, any contingent or other obligation which the party (or such Credit Support Provider) has under any Credit Support Document relating to such Transaction; (ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (y) a Change in Tax Law, the party (which will be the Affected Party) will, or there is a substantial likelihood that it will, on the next succeeding Scheduled Payment Date (1) be required to pay to the other party an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount is required to be deducted or withheld for or on account of a Tax (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount is required to be paid in respect of such Tax under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or (B)); (iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the next succeeding Scheduled Payment Date will either (1) be required to pay an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been deducted or withheld for or on account of any Indemnifiable Tax in respect of which the other party is not required to pay an additional amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a party consolidating or amalgamating with, or merging with or into, or transferring all or substantially all its assets to, another entity (which will be the Affected Party) where such action does not constitute an event described in Section 5(a)(viii); (iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is specified in the Schedule as applying to the party, such party ("X"), any Credit Support Provider of X or any applicable Specified Entity of X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and such action does not constitute an event described in Section 5(a)(viii) but the creditworthiness of the resulting, surviving or transferee entity is materially weaker than that of X, such Credit Support Provider or such Specified Entity, as the case may be, immediately prior to such action (and, in such event, X or its successor or transferee, as appropriate, will be the Affected Party); or (v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination Event" is specified in the Schedule or any Confirmation as applying, the occurrence of such event (and, in such event, the Affected Party or Affected Parties shall be as specified for such Additional Termination Event in the Schedule or such Confirmation). (c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which would otherwise constitute or give rise to an Event of Default also constitutes an Illegality, it will be treated as an Illegality and will not constitute an Event of Default. 7 6. EARLY TERMINATION (a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event of Default with respect to a party (the "Defaulting Party") has occurred and is then continuing, the other party (the "Non-defaulting Party") may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, "Automatic Early Termination" is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8). (b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT. (i) NOTICE. If a Termination Event occurs, an Affected Party will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Termination Event and each Affected Transaction and will also give such other information about that Termination Event as the other party may reasonably require. (ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the Affected Party, the Affected Party will, as a condition to its right to designate an Early Termination Date under Section 6(b)(iv), use all reasonable efforts (which will not require such party to incur a loss, excluding immaterial, incidental expenses) to transfer within 20 days after it gives notice under Section 6(b)(i) all its rights and obligations under this Agreement in respect of the Affected Transactions to another of its Offices or Affiliates so that such Termination Event ceases to exist. If the Affected Party is not able to make such a transfer it will give notice to the other party to that effect within such 20 day period, whereupon the other party may effect such a transfer within 30 days after the notice is given under Section 6(b)(i). Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional upon the prior written consent of the other party, which consent will not be withheld if such other party's policies in effect at such time would permit it to enter into transactions with the transferee on the terms proposed. (iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties, each party will use all reasonable efforts to reach agreement within 30 days after notice thereof is given under Section 6(b)(i) on action to avoid that Termination Event. (iv) RIGHT TO TERMINATE. If:- (1) a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as the case may be, has not been effected with respect to all Affected Transactions within 30 days after an Affected Party gives notice under Section 6(b)(i); or (2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or an Additional Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened Party is not the Affected Party, either party in the case of an Illegality, the Burdened Party in the case of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event or an Additional Termination Event if there is more than one Affected Party, or the party which is not the Affected Party in the case of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Party may, by not more than 20 days notice to the other party and provided that the relevant Termination Event is then 8 continuing, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all Affected Transactions. (c) EFFECT OF DESIGNATION. (i) If notice designating an Early Termination Date is given under Section 6(a) or (b), the Early Termination Date will occur on the date so designated, whether or not the relevant Event of Default or Termination Event is then continuing. (ii) Upon the occurrence or effective designation of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or 2(e) in respect of the Terminated Transactions will be required to be made, but without prejudice to the other provisions of this Agreement. The amount, if any, payable in respect of an Early Termination Date shall be determined pursuant to Section 6(e). (d) CALCULATIONS. (i) STATEMENT. On or as soon as reasonably practicable following the occurrence of an Early Termination Date, each party will make the calculations on its part, if any, contemplated by Section 6(e) and will provide to the other party a statement (1) showing, in reasonable detail, such calculations (including all relevant quotations and specifying any amount payable under Section 6(e)) and (2) giving details of the relevant account to which any amount payable to it is to be paid. In the absence of written confirmation from the source of a quotation obtained in determining a Market Quotation, the records of the party obtaining such quotation will be conclusive evidence of the existence and accuracy of such quotation. (ii) PAYMENT DATE. An amount calculated as being due in respect of any Early Termination Date under Section 6(e) will be payable on the day that notice of the amount payable is effective (in the case of an Early Termination Date which is designated or occurs as a result of an Event of Default) and on the day which is two Local Business Days after the day on which notice of the amount payable is effective (in the case of an Early Termination Date which is designated as a result of a Termination Event). Such amount will be paid together with (to the extent permitted under applicable law) interest thereon (before as well as after judgment) in the Termination Currency, from (and including) the relevant Early Termination Date to (but excluding) the date such amount is paid, at the Applicable Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. (e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the following provisions shall apply based on the parties' election in the Schedule of a payment measure, either "Market Quotation" or "Loss", and a payment method, either the "First Method"-- or the "Second Method". If the parties fail to designate a payment measure or payment method in the Schedule, it will be deemed that "Market Quotation" or the "Second Method", as the case may be, shall apply. The amount, if any, payable in respect of an Early Termination Date and determined pursuant to this Section will be subject to any Set-off. (i) EVENTS OF DEFAULT. If the Early Termination Date results from an Event of Default:- (1) FIRST METHOD AND MARKET QUOTATION. If the First Method and Market Quotation apply, the Defaulting Party will pay to the Non-defaulting Party the excess, if a positive number, of (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party over (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. (2) FIRST METHOD AND LOSS. If the First Method and Loss apply, the Defaulting Party will pay to the Non-defaulting Party, if a positive number, the Non-defaulting Party's Loss in respect of this Agreement. (3) SECOND METHOD AND MARKET QUOTATION. If the Second Method and Market Quotation apply, an amount will be payable equal to (A) the sum of the Settlement Amount (determined by the 9 Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party. (4) SECOND METHOD AND LOSS. If the Second Method and Loss apply, an amount will be payable equal to the Non-defaulting Party's Loss in respect of this Agreement. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party. (ii) TERMINATION EVENTS. If the Early Termination Date results from a Termination Event:- (1) ONE AFFECTED PARTY. If there is one Affected Party, the amount payable will be determined in accordance with Section 6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if Loss applies, except that, in either case, references to the Defaulting Party and to the Non-defaulting Party will be deemed to be references to the Affected Party and the party which is not the Affected Party, respectively, and, if Loss applies and fewer than all the Transactions are being terminated, Loss shall be calculated in respect of all Terminated Transactions. (2) TWO AFFECTED PARTIES. If there are two Affected Parties:- (A) if Market Quotation applies, each party will determine a Settlement Amount in respect of the Terminated Transactions, and an amount will be payable equal to (I) the sum of (a) one-half of the difference between the Settlement Amount of the party with the higher Settlement Amount ("X") and the Settlement Amount of the party with the lower Settlement Amount ("Y") and (b) the Termination Currency Equivalent of the Unpaid Amounts owing to X less (II) the Termination Currency Equivalent of the Unpaid Amounts owing to Y; and (B) if Loss applies, each party will determine its Loss in respect of this Agreement (or, if fewer than all the Transactions are being terminated, in respect of all Terminated Transactions) and an amount will be payable equal to one-half of the difference between the Loss of the party with the higher Loss ("X") and the Loss of the party with the lower Loss ("Y"). If the amount payable is a positive number, Y will pay it to X; if it is a negative number, X will pay the absolute value of that amount to Y. (iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early Termination Date occurs because "Automatic Early Termination" applies in respect of a party, the amount determined under this Section 6(e) will be subject to such adjustments as are appropriate and permitted by law to reflect any payments or deliveries made by one party to the other under this Agreement (and retained by such other party) during the period from the relevant Early Termination Date to the date for payment determined under Section 6(d)(ii). (iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies an amount recoverable under this Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount is payable for the loss of bargain and the loss of protection against future risks and except as otherwise provided in this Agreement neither party will be entitled to recover any additional damages as a consequence of such losses. 10 7. TRANSFER Subject to Section 6(b)(ii), neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party, except that:- (a) a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and (b) a party may make such a transfer of all or any part of its interest in any amount payable to it from a Defaulting Party under Section 6(e). Any purported transfer that is not in compliance with this Section will be void. 8. CONTRACTUAL CURRENCY (a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement will be made in the relevant currency specified in this Agreement for that payment (the "Contractual Currency"). To the extent permitted by applicable law, any obligation to make payments under this Agreement in the Contractual Currency will not be discharged or satisfied by any tender in any currency other than the Contractual Currency, except to the extent such tender results in the actual receipt by the party to which payment is owed, acting in a reasonable manner and in good faith in converting the currency so tendered into the Contractual Currency, of the full amount in the Contractual Currency of all amounts payable in respect of this Agreement. If for any reason the amount in the Contractual Currency so received falls short of the amount in the Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for the shortfall. If for any reason the amount in the Contractual Currency so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party receiving the payment will refund promptly the amount of such excess. (b) JUDGMENTS. To the extent permitted by applicable law, if any judgment or order expressed in a currency other than the Contractual Currency is rendered (i) for the payment of any amount owing in respect of this Agreement, (ii) for the payment of any amount relating to any early termination in respect of this Agreement or (iii) in respect of a judgment or order of another court for the payment of any amount described in (i) or (ii) above, the party seeking recovery, after recovery in full of the aggregate amount to which such party is entitled pursuant to the judgment or order, will be entitled to receive immediately from the other party the amount of any shortfall of the Contractual Currency received by such party as a consequence of sums paid in such other currency and will refund promptly to the other party any excess of the Contractual Currency received by such party as a consequence of sums paid in such other currency if such shortfall or such excess arises or results from any variation between the rate of exchange at which the Contractual Currency is converted into the currency of the judgment or order for the purposes of such judgment or order and the rate of exchange at which such party is able, acting in a reasonable manner and in good faith in converting the currency received into the Contractual Currency, to purchase the Contractual Currency with the amount of the currency of the judgment or order actually received by such party. The term "rate of exchange" includes, without limitation, any premiums and costs of exchange payable in connection with the purchase of or conversion into the Contractual Currency. (c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these indemnities constitute separate and independent obligations from the other obligations in this Agreement, will be enforceable as separate and independent causes of action, will apply notwithstanding any indulgence granted by the party to which any payment is owed and will not be affected by judgment being obtained or claim or proof being made for any other sums payable in respect of this Agreement. (d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be sufficient for a party to demonstrate that it would have suffered a loss had an actual exchange or purchase been made. 11 9. MISCELLANEOUS (a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings with respect thereto. (b) AMENDMENTS. No amendment, modification or waiver in respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties or confirmed by an exchange of telexes or electronic messages on an electronic messaging system. (c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties under this Agreement will survive the termination of any Transaction. (d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights, powers, remedies and privileges provided in this Agreement are cumulative and not exclusive of any rights, powers, remedies and privileges provided by law. (e) COUNTERPARTS AND CONFIRMATIONS. (i) This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile transmission), each of which will be deemed an original. (ii) The parties intend that they are legally bound by the terms of each Transaction from the moment they agree to those terms (whether orally or otherwise). A Confirmation shall be entered into as soon as practicable and may be executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes or by an exchange of electronic messages on an electronic messaging system, which in each case will be sufficient for all purposes to evidence a binding supplement to this Agreement. The parties will specify therein or through another effective means that any such counterpart, telex or electronic message constitutes a Confirmation. (f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege. (g) HEADINGS. The headings used in this Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement. 10. OFFICES; MULTIBRANCH PARTIES (a) If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction through an Office other than its head or home office represents to the other party that, notwithstanding the place of booking office or jurisdiction of incorporation or organisation of such party, the obligations of such party are the same as if it had entered into the Transaction through its head or home office. This representation will be deemed to be repeated by such party on each date on which a Transaction is entered into. (b) Neither party may change the Office through which it makes and receives payments or deliveries for the purpose of a Transaction without the prior written consent of the other party. (c) If a party is specified as a Multibranch Party in the Schedule, such Multibranch Party may make and receive payments or deliveries under any Transaction through any Office listed in the Schedule, and the Office through which it makes and receives payments or deliveries with respect to a Transaction will be specified in the relevant Confirmation. 11. EXPENSES A Defaulting Party will, on demand, indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees and Stamp Tax, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement or any Credit Support Document 12 to which the Defaulting Party is a party or by reason of the early termination of any Transaction, including, but not limited to, costs of collection. 12. NOTICES (a) EFFECTIVENESS. Any notice or other communication in respect of this Agreement may be given in any manner set forth below (except that a notice or other communication under Section 5 or 6 may not be given by facsimile transmission or electronic messaging system) to the address or number or in accordance with the electronic messaging system details provided (see the Schedule) and will be deemed effective as indicated:- (i) if in writing and delivered in person or by courier, on the date it is delivered; (ii) if sent by telex, on the date the recipient's answerback is received; (iii) if sent by facsimile transmission, on the date that transmission is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender's facsimile machine); (iv) if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date that mail is delivered or its delivery is attempted; or (v) if sent by electronic messaging system, on the date that electronic message is received, unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Local Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Local Business Day. (b) CHANGE OF ADDRESSES. Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system details at which notices or other communications are to be given to it. 13. GOVERNING LAW AND JURISDICTION (a) GOVERNING LAW. This Agreement will be governed by and construed in accordance with the law specified in the Schedule. (b) JURISDICTION. With respect to any suit, action or proceedings relating to this Agreement ("Proceedings"), each party irrevocably:- (i) submits to the jurisdiction of the English courts, if this Agreement is expressed to be governed by English law, or to the non-exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City, if this Agreement is expressed to be governed by the laws of the State of New York; and (ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party. Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction (outside, if this Agreement is expressed to be governed by English law, the Contracting States, as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or any modification, extension or re-enactment thereof for the time being in force) nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction. (c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent (if any) specified opposite its name in the Schedule to receive, for it and on its behalf, service of process in any Proceedings. If for any 13 reason any party's Process Agent is unable to act as such, such party will promptly notify the other party and within 30 days appoint a substitute process agent acceptable to the other party. The parties irrevocably consent to service of process given in the manner provided for notices in Section 12. Nothing in this Agreement will affect the right of either party to serve process in any other manner permitted by law. (d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest extent permitted by applicable law, with respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction, order for specific performance or for recovery of property, (iv) attachment of its assets (whether before or after judgment) and (v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise be entitled in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any Proceedings. 14. DEFINITIONS As used in this Agreement:- "ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b). "AFFECTED PARTY" has the meaning specified in Section 5(b). "AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event consisting of an Illegality, Tax Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such Termination Event and (b) with respect to any other Termination Event, all Transactions. "AFFILIATE" means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, "control" of any entity or person means ownership of a majority of the voting power of the entity or person. "APPLICABLE RATE" means:- (a) in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate; (b) in respect of an obligation to pay an amount under Section 6(e) of either party from and after the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable, the Default Rate; (c) in respect of all other obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default Rate; and (d) in all other cases, the Termination Rate. "BURDENED PARTY" has the meaning specified in Section 5(b). "CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification of, or any change in or amendment to, any law (or in the application or official interpretation of any law) that occurs on or after the date on which the relevant Transaction is entered into. "CONSENT" includes a consent, approval, action, authorisation, exemption, notice, filing, registration or exchange control consent. "CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b). "CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified as such in this Agreement. "CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule. "DEFAULT RATE" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus 1% per annum. 14 "DEFAULTING PARTY" has the meaning specified in Section 6(a). "EARLY TERMINATION DATE" means the date determined in accordance with Section 6(a) or 6(b)(iv). "EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if applicable, in the Schedule. "ILLEGALITY" has the meaning specified in Section 5(b). "INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in respect of a payment under this Agreement but for a present or former connection between the jurisdiction of the government or taxation authority imposing such Tax and the recipient of such payment or a person related to such recipient (including, without limitation, a connection arising from such recipient or related person being or having been a citizen or resident of such jurisdiction, or being or having been organised, present or engaged in a trade or business in such jurisdiction, or having or having had a permanent establishment or fixed place of business in such jurisdiction, but excluding a connection arising solely from such recipient or related person having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement or a Credit Support Document). "LAW" includes any treaty, law, rule or regulation (as modified, in the case of tax matters, by the practice of any relevant governmental revenue authority) and "lawful" and "unlawful" will be construed accordingly. "LOCAL BUSINESS DAY" means; subject to the Schedule, a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) (a) in relation to any obligation under Section 2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement, (b) in relation to any other payment, in the place where the relevant account is located and, if different, in the principal financial centre, if any, of the currency of such payment, (c) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), in the city specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and (d) in relation to Section 5(a)(v)(2), in the relevant locations for performance with respect to such Specified Transaction. "LOSS" means, with respect to this Agreement or one or more Terminated Transactions, as the case may be, and a party, the Termination Currency Equivalent of an amount that party reasonably determines in good faith to be its total losses and costs (or gain, in which case expressed as a negative number) in connection with this Agreement or that Terminated Transaction or group of Terminated Transactions, as the case may be, including any loss of bargain, cost of funding or, at the election of such party but without duplication, loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position (or any gain resulting from any of them). Loss includes losses and costs (or gains) in respect of any payment or delivery required to have been made (assuming satisfaction of each applicable condition precedent) on or before the relevant Early Termination Date and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and out-of-pocket expenses referred to under Section 11. A party will determine its Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as of the earliest date thereafter as is reasonably practicable. A party may (but need not) determine its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets. "MARKET QUOTATION" means, with respect to one or more Terminated Transactions and a party making the determination, an amount determined on the basis of quotations from Reference Market-makers. Each quotation will be for an amount, if any, that would be paid to such party (expressed as a negative number) or by such party (expressed as a positive number) in consideration of an agreement between such party (taking into account any existing Credit Support Document with respect to the obligations of such party) and the quoting Reference Market-maker to enter into a transaction (the "Replacement Transaction") that would have the effect of preserving for such party the economic equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) by the parties under Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have 15 been required after that date. For this purpose, Unpaid Amounts in respect of the Terminated Transaction or group of Terminated Transactions are to be excluded but, without limitation, any payment or delivery that would, but for the relevant Early Termination Date, have been required (assuming satisfaction of each applicable condition precedent) after that Early Termination Date is to be included. The Replacement Transaction would be subject to such documentation as such party and the Reference Market-maker may, in good faith, agree. The party making the determination (or its agent) will request each Reference Market-maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on or as soon as reasonably practicable after the relevant Early Termination Date. The day and time as of which those quotations are to be obtained will be selected in good faith by the party obliged to make a determination under Section 6(e), and, if each party is so obliged, after consultation with the other. If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values. If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations shall be disregarded. If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Terminated Transaction or group of Terminated Transactions cannot be determined. "NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the Non-defaulting Party (as certified by it) if it were to fund the relevant amount. "NON-DEFAULTING PARTY" has the meaning specified in Section 6(a). "OFFICE" means a branch or office of a party, which may be such party's head or home office. "POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default. "REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market selected by the party determining a Market Quotation in good faith (a) from among dealers of the highest credit standing which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit and (b) to the extent practicable, from among such dealers having an office in the same city. "RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a) in which the party is incorporated, organised, managed and controlled or considered to have its seat, (b) where an Office through which the party is acting for purposes of this Agreement is located, (c) in which the party executes this Agreement and (d) in relation to any payment, from or through which such payment is made. "SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be made under Section 2(a)(i) with respect to a Transaction. "SET-OFF" means set-off, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the payer of an amount under Section 6 is entitled or subject (whether arising under this Agreement, another contract, applicable law or otherwise) that is exercised by, or imposed on, such payer. "SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination Date, the sum of:- (a) the Termination Currency Equivalent of the Market Quotations (whether positive or negative) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation is determined; and (b) such party's Loss (whether positive or negative and without reference to any Unpaid Amounts) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation cannot be determined or would not (in the reasonable belief of the party making the determination) produce a commercially reasonable result. "SPECIFIED ENTITY" has the meaning specified in the Schedule. 16 "SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money. "SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction (including an agreement with respect thereto) now existing or hereafter entered into between one party to this Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement (or any Credit Support Provider of such other party or any applicable Specified Entity of such other party) which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions), (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation. "STAMP TAX" means any stamp, registration, documentation or similar tax. "TAX" means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest, penalties and additions thereto) that is imposed by any government or other taxing authority in respect of any payment under this Agreement other than a stamp, registration, documentation or similar tax. "TAX EVENT" has the meaning specified in Section 5(b). "TAX EVENT UPON MERGER" has the meaning specified in Section 5(b). "TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a) if resulting from a Termination Event, all Affected Transactions and (b) if resulting from an Event of Default, all Transactions (in either case) in effect immediately before the effectiveness of the notice designating that Early Termination Date (or, if "Automatic Early Termination" applies, immediately before that Early Termination Date). "TERMINATION CURRENCY" has the meaning specified in the Schedule. "TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated in the Termination Currency, such Termination Currency amount and, in respect of any amount denominated in a currency other than the Termination Currency (the "Other Currency"), the amount in the Termination Currency determined by the party making the relevant determination as being required to purchase such amount of such Other Currency as at the relevant Early Termination Date, or, if the relevant Market Quotation or Loss (as the case may be), is determined as of a later date, that later date, with the Termination Currency at the rate equal to the spot exchange rate of the foreign exchange agent (selected as provided below) for the purchase of such Other Currency with the Termination Currency at or about 11:00 a.m. (in the city in which such foreign exchange agent is located) on such date as would be customary for the determination of such a rate for the purchase of such Other Currency for value on the relevant Early Termination Date or that later date. The foreign exchange agent will, if only one party is obliged to make a determination under Section 6(e), be selected in good faith by that party and otherwise will be agreed by the parties. "TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to be applicable, a Credit Event Upon Merger or an Additional Termination Event. "TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such amounts. "UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination Date, the aggregate of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early Termination Date and which remain unpaid as at such Early Termination Date and (b) in respect of each Terminated Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be settled by delivery to such party on or prior to such Early Termination Date and which has not been so settled as at such Early Termination Date, an amount equal to the fair market 17 value of that which was (or would have been) required to be delivered as of the originally scheduled date for delivery, in each case together with (to the extent permitted under applicable law) interest, in the currency of such amounts, from (and including) the date such amounts or obligations were or would have been required to have been paid or performed to (but excluding) such Early Termination Date, at the Applicable Rate. Such amounts of interest will be calculated on the basis of daily compounding and the actual number of days elapsed. The fair market value of any obligation referred to in clause (b) above shall be reasonably determined by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, it shall be the average of the Termination Currency Equivalents of the fair market values reasonably determined by both parties. IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document. BANCO SANTANDER CENTRAL FINANZAS DOS, S.A. HISPANO, S.A. By: /s/ Noemi Doce Deibe By: /s/ Valentin Montoya Moya Name: Name: Title: Title: Date: Date: By: /s/ [ILLEGIBLE SIGNATURE] By: /s/ Jorge Vega-Penichet Lopez Name: Name: Title: Title: Date: Date: SCHEDULE TO THE MASTER AGREEMENT DATED AS OF SEPTEMBER 25, 2006 BETWEEN Banco Santander FINANZAS DOS, S.A. Central Hispano, S.A. and ("Party A") ("Party B") PART 1 TERMINATION PROVISIONS In this Agreement:- (a) "SPECIFIED ENTITY" means in relation to Party A for the purpose of: Section 5(a) (v), Not applicable. Section 5(a) (vi), Not applicable. Section 5(a) (vii), Not applicable. Section 5(b) (iv), Not applicable. In relation to Party B for the purpose of: Section 5(a) (v), Any Affiliate Section 5(a) (vi), Any Affiliate Section 5(a) (vii), Any Affiliate Section 5(b) (iv), Any Affiliate (b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14 of this Agreement. (c) The "CROSS DEFAULT" provisions of Section 5(a)(vi) of this Agreement will apply to both parties, but shall exclude any payment default that results solely from wire transfer difficulties or an error or omission of an administrative or operational nature (so long as sufficient funds are available to the relevant party on the relevant date), provided that payment is made within three Business Days after such transfer difficulties have been corrected or the error or omission has been discovered. 1 If such provisions apply:- "SPECIFIED INDEBTEDNESS" means any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money, other than indebtedness in relation to bank deposits received in the normal course of business. "THRESHOLD AMOUNT" means in respect of Party A 3% of shareholders' equity as reported in its most recently audited financial statements and in respect of Party B 3% of shareholders' equity on a consolidated basis, as reported in its most recently audited financial statements. (d) The "CREDIT EVENT UPON MERGER" provisions of Sections 5 (b) (iv) will apply to Party A and Party B. (e) The "AUTOMATIC EARLY TERMINATION" provisions of Section 6 (a) will not apply to Party A and Party B. (f) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6 (e) of this Agreement: (i) Market Quotation will apply. (ii) The Second Method will apply. (g) "TERMINATION CURRENCY" means any single currency of any Transaction as may be selected by the party which is not the Defaulting Party or the Affected Party (as the case may be) or, in circumstances where there is more than one Affected Party, such currency of any Transaction as may be mutually agreed between the parties hereto or otherwise, failing such mutual agreement or in the event that such currency is not freely available and convertible, Euro ((euro)). (h) ADDITIONAL TERMINATION EVENT will not apply. PART 2 TAX REPRESENTATIONS (a) PAYER TAX REPRESENTATIONS. For the purpose of Section 3 (e) of this Agreement, Party A and Party B will make the following representation:- It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any tax from any payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party under this Agreement. In making this representation, it may rely on:- 2 (i) the accuracy of any representation made by the other party pursuant to Section 3(f) of this Agreement; (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement; and (iii) the satisfaction of the agreement of the other party contained in Section 4 (d) of this Agreement, provided that it shall not be a breach of this representation where reliance is placed on clause (ii) and other party does not deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position. (b) PAYEE TAX REPRESENTATIONS. For the purpose of Section 3(f) of this Agreement, Party A and Party B make no representations. PART 3 DOCUMENTS TO BE DELIVERED For the purpose of Section 4 (a):- (a) Tax forms, documents or certificates to be delivered are: Party required to deliver document Form / Document / Certificate Date by which to be delivered - --------------------------------------------------------------------------------------------------------------- Each Party Any form, document or certificate As soon as practicable following reasonably requested by the other written demand. party in order for such other party to be able to make payments hereunder without withholding for or on account of Taxes or with such withholding at a reduced rate.
3 (b) Other documents to be delivered are:- Covered by Party required to deliver Date by which to Section 3(d) document Form/Document/Certificate be delivered representation - ------------------------------------------------------------------------------------------------------------------- Each Party Such proof of the names true signatures on signing yes on signing yes and authority of persons signing this Agreement on its behalf as the other party may reasonably request Party B A copy of an annual report of such party Promptly upon Yes and its subsidiaries prepared on a request. consolidated basis and in conformity with generally accepted accounting principles applied on a basis consistent with audited consolidated financial statements of such party and its subsidiaries as at the most recently completed fiscal year, duly certified by independent certified public accountants of recognized standing selected by such party. - ---------------------------------- -------------------------------------------- ------------------- ------------------ - ---------------------------------- -------------------------------------------- ------------------- ------------------ Party B A copy of unaudited financial statements Promptly upon Yes of such party and its subsidiaries request. prepared in the same manner as the audit report referred to above, signed by a duly authorized accounting officer of such party and consisting of at least a balance sheet as at the close of such quarter and statements of earnings and source and application of funds for such quarter and for the period from the beginning of such fiscal year to the close of the quarter.
4 PART 4 MISCELLANEOUS (a) Addresses for Notices. For the purpose of Section 12 (a) of this Agreement:- Address for notices or communications to Party A:- BANCO SANTANDER CENTRAL HISPANO, S.A., MADRID Address: Ciudad Grupo Santander Edificio Marisma, Planta Baja 28660 Boadilla del Monte, Madrid. Attn.: Swaps Administration Telex: 42362/45928 BADER E Swift: BSCHESMM Fax: (341) 2571228 Tel.: (341) 2893116 For all purposes and with respect to Transactions through that Office Address for notices or communications to Party B:- Avenida de Europa 18, Parque Emipresarial La Moraleja, 28108 Alcobendas, Madrid, Attn: D. Juan Gallardo. Fax no. +34 91663 7884 (b) PROCESS AGENT. For the purpose of Section 13(c) of this Agreement:- Party A appoints as its Process Agent: Banco Santander Central Hispano S.A., London Branch Santander House 100 Ludgate Hill London EC4M 7NJ Attn.: Jim Inches / Brian Watts (OPS CONTROL) Tel.: 020 7332 7781 / 020 7332 7987 Fax: 020 7332 7421 Telex: 8812851 BADER G Swift: BSCHGB2L Tel. switchboard: 020 7332 7766 Fax Legal: 020 7332 7440 Party B appoints as its Process Agent: Not Applicable (c) OFFICES. The Provisions of Section 10 (a) will apply to this Agreement. 5 (d) MULTIBRANCH PARTY. For the purpose of Section 10 (c): Party A is not a Multibranch Party. Party B is not a Multibranch Party. (e) CALCULATION AGENT. The Calculation Agent for each Transaction shall be Party A, unless otherwise specified in the relevant Confirmation. (f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document: In relation to Party B the "Garantia a primera demanda" dated as of September 25, 2006 in favour of Party and attached as Annex I hereto. (g) CREDIT SUPPORT PROVIDER. Means: In relation to Party A: none In relation to Party B: Acciona S.A. (h) GOVERNING LAW. This Agreement will be governed by and construed in accordance with English law. (i) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2 (c) of this Agreement will apply to all Transactions. (j) "AFFILIATE" will have the meaning specified in Section 14 of this Agreement. PART 5 OTHER PROVISIONS (a) ISDA DEFINITIONS. The definitions and provisions contained in the 2000 ISDA Definitions (published by the International Swaps and Derivatives Association, Inc.) (the "Definitions"), are incorporated into any Confirmation which supplements and forms part of the Agreement; and all capitalised terms used in a Confirmation shall have the meaning set forth in the Definitions, unless otherwise defined in a Confirmation. In the event of any conflict between the provision of the Definitions and the provisions of this Agreement, the provisions of this Agreement shall apply, and in the event of any conflict between the provisions of this Agreement and the Confirmation, the provision of the Confirmation will apply. (b) CHANGE OF ACCOUNT. Section 2 (b) of this Agreement is hereby amended by the addition of the following after the word "delivery" in the first line thereof: 6 "to another account in the same legal and tax jurisdiction as the original account." (c) ESCROW PAYMENTS. If, by reason of the time difference between the cities in which payments are to be made, or otherwise, it is not possible for simultaneous payments to be made on any date on which both parties are required to make payments hereunder, either party may at its option and in its sole discretion notify the other party that payments on that date are to be made in escrow. In this case deposit of the payment due earlier on that date shall be made by 2:00 p.m. (local time at the place for the earlier payment) on that day with an escrow agent selected by the party giving the notice, accompanied by irrevocable payment instructions (i) to release the deposited payment to the intended recipient upon receipt by the escrow agent of the required deposit of the corresponding payment from the other party on the same date accompanied by irrevocable payment instructions to the same effect or (ii) if the required deposit of the corresponding payment is not made on the same date, to return the payment deposited to the party that paid it into escrow. The party that elects to have payments made in escrow shall pay the costs of the escrow arrangements and cause those arrangements to provide that the intended recipient of the payment due to be deposited first shall be entitled to interest on that deposited payment for each day in the period of its deposit at the rate offered by the escrow agent for that day for overnight deposits in the relevant currency in the office where it holds that deposited payment (at 11:00 a.m. local time on that day) if that payment is not released by 5:00 p.m. local time on the day it is deposited for any reason other than the intended recipient's failure to make the escrow deposit it is required to make hereunder in a timely fashion. (d) SET-OFF. Each party agrees that the following provision shall be added as Section 6 (f) of this Agreement: "Set-off: Any amount (the "Early Termination Amount") payable to one party (the "Payee") by the other party (the "Payer") under Section 6 (e), in circumstances where there is a Defaulting Party or one Affected Party in the case where a Termination Event under Section 5 (b) (iv) has occurred, will at the option of the Party ("X") other than the Defaulting Party or the Affected Party (and without prior notice to the Defaulting Party or the Affected Party), be reduced by its set-off against any amount(s) ("the Other Agreement Amount") payable (whether at such time or in the future or upon the occurrence of a contingency) by the Payee to the Payer (irrespective of the currency, place of payment or booking office of the obligation) under any other agreement(s) between the Payee and the Payer or instrument(s) or undertaking(s) issued or executed by one party to, or in favour of, the other party (and the Other Agreement Amount will be discharged promptly and in all respects to the extent it so set-off). X will give notice to the other party of any set-off so effected. For this purpose, either the Early Termination Amount or the Other Agreement Amount (or the relevant portion of such amounts) may be converted by X into the currency in which the other is denominated at the rate of exchange at which such party would be able, acting in a reasonable manner and in good faith, to 7 purchase the relevant amount of such currency. If an obligation is unascertained, X may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained. Nothing in this paragraph shall be effective to create a charge or other security interest. This paragraph shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise)." (e) RELATIONSHIP BETWEEN THE PARTIES. Each Party will be deemed to represent to the other party on the date on which it enters into a Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction): (a) NON-RELIANCE. It is acting for its own account, and it has made its own independent decisions to enter into that Transaction and as to whether that Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into that Transaction, it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into that Transaction. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of that Transaction. (b) ASSESSMENT AND UNDERSTANDING. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of that Transaction. It is also capable of assuming, and assumes, the risks of that Transaction. (c) STATUS OF PARTIES. The other party is not acting as a fiduciary or an advisor to it in respect of that Transaction. (f) RECORDING OF CONVERSATIONS. Each party (i) consents to the recording of the telephone conversations of its trading and marketing personnel in connection with this Agreement or any potential Transaction; (ii) agrees to obtain any necessary consent of, and give notice of such recording to, such personnel and (iii) agrees that any such recordings may be submitted in evidence in any Proceedings relating to this Agreement. (g) ELECTRONIC CONFIRMATIONS. Where a Transaction is confirmed by means of an 8 electronic messaging system that the parties have elected to use to confirm such Transaction (i) such Confirmation will constitute a "Confirmation" as referred to in the this Agreement even where not so specified in the confirmation, (ii) such Confirmation will supplement, form part of, and be subject to this Agreement (unless such Confirmation shall expressly state otherwise) and (iii) the definitions and provisions contained in the 1998 ISDA FX and Currency Option Definitions (as published by the International Swap Dealers Association, Inc.) will be incorporated into the Confirmation if the Transaction is an FX Transaction or Currency Option. In the event of any inconsistency between the Definitions applicable pursuant to clause (iii) of this subsection and this Agreement, the Confirmation will prevail for the purpose of the relevant Transaction. IN WITNESS WHEREOF the parties have executed this Schedule on the respective dates specified below with effect from the date specified on the first page of this document. BANCO SANTANDER CENTRAL HISPANO, S.A. FINANZAS DOS, S.A. By: /s/ Noemi Doce Deibe By: /s/ Valentin Montoya Moya ------------------------ ---------------------------- Name: Name: Title: Title: Date: Date: By: /s/ [ILLEGIBLE SIGNATURE] By: /s/ Jorge Vega-Penichet Lopez -------------------------- ------------------------------ Name: Name: Title: Title: Date: Date: 9 Bowne Translation Services 55 Water Street New York, NY 10041 212/924-5500 Fax: 212/658-5090 [BOWNE LOGO] CERTIFICATE OF ACCURACY This is to certify that the translation described below is, to the best of our knowledge and belief, a true and accurate rendition of the original document. Job Number: 96674 Job Name: WACHTELL, LIPTON, ROSEN & KATZ Job Description: EQUITY SWAP LETTER Language from: SPANISH into: ENGLISH Date: OCTOBER 18, 2006 /s/ Nabeel Sarwar ----------------------------------------- Nabeel Sarwar Project Coordinator - ------------------------------------------------------- STATE OF NEW YORK, COUNTY OF KINGS Subscribed and sworn to before me this date of October 18, 2006 /s/ Robert J. Mazza Notary Public [NOTARY PUBLIC STAMP] A Member of the International Family of Bowne Companies [ACCIONA LOGO] Acciona ANNEX I Avenida de Europa 18 Parque Empresarial La Moraleja GUARANTY 28108 Alcobendas, Madrid, Spain www.acciona.com GUARANTY dated September 25, 2006 granted by Acciona, S.A. (hereinafter, the "Guarantor"), in favor of Banco Santander Central Hispano, S.A. (hereinafter "Santander"), in relation to the Transaction (as defined below) which the latter has undertaken on this date with Finanzas Dos, S.A. (hereinafter, the "Company"). "Transaction" shall be construed as the Total Return Equity Swap Transaction contracted by and between Santander and the Company on this date entered into under the scope of the ISDA Master Agreement, on 39,089,488 common shares of Endesa, S.A. 1. GUARANTY. This Guaranty is, in nature, an unconditional and irrevocable first-demand guaranty. The obligations of the Guarantor are joint-and-several with respect to the Company such that it is liable at the same level as the Company as principal obligor to Santander. The Guarantor guarantees unconditionally, irrevocably, and upon first demand, to Santander, its successor entities and/or assignees, payment when due of each and every one of the obligations and responsibilities of the Company to Santander derived from the Transaction (hereinafter, "the Obligations"), mere notification by Santander to the Guarantor being necessary for its claim, without a need to justify the reason for the default. 2. CONSENT, WAIVERS, AND RENEWALS. The Guarantor agrees that Santander may appeal to them for payment of any of the Obligations, regardless of whether Santander has appealed to any guaranty or collateral or has proceeded legally against any other principal or secondary obligor with respect to any of the Obligations. 3. EXPENSES. The Guarantor agrees to reimburse at sight any expense related directly to the execution or protection of Santander's right under this Guaranty. 4. SUBROGATION. The Guarantor undertakes not to execute any right that might pertain to it with respect to the Company until the Obligations to Santander have been fully met. If any amount were paid to the Guarantor contravening the preceding commitment, such amount shall remain on deposit to the benefit of Santander and shall be delivered to it for application thereof to the Obligations. 5. VALIDITY OF THE GUARANTY. This Guaranty is unconditional and irrevocable in nature, executable upon first demand, and it shall remain in effect and shall be binding on the Guarantor, its successors and assigns until the entirety of the Obligations have been fully met. [letterhead information] [ACCIONA LOGO] 6. LAW AND JURISDICTION. This Guaranty is subject to Spanish law. 7. NOTIFICATIONS. The guarantor's address for the effects of notifications is as follows: Acciona, S.A. Avenida de Europe 18, Parque Empresarial La Moraleja 28108 Alcobendas, Madrid Att'n: Mr. Juan Gallardo Fax No.: +34 91663 7884 8. AMENDMENTS. No amendment to this Guaranty shall take effect unless made in writing, with the signature of the Guarantor, the Company, and Santander. ACCIONA, S.A. /s/ Jose Manuel Entrecanales Signed: Name: CONFIRMATION DATE: 25 September 2006 TO: Finanzas Dos, S.A. FROM: BANCO SANTANDER CENTRAL HISPANO, S.A. SUBJECT: SWAP TRANSACTION Dear Sirs, The purpose of this letter agreement (this "Confirmation") is to set forth the terms and conditions of the transaction entered into on the Trade Date referred to below (the "Transaction"), between Banco Santander Central Hispano, S.A. ("SANTANDER") and Finanzas Dos, S.A. ("Counterparty"). This confirmation constitutes a "Confirmation" as referred to in the Agreement specified below and supersedes any prior written or oral agreements in relation to the Transaction. The definitions and provisions contained in the 2000 ISDA Definitions (the "Swap Definitions") and in the 2002 ISDA Equity Derivatives Definitions (the "Equity Definitions", and together with the Swap Definitions, the "Definitions"), in each case as published by the International Swaps and Derivatives Association, Inc. ("Isda"), are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definitions and the Equity Definitions, the Equity Definitions will prevail. In the event of any inconsistency between either set of Definitions and this Confirmation, this Confirmation will govern. This Confirmation supplements, forms part of, and is subject to, the agreement dated as of 25 September 2006, as amended and supplemented from time to time (the "Agreement") between Santander and the Counterparty. All provisions contained in the Agreement govern this Confirmation except as expressly modified below. 1. THE TERMS OF THE PARTICULAR TRANSACTION TO WHICH THIS CONFIRMATION RELATES ARE AS FOLLOWS: GENERAL TERMS: Trade Date: September 25, 2006. Effective Date; September 26, 2006. Termination Date: The Cash Settlement Payment Date. Shares: Shares of Endesa, S.A. ISIN: ES0130670112 Exchange: Madrid, Bilbao, Barcelona, and Valencia Exchanges (Sistema de Interconexion Bursatil). [INITIALS] 1 Related Exchange: Meff Renta Variable (MEFF RV). EQUITY, AMOUNTS PAYABLE BY SANTANDER: Equity Amount Payer: Santander. Number of Shares: 39,089,488 Equity Notional Amount: EUR 1,250,863,616 (the Number of Shares times the Initial Price) Equity Notional Reset: Not Applicable Type of Return: Total Return Initial Price: EUR 32.00 Final Price: In respect of the Valuation Date, means the weighted average price of the Shares on the Exchange as determined by the Calculation Agent. Valuation Time: At the Scheduled Closing Time Valuation Date: 29 December 2006 Dividend Period: Second Period Dividend Amount: Paid Amount multiplied by Number of Shares. Dividend Payment Dates: The Currency Business Day following the day on which payment is made by the Issuer to holders of record of the Shares. Re-investment of Dividends: Not applicable. FLOATING AMOUNTS PAYABLE BY COUNTERPARTY: Floating Amount Payer: Counterparty Notional Amount: The Equity Notional Amount Payments Dates: The Cash Settlement Payment Date Floating rate Option: EUR EURIBOR TELERATE Designated Maturity: 1 month [INITIALS] 2 Spread: plus 25 bps Floating Rate Day Count Fraction: Actual/360 Reset Date: The first date of each Calculation Period Business Days: TARGET Settlement Day Compounding: Inapplicable SETTLEMENT TERMS: Cash Settlement: Applicable Settlement Currency: EUR Cash Settlement Payment Date: Three Currency Business Days following the Valuation Date ADJUSTMENTS: Method of Adjustment: Calculation Agent Adjustment Extraordinary Events: Consequences of Merger Events: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Tender Offer: Applicable including, for the avoidance of doubt, the Tender Offers already launched over the Shares or any modification thereof. Consequences of Tender Offers: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Composition of Combined Consideration: Not Applicable [INITIALS] 3 Nationalization, Insolvency or Delisting: Cancellation and Payment (Calculation Agent Determination) Additional Disruption Events: Change in Law: Applicable Insolvency Filing: Not Applicable Hedging Disruption: Not Applicable Increased Cost of Hedging: Not Applicable Loss of Stock Borrow: Not Applicable Increased Cost of Stock Borrow: Not Applicable Optional Early Termination: Applicable, provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing. From the Effective Date to the Termination Date, Counterparty will have the option, with a five Business Days prior written notice to Santander, to early terminate this Transaction in whole and not in part, designating a new Valuation Date, which in no case may be a date after December 29, 2006. The designation by Counterparty of the new Valuation Date shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. Optional Extension: Provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing, Counterparty will have the option to extend the Termination Date by designating a new Valuation Date. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to December 29, 2006, replacing December 29, 2006 with January 31, 2007 as the Valuation Date. If Counterparty has exercised the Optional Extension above, Counterparty shall be entitled to an additional Optional Extension. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to January 31, 2007, replacing January 31, 2007 with February 28, 2007 as the Valuation Date. The replacement by Counterparty of the Valuation Date by exercising the Optional Extensions above, shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. 2. CALCULATION AGENT: SANTANDER 3. ACCOUNT DETAILS: Account for payments to Santander: To be determined Account for payments to Counterparty: To be determined [INITIALS] 4 4. OFFICES: The Office of Santander for the Transaction is: Ciudad Grupo Santander, Avenida de Cantabria s/n, Edificio Amazonia planta 1, 28660 Boadilla del Monte (Madrid) Attn. D. Ignacio Cepeda The Office of Counterparty for the Transaction is: Avenida de Europa 18, Parque Empresarial La Moraleja, 28108 Alcobendas, Madrid, Attn: D. Juan Gallardo. Fax no. +34 91663 7884 5. OTHER PROVISIONS: a) Non Reliance: Applicable b) Agreements and Acknowledgements Regarding Hedging Agreements: Applicable c) Additional Acknowledgements: Applicable Please confirm that the foregoing correctly sets forth the terms of our agreement with respect to the Transaction by executing this Confirmation and returning it D. Ignacio Cepeda, Fax: +34 912571841. Very truly yours, BANCO SANTANDER CENTRAL HISPANO, S.A. By: /s/ Noemi Doce Deibe -------------------------- Name: -------------------------- Title: /s/ [ILLEGIBLE SIGNATURE] --------------------------- Finanzas Dos, S.A. ACCEPTED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN: By: /s/ Jorge Vega-Penichet Lopez /s/ Valentin Montoya Moya ------------------------------- Name: ------------------------------- Title: ------------------------------- 5 CONFIRMATION DATE: 27 September 2006 TO: Finanzas Dos, S.A. FROM: BANCO SANTANDER CENTRAL HISPANO, S.A. SUBJECT: SWAP TRANSACTION Dear Sirs, The purpose of this letter agreement (this "Confirmation") is to set forth the terms and conditions of the transaction entered into on the Trade Date referred to below (the "Transaction"), between Banco Santander Central Hispano, S.A. ("SANTANDER") and Finanzas Dos, S.A. ("Counterparty"). This confirmation constitutes a "Confirmation" as referred to in the Agreement specified below and supersedes any prior written or oral agreements in relation to the Transaction. The definitions and provisions contained in the 2000 ISDA Definitions (the "Swap Definitions") and in the 2002 ISDA Equity Derivatives Definitions (the "Equity Definitions", and together with the Swap Definitions, the "Definitions"), in each case as published by the International Swaps and Derivatives Association, Inc. ("Isda"), are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definitions and the Equity Definitions, the Equity Definitions will prevail. In the event of any inconsistency between either set of Definitions and this Confirmation, this Confirmation will govern. This Confirmation supplements, forms part of, and is subject to, the agreement dated as of 25 September 2006, as amended and supplemented from time to time (the "Agreement") between Santander and the Counterparty. All provisions contained in the Agreement govern this Confirmation except as expressly modified below. 1. THE TERMS OF THE PARTICULAR TRANSACTION TO WHICH THIS CONFIRMATION RELATES ARE AS FOLLOWS: GENERAL TERMS: Trade Date: September 27, 2006. Effective Date: September 27, 2006. Termination Date: The Cash Settlement Payment Date. Shares: Shares of Endesa, S.A. ISIN: ES0130670112 Exchange: Madrid, Bilbao, Barcelona, and Valencia Exchanges (Sistema de Interconexion Bursatil). [INITIALS] 1 Related Exchange: Meff Renta Variable (MEFF RV). EQUITY AMOUNTS PAYABLE BY SANTANDER: Equity Amount Payer: Santander. Number of Shares: 1.953.993 Equity Notional Amount: EUR 485,459,417.47 (the Number of Shares times the Initial Price) Equity Notional Reset: Not Applicable Type of Return: Total Return Initial Price: EUR 34.79 Final Price: In respect of the Valuation Date, means the weighted average price of the Shares on the Exchange as determined by the Calculation Agent. Valuation Time: At the Scheduled Closing Time Valuation Date: 29 December 2006 Dividend Period: Second Period Dividend Amount: Paid Amount multiplied by Number of Shares. Dividend Payment Dates: The Currency Business Day following the day on which payment is made by the Issuer to holders of record of the Shares. Re-investment of Dividends: Not applicable. FLOATING AMOUNTS PAYABLE BY COUNTERPARTY: Floating Amount Payer: Counterparty Notional Amount: The Equity Notional Amount Payments Dates: The Cash Settlement Payment Date Floating rate Option: EUR EURIBOR TELERATE Designated Maturity: 1 month [INITIALS] 2 Spread: plus 25 bps Floating Rate Day Count Fraction: Actual/360 Reset Date: The first date of each Calculation Period Business Days: TARGET Settlement Day Compounding: Inapplicable Settlement Terms: Cash Settlement: Applicable Settlement Currency: EUR Cash Settlement Payment Date: Three Currency Business Days following the Valuation Date ADJUSTMENTS: Method of Adjustment: Calculation Agent Adjustment Extraordinary Events: Consequences of Merger Events: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Tender Offer: Applicable including, for the avoidance of doubt, the Tender Offers already launched over the Shares or any modification thereof. Consequences of Tender Offers: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Composition of Combined Consideration: Not Applicable [INITIALS] 3 Nationalization, Insolvency or Delisting: Cancellation and Payment (Calculation Agent Determination) Additional Disruption Events: Change in Law: Applicable Insolvency Filing: Not Applicable Hedging Disruption: Not Applicable Increased Cost of Hedging: Not Applicable Loss of Stock Borrow: Not Applicable Increased Cost of Stock Borrow: Not Applicable Optional Early Termination: Applicable, provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing. From the Effective Date to the Termination Date, Counterparty will have the option, with a five Business Days prior written notice to Santander, to early terminate this Transaction in whole and not in part, designating a new Valuation Date, which in no case may be a date after December 29, 2006. The designation by Counterparty of the new Valuation Date shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. Optional Extension: Provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing, Counterparty will have the option to extend the Termination Date by designating a new Valuation Date. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to December 29, 2006, replacing December 29, 2006 with January 31, 2007 as the Valuation Date. If Counterparty has exercised the Optional Extension above, Counterparty shall be entitled to an additional Optional Extension. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to January 31, 2007, replacing January 31, 2007 with February 28, 2007 as the Valuation Date. The replacement by Counterparty of the Valuation Date by exercising the Optional Extensions above, shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. 2. CALCULATION AGENT: SANTANDER 3. ACCOUNT DETAILS: Account for payments to Santander: To be determined Account for payments to Counterparty: To be determined [INITIALS] 4 4. OFFICES: The Office of Santander for the Transaction is: Ciudad Grupo Santander, Avenida de Cantabria s/n, Edificio Amazonia planta 1, 28660 Boadilla del Monte (Madrid) Attn: D. Ignacio Cepeda The Office of Counterparty for the Transaction is: Avenida de Europa 18, Parque Empresarial La Moraleja, 28108 Alcobendas, Madrid, Attn: D. Juan Gallardo. Fax no. +34 91663 7884 5. OTHER PROVISIONS: a) Non Reliance: Applicable b) Agreements and Acknowledgements Regarding Hedging Agreements: Applicable c) Additional Acknowledgements: Applicable Please confirm that the foregoing correctly sets forth the terms of our agreement with respect to the Transaction by executing this Confirmation and returning it D. Ignacio Cepeda, Fax: +34 912571841. Very truly yours, BANCO SANTANDER CENTRAL HISPANO, S.A. By: /s/ [ILLEGIBLE SIGNATURE] -------------------------------- Name: Title: /s/ [ILLEGIBLE SIGNATURE] ----------------------------- Finanzas Dos, S.A. ACCEPTED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN: By: /s/ Jorge Vega-Penichet Lopez /s/ Juan Gallardo Cruces -------------------------------- Name: -------------------------------- Title: -------------------------------- 5 CONFIRMATION DATE: 3 October 2006 TO: Finanzas Dos, S.A. FROM: BANCO SANTANDER CENTRAL HISPANO, S.A. SUBJECT: SWAP TRANSACTION Dear Sirs, The purpose of this letter agreement (this "Confirmation") is to set forth the terms and conditions of the transaction entered into on the Trade Date referred to below (the "Transaction"), between Banco Santander Central Hispano, S.A. ("SANTANDER") and Finanzas Dos, S.A. ("Counterparty"). This confirmation constitutes a "Confirmation" as referred to in the Agreement specified below and supersedes any prior written or oral agreements in relation to the Transaction. The definitions and provisions contained in the 2000 ISDA Definitions (the "Swap Definitions") and in the 2002 ISDA Equity Derivatives Definitions (the "Equity Definitions", and together with the Swap Definitions, the "Definitions"), in each case as published by the International Swaps and Derivatives Association, Inc. ("Isda"), are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definitions and the Equity Definitions, the Equity Definitions will prevail. In the event of any inconsistency between either set of Definitions and this Confirmation, this Confirmation will govern. This Confirmation supplements, forms part of, and is subject to, the agreement dated as of 25 September 2006, as amended and supplemented from time to time (the "Agreement") between Santander and the Counterparty. All provisions contained in the Agreement govern this Confirmation except as expressly modified below. 1. THE TERMS OF THE PARTICULAR TRANSACTION TO WHICH THIS CONFIRMATION RELATES ARE AS FOLLOWS: GENERAL TERMS: Trade Date: October 3, 2006. Effective Date: October 3, 2006. Termination Date: The Cash Settlement Payment Date. Shares: Shares of Endesa, S.A. ISIN:ES0130670112 Exchange: Madrid, Bilbao, Barcelona, and Valencia Exchanges (Sistema de Interconexion Bursatil). [INITIALS] 1 Related Exchange: Meff Renta Variable (MEFF RV). EQUITY AMOUNTS PAYABLE BY SANTANDER: Equity Amount Payer: Santander. Number of Shares: 1,363,592 Equity Notional Amount: EUR 45,803,055.28 (the Number of Shares times the Initial Price) Equity Notional Reset: Not Applicable Type of Return: Total Return Initial Price: EUR 33.59 Final Price: In respect of the Valuation Date, means the weighted average price of the Shares on the Exchange as determined by the Calculation Agent. Valuation Time: At the Scheduled Closing Time Valuation Date: 29 December 2006 Dividend Period: Second Period Dividend Amount: Paid Amount multiplied by Number of Shares. Dividend Payment Dates: The Currency Business Day following the day on which payment is made by the Issuer to holders of record of the Shares. Re-investment of Dividends: Not applicable. FLOATING AMOUNTS PAYABLE BY COUNTERPARTY: Floating Amount Payer: Counterparty Notional Amount: The Equity Notional Amount Payments Dates: The Cash Settlement Payment Date Floating rate Option: EUR EURIBOR TELERATE Designated Maturity: 1 month [INITIALS] 2 Spread: plus 25 bps Floating Rate Day Count Fraction: Actual/360 Reset Date: The first date of each Calculation Period Business Days: TARGET Settlement Day Compounding: Inapplicable SETTLEMENT TERMS: Cash Settlement: Applicable Settlement Currency: EUR Cash Settlement Payment Date: Three Currency Business Days following the Valuation Date ADJUSTMENTS: Method of Adjustment: Calculation Agent Adjustment Extraordinary Events: Consequences of Merger Events: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Tender Offer: Applicable including, for the avoidance of doubt, the Tender Offers already launched over the Shares or any modification thereof. Consequences of Tender Offers: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Composition of Combined Consideration: Not Applicable [INITIALS] 3 Nationalization, Insolvency or Delisting: Cancellation and Payment (Calculation Agent Determination) Additional Disruption Events: Change in Law: Applicable Insolvency Filing: Not Applicable Hedging Disruption: Not Applicable Increased Cost of Hedging: Not Applicable Loss of Stock Borrow: Not Applicable Increased Cost of Stock Borrow: Not Applicable Optional Early Termination: Applicable, provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing. From the Effective Date to the Termination Date, Counterparty will have the option, with a five Business Days prior written notice to Santander, to early terminate this Transaction in whole and not in part, designating a new Valuation Date, which in no case may be a date after December 29, 2006. The designation by Counterparty of the new Valuation Date shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. Optional Extension: Provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing, Counterparty will have the option to extend the Termination Date by designating a new Valuation Date. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to December 29, 2006, replacing December 29, 2006 with January 31, 2007 as the Valuation Date. If Counterparty has exercised the Optional Extension above, Counterparty shall be entitled to an additional Optional Extension. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to January 31, 2007, replacing January 31, 2007 with February 28, 2007 as the Valuation Date. The replacement by Counterparty of the Valuation Date by exercising the Optional Extensions above, shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. 2. CALCULATION AGENT: SANTANDER 3. ACCOUNT DETAILS: Account for payments to Santander: To be determined Account for payments to Counterparty: To be determined [INITIALS] 4 4. OFFICES: The Office of Santander for the Transaction is: Ciudad Grupo Santander, Avenida de Cantabria s/n, Edificio Amazonia planta 1, 28660 Boadilla del Monte (Madrid) Attn: D. Ignacio Cepeda The Office of Counterparty for the Transaction is: Avenida de Europa 18, Parque Empresarial La Moraleja, 28108 Alcobendas, Madrid, Attn: D. Juan Gallardo. Fax no. +34 91663 7884 5. OTHER PROVISIONS: a) Non Reliance: Applicable b) Agreements and Acknowledgements Regarding Hedging Agreements: Applicable c) Additional Acknowledgements: Applicable Please confirm that the foregoing correctly sets forth the terms of our agreement with respect to the Transaction by executing this Confirmation and returning it D. Ignacio Cepeda, Fax: +34 912571841. Very truly yours, BANCO SANTANDER CENTRAL HISPANO, S.A. By: /s/ Noemi Doce Deibe -------------------------- Name: Title /s/ Manuel Sanchez Marcos -------------------------- Finanzas Dos, S.A. ACCEPTED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN: By: /s/ Juan Gallardo Cruces /s/ Jorge Vega-Penichet Lopez ------------------------- Name: ------------------------- Title: ------------------------- 5 CONFIRMATION DATE: 4 October 2006 TO: Finanzas Dos, S.A. FROM: BANCO SANTANDER CENTRAL HISPANO, S.A. SUBJECT: SWAP TRANSACTION Dear Sirs, The purpose of this letter agreement (this "Confirmation") is to set forth the terms and conditions of the transaction entered into on the Trade Date referred to below (the "Transaction"), between Banco Santander Central Hispano, S.A. ("SANTANDER") and Finanzas Dos, S.A. ("Counterparty"). This confirmation constitutes a "Confirmation" as referred to in the Agreement specified below and supersedes any prior written or oral agreements in relation to the Transaction. The definitions and provisions contained in the 2000 ISDA Definitions (the "Swap Definitions") and in the 2002 ISDA Equity Derivatives Definitions (the "Equity Definitions", and together with the Swap Definitions, the "Definitions"), in each ease as published by the International Swaps and Derivatives Association, Inc. ("Isda"), are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definitions and the Equity Definitions, the Equity Definitions will prevail. In the event of any inconsistency between either set of Definitions and this Confirmation, this Confirmation will govern. This Confirmation supplements, forms part of, and is subject to, the agreement dated as of 25 September 2006, as amended and supplemented from time to time (the "Agreement") between Santander and the Counterparty. All provisions contained in the Agreement govern this Confirmation except as expressly modified below. 1. THE TERMS OF THE PARTICULAR TRANSACTION TO WHICH THIS CONFIRMATION RELATES ARE AS FOLLOWS: GENERAL TERMS: Trade Date: October 4, 2006. Effective Date: October 4, 2006. Termination Date: The Cash Settlement Payment Date. Shares: Shares of Endesa, S.A. ISIN:ES0130670112 Exchange: Madrid, Bilbao, Barcelona, and Valencia Exchanges (Sistema de Interconexion Bursatil). [INITIALS] 1 Related Exchange: Meff Renta Variable (MEFF RV). EQUITY AMOUNTS PAYABLE BY SANTANDER: Equity Amount Payer: Santander. Number of Shares: 5,536,028 Equity Notional Amount: EUR 187,948,150.60 (the Number of Shares times the Initial Price) Equity Notional Reset: Not Applicable Type of Return: Total Return Initial Price: EUR 33.95 Final Price: In respect of the Valuation Date, means the weighted average price of the Shares on the Exchange as determined by the Calculation Agent. Valuation Time: At the Scheduled Closing Time Valuation Date: 29 December 2006 Dividend Period: Second Period Dividend Amount: Paid Amount multiplied by Number of Shares. Dividend Payment Dates: The Currency Business Day following the day on which payment is made by the Issuer to holders of record of the Shares. Re-investment of Dividends: Not applicable FLOATING AMOUNTS PAYABLE BY COUNTERPARTY: Floating Amount Payer: Counterparty Notional Amount: The Equity Notional Amount Payments Dates: The Cash Settlement Payment Date Floating rate Option: EUR EURIBOR TELERATE Designated Maturity: 1 month [INITIALS] 2 Spread: plus 25 bps Floating Rate Day Count Fraction: Actual/360 Reset Date: The first date of each Calculation Period Business Days: TARGET Settlement Day Compounding: Inapplicable SETTLEMENT TERMS: Cash Settlement: Applicable Settlement Currency: EUR Cash Settlement Payment Date: Three Currency Business Days following the Valuation Date ADJUSTMENTS: Method of Adjustment: Calculation Agent Adjustment Extraordinary Events: Consequences of Merger Events: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Tender Offer: Applicable including, for the avoidance of doubt, the Tender Offers already launched over the Shares or any modification thereof. Consequences of Tender Offers: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Composition of Combined Consideration: Not Applicable [INITIALS] 3 Nationalization, Insolvency or Delisting: Cancellation and Payment (Calculation Agent Determination) Additional Disruption Events: Change in Law: Applicable Insolvency Filing: Not Applicable Hedging Disruption: Not Applicable Increased Cost of Hedging: Not Applicable Loss of Stock Borrow: Not Applicable Increased Cost of Stock Borrow: Not Applicable Optional Early Termination: Applicable, provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing. From the Effective Date to the Termination Date, Counterparty will have the option, with a five Business Days prior written notice to Santander, to early terminate this Transaction in whole and not in part, designating a new Valuation Date, which in no case may be a date after December 29, 2006. The designation by Counterparty of the new Valuation Date shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. Optional Extension: Provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing, Counterparty will have the option to extend the Termination Date by designating a new Valuation Date. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to December 29, 2006, replacing December 29, 2006 with January 31, 2007 as the Valuation Date. If Counterparty has exercised the Optional Extension above, Counterparty shall be entitled to an additional Optional Extension. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to January 31, 2007, replacing January 31, 2007 with February 28, 2007 as the Valuation Date. The replacement by Counterparty of the Valuation Date by exercising the Optional Extensions above, shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. 2. CALCULATION AGENT: SANTANDER 3. ACCOUNT DETAILS: Account for payments to Santander: To be determined Account for payments to Counterparty: To be determined [INITIALS] 4 4. OFFICES: The Office of Santander for the Transaction is: Ciudad Grupo Santander, Avenida de Cantabria s/n, Edificio Amazonia planta 1, 28660 Boadilla del Monte (Madrid) Attn: D. Ignacio Cepeda The Office of Counterparty for the Transaction is: Avenida de Europa 18, Parque Empresarial La Moraleja, 28108 Alcobendas, Madrid, Attn: D. Juan Gallardo. Fax no. +34 91663 7884 5. OTHER PROVISIONS: a) Non Reliance: Applicable b) Agreements and Acknowledgements Regarding Hedging Agreements: Applicable c) Additional Acknowledgements: Applicable Please confirm that the foregoing correctly sets forth the terms of our agreement with respect to the Transaction by executing this Confirmation and returning it D. Ignacio Cepeda, Fax: +34 912571841. Very truly yours, BANCO SANTANDER CENTRAL HISPANO, S.A. By: /s/ Ma Noemi Doce Deibe -------------------------- Name: Title: /s/ Manuel Sanchez Marcos --------------------------- Finanzas Dos, S.A. ACCEPTED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN: By: /s/ Jorge Vega-Penishet Lopez /s/ Juan Gallardo Cruces ----------------------------- Name: ----------------------------- Title: ----------------------------- 5 CONFIRMATION DATE: 5 October 2006 TO: Finanzas Dos, S.A. FROM: BANCO SANTANDER CENTRAL HISPANO, S.A. SUBJECT: SWAP TRANSACTION Dear Sirs, The purpose of this letter agreement (this "Confirmation") is to set forth the terms and conditions of the transaction entered into on the Trade Date referred to below (the "Transaction"), between Banco Santander Central Hispano, S.A. ("SANTANDER") and Finanzas Dos, S.A. ("Counterparty"). This confirmation constitutes a "Confirmation" as referred to in the Agreement specified below and supersedes any prior written or oral agreements in relation to the Transaction. The definitions and provisions contained in the 2000 ISDA Definitions (the "Swap Definitions") and in the 2002 ISDA Equity Derivatives Definitions (the "Equity Definitions", and together with the Swap Definitions, the "Definitions"), in each case as published by the International Swaps and Derivatives Association, Inc. ("Isda"), are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definitions and the Equity Definitions, the Equity Definitions will prevail. In the event of any inconsistency between either set of Definitions and this Confirmation, this Confirmation will govern. This Confirmation supplements, forms part of, and is subject to, the agreement dated as of 25 September 2006, as amended and supplemented from time to time (the "Agreement") between Santander and the Counterparty. All provisions contained in the Agreement govern this Confirmation except as expressly modified below. 1. THE TERMS OF THE PARTICULAR TRANSACTION TO WHICH THIS CONFIRMATION RELATES ARE AS FOLLOWS: GENERAL TERMS: Trade Date: October 5, 2006. Effective Date: October 5, 2006. Termination Date: The Cash Settlement Payment Date. Shares: Shares of Endesa, S.A. ISIN:ES0130670112 Exchange: Madrid, Bilbao, Barcelona, and Valencia Exchanges (Sistema de Interconexion Bursatil). [INITIALS] 1 Related Exchange: Meff Renta Variable (MEFF RV). EQUITY AMOUNTS PAYABLE BY SANTANDER: Equity Amount Payer: Santander. Number of Shares: 8,466,349 Equity Notional Amount: EUR 287,432,548.55 (the Number of Shares times the Initial Price) Equity Notional Reset: Not Applicable Type of Return: Total Return Initial Price: EUR 33.95 Final Price: In respect of the Valuation Date, means the weighted average price of the Shares on the Exchange as determined by the Calculation Agent. Valuation Time: At the Scheduled Closing Time Valuation Date: 29 December 2006 Dividend Period: Second Period Dividend Amount: Paid Amount multiplied by Number of Shares. Dividend Payment Dates: The Currency Business Day following the day on which payment is made by the Issuer to holders of record of the Shares. Re-investment of Dividends: Not applicable. FLOATING AMOUNTS PAYABLE BY COUNTERPARTY: Floating Amount Payer: Counterparty Notional Amount: The Equity Notional Amount Payments Dates: The Cash Settlement Payment Date Floating rate Option: EUR EURIBOR TELERATE Designated Maturity: 1 month [INITIALS] 2 Spread: plus 25 bps Floating Rate Day Count Fraction: Actual/360 Reset Date: The first date of each Calculation Period Business Days: TARGET Settlement Day Compounding: Inapplicable SETTLEMENT TERMS: Cash Settlement: Applicable Settlement Currency: EUR Cash Settlement Payment Date: Three Currency Business Days following the Valuation Date ADJUSTMENTS: Method of Adjustment: Calculation Agent Adjustment Extraordinary Events: Consequences of Merger Events: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Tender Offer: Applicable including, for the avoidance of doubt, the Tender Offers already launched over the Shares or any modification thereof. Consequences of Tender Offers: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Composition of Combined Consideration: Not Applicable [INITIALS] 3 Nationalization, Insolvency or Delisting: Cancellation and Payment (Calculation Agent Determination) Additional Disruption Events: Change in Law: Applicable Insolvency Filing: Not Applicable Hedging Disruption: Not Applicable Increased Cost of Hedging: Not Applicable Loss of Stock Borrow: Not Applicable Increased Cost of Stock Borrow: Not Applicable Optional Early Termination: Applicable, provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing. From the Effective Date to the Termination Date, Counterparty will have the option, with a five Business Days prior written notice to Santander, to early terminate this Transaction in whole and not in part, designating a new Valuation Date, which in no case may be a date after December 29, 2006. The designation by Counterparty of the new Valuation Date shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. Optional Extension: Provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing, Counterparty will have the option to extend the Termination Date by designating a new Valuation Date. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to December 29, 2006, replacing December 29, 2006 with January 31, 2007 as the Valuation Date. If Counterparty has exercised the Optional Extension above, Counterparty shall be entitled to an additional Optional Extension. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to January 31, 2007, replacing January 31, 2007 with February 28, 2007 as the Valuation Date. The replacement by Counterparty of the Valuation Date by exercising the Optional Extensions above, shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. 2. CALCULATION AGENT: SANTANDER 3. ACCOUNT DETAILS: Account for payments to Santander: To be determined Account for payments to Counterparty: To be determined [INITIALS] 4 4. OFFICES: The Office of Santander for the Transaction is: Ciudad Grupo Santander, Avenida de Cantabria s/n, Edificio Amazonia planta 1, 28660 Boadilla del Monte (Madrid) Attn: D. Ignacio Cepeda The Office of Counterparty for the Transaction is: Avenida de Europa 18, Parque Empresarial La Moraleja, 28108 Alcobendas, Madrid, Attn: D. Juan Gallardo. Fax no. +34 91663 7884 5. OTHER PROVISIONS: a) Non Reliance: Applicable b) Agreements and Acknowledgements Regarding Hedging Agreements: Applicable c) Additional Acknowledgements: Applicable Please confirm that the foregoing correctly sets forth the terms of our agreement with respect to the Transaction by executing this Confirmation and returning it D. Ignacio Cepeda, Fax: +34 912571841. Very truly yours, BANCO SANTANDER CENTRAL HISPANO, S.A. By: /s/ Noemi Doce Deibe -------------------------- Name: Title: /s/ Manuel Sanchez Marcos ---------------------------- Finanzas Dos, S.A. ACCEPTED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN: By: /s/ Jorge Vega-Penichet Lopez /s/ Juan Gallardo Cruces ----------------------------- Name: ----------------------------- Title: ----------------------------- 5 CONFIRMATION DATE: 6 October 2006 TO: Finanzas Dos, S.A. FROM: BANCO SANTANDER CENTRAL HISPANO, S.A. SUBJECT: SWAP TRANSACTION Dear Sirs, The purpose of this letter agreement (this "Confirmation") is to set forth the terms and conditions of the transaction entered into on the Trade Date referred to below (the "Transaction"), between Banco Santander Central Hispano, S.A. ("SANTANDER") and Finanzas Dos, S.A. ("Counterparty"). This confirmation constitutes a "Confirmation" as referred to in the Agreement specified below and supersedes any prior written or oral agreements in relation to the Transaction. The definitions and provisions contained in the 2000 ISDA Definitions (the "Swap Definitions") and in the 2002 ISDA Equity Derivatives Definitions (the "Equity Definitions", and together with the Swap Definitions, the "Definitions"), in each case as published by the International Swaps and Derivatives Association, Inc. ("Isda"), are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definitions and the Equity Definitions, the Equity Definitions will prevail. In the event of any inconsistency between either set of Definitions and this Confirmation, this Confirmation will govern. This Confirmation supplements, forms part of, and is subject to, the agreement dated as of 25 September 2006, as amended and supplemented from time to time (the "Agreement") between Santander and the Counterparty. All provisions contained in the Agreement govern this Confirmation except as expressly modified below. 1. THE TERMS OF THE PARTICULAR TRANSACTION TO WHICH THIS CONFIRMATION RELATES ARE AS FOLLOWS: GENERAL TERMS: Trade Date: October 6, 2006. Effective Date: October 6, 2006. Termination Date: The Cash Settlement Payment Date. Shares: Shares of Endesa, S.A. ISIN:ES0130670112 Exchange: Madrid, Bilbao, Barcelona, and Valencia Exchanges (Sistema de Interconexion Bursatil). [INITIALS] 1 Related Exchange: Meff Renta Variable (MEFF RV). EQUITY AMOUNTS PAYABLE BY SANTANDER: Equity Amount Payer: Santander. Number of Shares: 1,600,000 Equity Notional Amount: EUR 54,240,000 (the Number of Shares times the Initial Price) Equity Notional Reset: Not Applicable Type of Return: Total Return Initial Price: EUR 33.90 Final Price: In respect of the Valuation Date, means the weighted average price of the Shares on the Exchange as determined by the Calculation Agent. Valuation Time: At the Scheduled Closing Time Valuation Date: 29 December 2006 Dividend Period: Second Period Dividend Amount: Paid Amount multiplied by Number of Shares. Dividend Payment Dates: The Currency Business Day following the day on which payment is made by the Issuer to holders of record of the Shares. Re-investment of Dividends: Not applicable. FLOATING AMOUNTS PAYABLE BY COUNTERPARTY: Floating Amount Payer: Counterparty Notional Amount: The Equity Notional Amount Payments Dates: The Cash Settlement Payment Date Floating rate Option: EUR EURIBOR TELERATE Designated Maturity: 1 month [INITIALS] 2 Spread: plus 25 bps Floating Rate Day Count Fraction: Actual/360 Reset Date: The first date of each Calculation Period Business Days: TARGET Settlement Day Compounding: Inapplicable SETTLEMENT TERMS: Cash Settlement: Applicable Settlement Currency: EUR Cash Settlement Payment Date: Three Currency Business Days following the Valuation Date ADJUSTMENTS: Method of Adjustment: Calculation Agent Adjustment Extraordinary Events: Consequences of Merger Events: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Tender Offer: Applicable including, for the avoidance of doubt, the Tender Offers already launched over the Shares or any modification thereof. Consequences of Tender Offers: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Composition of Combined Consideration: Not Applicable [INITIALS] 3 Nationalization, Insolvency or Delisting: Cancellation and Payment (Calculation Agent Determination) Additional Disruption Events: Change in Law: Applicable Insolvency Filing: Not Applicable Hedging Disruption: Not Applicable Increased Cost of Hedging: Not Applicable Loss of Stock Borrow: Not Applicable Increased Cost of Stock Borrow:Not Applicable Optional Early Termination: Applicable, provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing. From the Effective Date to the Termination Date, Counterparty will have the option, with a five Business Days prior written notice to Santander, to early terminate this Transaction in whole and not in part, designating a new Valuation Date, which in no case may be a date after December 29, 2006. The designation by Counterparty of the new Valuation Date shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. Optional Extension: Provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing, Counterparty will have the option to extend the Termination Date by designating a new Valuation Date. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to December 29, 2006, replacing December 29, 2006 with January 31, 2007 as the Valuation Date. If Counterparty has exercised the Optional Extension above, Counterparty shall be entitled to an additional Optional Extension. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to January 31, 2007, replacing January 31, 2007 with February 28, 2007 as the Valuation Date. The replacement by Counterparty of the Valuation Date by exercising the Optional Extensions above, shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. 2. CALCULATION AGENT: SANTANDER 3. ACCOUNT DETAILS: Account for payments to Santander: To be determined Account for payments to Counterparty: To be determined [INITIALS] 4 4. OFFICES: The Office of Santander for the Transaction is: Ciudad Grupo Santander, Avenida de Cantabria s/n, Edificio Amazonia planta 1, 28660 Boadilla del Monte (Madrid) Attn: D. Ignacio Cepeda The Office of Counterparty for the Transaction is: Avenida de Europa 18, Parque Empresarial La Moraleja, 28108 Alcobendas, Madrid, Attn: D. Juan Gallardo. Fax no. +34 91663 7884 5. OTHER PROVISIONS: a) Non Reliance: Applicable b) Agreements and Acknowledgements Regarding Hedging Agreements: Applicable c) Additional Acknowledgements: Applicable Please confirm that the foregoing correctly sets forth the terms of our agreement with respect to the Transaction by executing this Confirmation and returning it D. Ignacio Cepeda, Fax: +34 912571841. Very truly yours, BANCO SANTANDER CENTRAL HISPANO, S.A. By: /s/ [ILLEGIBLE SIGNATURE] -------------------------------- Name: Title: /s/ [ILLEGIBLE SIGNATURE] ----------------------------- Finanzas Dos, S.A. ACCEPTED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN: By: /s/ Jorge Vega-Penichet Lopez /s/ Juan Gallardo Cruces ------------------------------ Name: ------------------------------ Title: ------------------------------ 5 CONFIRMATION DATE: 9 October 2006 TO: Finanzas Dos, S.A. FROM: BANCO SANTANDER CENTRAL HISPANO, S.A. SUBJECT: SWAP TRANSACTION Dear Sirs, The purpose of this letter agreement (this "Confirmation") is to set forth the terms and conditions of the transaction entered into on the Trade Date referred to below (the "Transaction"), between Banco Santander Central Hispano, S.A. ("SANTANDER") and Finanzas Dos, S.A. ("Counterparty"). This confirmation constitutes a "Confirmation" as referred to in the Agreement specified below and supersedes any prior written or oral agreements in relation to the Transaction. The definitions and provisions contained in the 2000 ISDA Definitions (the "Swap Definitions") and in the 2002 ISDA Equity Derivatives Definitions (the "Equity Definitions", and together with the Swap Definitions, the "Definitions"), in each case as published by the International Swaps and Derivatives Association, Inc. ("Isda"), are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definitions and the Equity Definitions, the Equity Definitions will prevail. In the event of any inconsistency between either set of Definitions and this Confirmation, this Confirmation will govern. This Confirmation supplements, forms part of, and is subject to, the agreement dated as of 25 September 2006, as amended and supplemented from time to time (the "Agreement") between Santander and the Counterparty. All provisions contained in the Agreement govern this Confirmation except as expressly modified below. 1. THE TERMS OF THE PARTICULAR TRANSACTION TO WHICH THIS CONFIRMATION RELATES ARE AS FOLLOWS: GENERAL TERMS: Trade Date: October 9, 2006. Effective Date: October 9, 2006. Termination Date: The Cash Settlement Payment Date. Shares: Shares of Endesa, S.A. ISIN:ES0130670112 Exchange: Madrid, Bilbao, Barcelona, and Valencia Exchanges (Sistema de Interconexion Bursatil). [INITIALS] 1 Related Exchange: Meff Renta Variable (MEFF RV). EQUITY AMOUNTS PAYABLE BY SANTANDER: Equity Amount Payer: Santander. Number of Shares: 3,671,735 Equity Notional Amount: EUR 124,655,403.25 (the Number of Shares times the Initial Price) Equity Notional Reset: Not Applicable Type of Return: Total Return Initial Price: EUR 33.95 Final Price: In respect of the Valuation Date, means the weighted average price of the Shares on the Exchange as determined by the Calculation Agent. Valuation Time: At the Scheduled Closing Time Valuation Date: 29 December 2006 Dividend Period: Second Period Dividend Amount: Paid Amount multiplied by Number of Shares. Dividend Payment Dates: The Currency Business Day following the day on which payment is made by the Issuer to holders of record of the Shares. Re-investment of Dividends: Not applicable. FLOATING AMOUNTS PAYABLE BY COUNTERPARTY: Floating Amount Payer: Counterparty Notional Amount: The Equity Notional Amount Payments Dates: The Cash Settlement Payment Date Floating rate Option: EUR EURIBOR TELERATE Designated Maturity: 1 month [INITIALS] 2 Spread: plus 25 bps Floating Rate Day Count Fraction: Actual/360 Reset Date: The first date of each Calculation Period Business Days: TARGET Settlement Day Compounding: Inapplicable SETTLEMENT TERMS: Cash Settlement: Applicable Settlement Currency: EUR Cash Settlement Payment Date: Three Currency Business Days following the Valuation Date ADJUSTMENTS: Method of Adjustment: Calculation Agent Adjustment Extraordinary Events: Consequences of Merger Events: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Tender Offer: Applicable including, for the avoidance of doubt, the Tender Offers already launched over the Shares or any modification thereof. Consequences of Tender Offers: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Composition of Combined Consideration: Not Applicable [INITIALS] 3 Nationalization, Insolvency or Delisting: Cancellation and Payment (Calculation Agent Determination) Additional Disruption Events: Change in Law: Applicable Insolvency Filing: Not Applicable Hedging Disruption: Not Applicable Increased Cost of Hedging: Not Applicable Loss of Stock Borrow: Not Applicable Increased Cost of Stock Borrow: Not Applicable Optional Early Termination: Applicable, provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing. From the Effective Date to the Termination Date, Counterparty will have the option, with a five Business Days prior written notice to Santander, to early terminate this Transaction in whole and not in part, designating a new Valuation Date, which in no case may be a date after December 29, 2006. The designation by Counterparty of the new Valuation Date shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. Optional Extension: Provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing, Counterparty will have the option to extend the Termination Date by designating a new Valuation Date. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to December 29, 2006, replacing December 29, 2006 with January 31, 2007 as the Valuation Date. If Counterparty has exercised the Optional Extension above, Counterparty shall be entitled to an additional Optional Extension. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to January 31, 2007, replacing January 31, 2007 with February 28, 2007 as the Valuation Date. The replacement by Counterparty of the Valuation Date by exercising the Optional Extensions above, shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. 2. CALCULATION AGENT: SANTANDER 3. ACCOUNT DETAILS: Account for payments to Santander: To be determined Account for payments to Counterparty: To be determined [INITIALS] 4 4. OFFICES: The Office of Santander for the Transaction is: Ciudad Grupo Santander, Avenida de Cantabria s/n, Edificio Amazonia planta 1, 28660 Boadilla del Monte (Madrid) Attn: D. Ignacio Cepeda The Office of Counterparty for the Transaction is: Avenida de Europa 18, Parque Empresarial La Moraleja, 28108 Alcobendas, Madrid, Attn: D. Juan Gallardo. Fax no. +34 91663 7884 5. OTHER PROVISIONS: a) Non Reliance: Applicable b) Agreements and Acknowledgements Regarding Hedging Agreements: Applicable c) Additional Acknowledgements: Applicable Please confirm that the foregoing correctly sets forth the terms of our agreement with respect to the Transaction by executing this Confirmation and returning it D. Ignacio Cepeda, Fax: +34 912571841. Very truly yours, BANCO SANTANDER CENTRAL HISPANO, S.A. By: /s/ [ILLEGIBLE SIGNATURE] -------------------------------- Name: Title: /s/ [ILLEGIBLE SIGNATURE] -------------------------------- Finanzas Dos, S.A. ACCEPTED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN: By: /s/ Jorge Vega-Penichet Lopez /s/ Juan Gallardo Cruces -------------------------------- Name: -------------------------------- Title: -------------------------------- 5 CONFIRMATION DATE: 10 October 2006 TO: Finanzas Dos, S.A. FROM: BANCO SANTANDER CENTRAL HISPANO, S.A. SUBJECT: SWAP TRANSACTION Dear Sirs, The purpose of this letter agreement (this "Confirmation") is to set forth the terms and conditions of the transaction entered into on the Trade Date referred to below (the "Transaction"), between Banco Santander Central Hispano, S.A. ("SANTANDER") and Finanzas Dos, S.A. ("Counterparty"). This confirmation constitutes a "Confirmation" as referred to in the Agreement specified below and supersedes any prior written or oral agreements in relation to the Transaction. The definitions and provisions contained in the 2000 ISDA Definitions (the "Swap Definitions") and in the 2002 ISDA Equity Derivatives Definitions (the "Equity Definitions", and together with the Swap Definitions, the "Definitions"), in each case as published by the International Swaps and Derivatives Association, Inc. ("Isda"), are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definitions and the Equity Definitions, the Equity Definitions will prevail. In the event of any inconsistency between either set of Definitions and this Confirmation, this Confirmation will govern. This Confirmation supplements, forms part of, and is subject to, the agreement dated as of 25 September 2006, as amended and supplemented from time to time (the "Agreement") between Santander and the Counterparty. All provisions contained in the Agreement govern this Confirmation except as expressly modified below. 1. THE TERMS OF THE PARTICULAR TRANSACTION TO WHICH THIS CONFIRMATION RELATES ARE AS FOLLOWS: GENERAL TERMS: Trade Date: October 10, 2006. Effective Date: October 10, 2006. Termination Date: The Cash Settlement Payment Date. Shares: Shares of Endesa, S.A. ISIN:ES0130670112 Exchange: Madrid, Bilbao, Barcelona, and Valencia Exchanges (Sistema de Interconexion Bursatil). [INITIALS] 1 Related Exchange: Meff Renta Variable (MEFF RV). EQUITY AMOUNTS PAYABLE BY SANTANDER: Equity Amount Payer: Santander. Number of Shares: 3,430,824 Equity Notional Amount: EUR 116,442,166.56 (the Number of Shares times the Initial Price) Equity Notional Reset: Not Applicable Type of Return: Total Return Initial Price: EUR 33.94 Final Price: In respect of the Valuation Date, means the weighted average price of the Shares on the Exchange as determined by the Calculation Agent. Valuation Time: At the Scheduled Closing Time Valuation Date: 29 December 2006 Dividend Period: Second Period Dividend Amount: Paid Amount multiplied by Number of Shares. Dividend Payment Dates: The Currency Business Day following the day on which payment is made by the Issuer to holders of record of the Shares. Re-investment of Dividends: Not applicable. FLOATING AMOUNTS PAYABLE BY COUNTERPARTY: Floating Amount Payer: Counterparty Notional Amount: The Equity Notional Amount Payments Dates: The Cash Settlement Payment Date Floating rate Option: EUR EURIBOR TELERATE Designated Maturity: 1 month [INITIALS] 2 Spread: plus 25 bps Floating Rate Day Count Fraction: Actual/360 Reset Date: The first date of each Calculation Period Business Days: TARGET Settlement Day Compounding: Inapplicable SETTLEMENT TERMS: Cash Settlement: Applicable Settlement Currency: EUR Cash Settlement Payment Date: Three Currency Business Days following the Valuation Date ADJUSTMENTS: Method of Adjustment: Calculation Agent Adjustment Extraordinary Events: Consequences of Merger Events: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Tender Offer: Applicable including, for the avoidance of doubt, the Tender Offers already launched over the Shares or any modification thereof. Consequences of Tender Offers: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Composition of Combined Consideration: Not Applicable [INITIALS] 3 Nationalization, Insolvency or Delisting: Cancellation and Payment (Calculation Agent Determination) Additional Disruption Events: Change in Law: Applicable Insolvency Filing: Not Applicable Hedging Disruption: Not Applicable Increased Cost of Hedging: Not Applicable Loss of Stock Borrow: Not Applicable Increased Cost of Stock Borrow: Not Applicable Optional Early Termination: Applicable, provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing. From the Effective Date to the Termination Date, Counterparty will have the option, with a five Business Days prior written notice to Santander, to early terminate this Transaction in whole and not in part, designating a new Valuation Date, which in no case may be a date after December 29, 2006. The designation by Counterparty of the new Valuation Date shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. Optional Extension: Provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing, Counterparty will have the option to extend the Termination Date by designating a new Valuation Date. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to December 29, 2006, replacing December 29, 2006 with January 31, 2007 as the Valuation Date. If Counterparty has exercised the Optional Extension above, Counterparty shall be entitled to an additional Optional Extension. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to January 31, 2007, replacing January 31, 2007 with February 28, 2007 as the Valuation Date. The replacement by Counterparty of the Valuation Date by exercising the Optional Extensions above, shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. 2. CALCULATION AGENT: SANTANDER 3. ACCOUNT DETAILS: Account for payments to Santander: To be determined Account for payments to Counterparty: To be determined [INITIALS] 4 4. OFFICES: The Office of Santander for the Transaction is: Ciudad Grupo Santander, Avenida de Cantabria s/n, Edificio Amazonia planta 1, 28660 Boadilla del Monte (Madrid) Attn: D. Ignacio Cepeda The Office of Counterparty for the Transaction is: Avenida de Europa 18, Parque Empresarial La Moraleja, 28108 Alcobendas, Madrid, Attn: D. Juan Gallardo. Fax no. +34 91663 7884 5. OTHER PROVISIONS: a) Non Reliance: Applicable b) Agreements and Acknowledgements Regarding Hedging Agreements: Applicable c) Additional Acknowledgements: Applicable Please confirm that the foregoing correctly sets forth the terms of our agreement with respect to the Transaction by executing this Confirmation and returning it D. Ignacio Cepeda, Fax: +34 912571841. Very truly yours, BANCO SANTANDER CENTRAL HISPANO, S.A. By: /s/ Francisco Benitez Aranda ---------------------------- Name: Title: /s/ Noemi Doce Deibe ------------------------------ Finanzas Dos, S.A. ACCEPTED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN: By: /s/ Juan Gallardo Cruces /s/ Jorge Vega-Penichet Lopez ------------------------- Name: ------------------------ Title: ------------------------ 5 CONFIRMATION DATE: 11 October 2006 TO: Finanzas Dos, S.A. FROM: BANCO SANTANDER CENTRAL HISPANO, S.A. SUBJECT: SWAP TRANSACTION Dear Sirs, The purpose of this letter agreement (this "Confirmation") is to set forth the terms and conditions of the transaction entered into on the Trade Date referred to below (the "Transaction"), between Banco Santander Central Hispano, S.A. ("SANTANDER") and Finanzas Dos, S.A. ("Counterparty"). This confirmation constitutes a "Confirmation" as referred to in the Agreement specified below and supersedes any prior written or oral agreements in relation to the Transaction. The definitions and provisions contained in the 2000 ISDA Definitions (the "Swap Definitions") and in the 2002 ISDA Equity Derivatives Definitions (the "Equity Definitions", and together with the Swap Definitions, the "Definitions"), in each case as published by the International Swaps and Derivatives Association, Inc. ("Isda"), are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definitions and the Equity Definitions, the Equity Definitions will prevail. In the event of any inconsistency between either set of Definitions and this Confirmation, this Confirmation will govern. This Confirmation supplements, forms part of, and is subject to, the agreement dated as of 25 September 2006, as amended and supplemented from time to time (the "Agreement") between Santander and the Counterparty. All provisions contained in the Agreement govern this Confirmation except as expressly modified below. 1. THE TERMS OF THE PARTICULAR TRANSACTION TO WHICH THIS CONFIRMATION RELATES ARE AS FOLLOWS: GENERAL TERMS: Trade Date: October 11, 2006. Effective Date: October 11, 2006. Termination Date: The Cash Settlement Payment Date. Shares: Shares of Endesa, S.A. ISIN:ES0130670112 Exchange: Madrid, Bilbao, Barcelona, and Valencia Exchanges (Sistema de Interconexion Bursatil). [INITIALS] 1 Related Exchange: Meff Renta Variable (MEFF RV). EQUITY AMOUNTS PAYABLE BY SANTANDER: Equity Amount Payer: Santander. Number of Shares: 2,650,000 Equity Notional Amount: EUR 89,914,500 (the Number of Shares times the Initial Price) Equity Notional Reset: Not Applicable Type of Return: Total Return Initial Price: EUR 33.93 Final Price: In respect of the Valuation Date, means the weighted average price of the Shares on the Exchange as determined by the Calculation Agent. Valuation Time: At the Scheduled Closing Time Valuation Date: 29 December 2006 Dividend Period: Second Period Dividend Amount: Paid Amount multiplied by Number of Shares. Dividend Payment Dates: The Currency Business Day following the day on which payment is made by the Issuer to holders of record of the Shares. Re-investment of Dividends: Not applicable. FLOATING AMOUNTS PAYABLE BY COUNTERPARTY: Floating Amount Payer: Counterparty Notional Amount: The Equity Notional Amount Payments Dates: The Cash Settlement Payment Date Floating rate Option: EUR EURIBOR TELERATE Designated Maturity: 1 month [INITIALS] 2 Spread: plus 25 bps Floating Rate Day Count Fraction: Actual/360 Reset Date: The first date of each Calculation Period Business Days: TARGET Settlement Day Compounding: Inapplicable SETTLEMENT TERMS: Cash Settlement: Applicable Settlement Currency: EUR Cash Settlement Payment Date: Three Currency Business Days following the Valuation Date ADJUSTMENTS: Method of Adjustment: Calculation Agent Adjustment Extraordinary Events: Consequences of Merger Events: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Tender Offer: Applicable including, for the avoidance of doubt, the Tender Offers already launched over the Shares or any modification thereof. Consequences of Tender Offers: Share-for-Share: Modified Calculation Agent Adjustment Share-for-Other: Modified Calculation Agent Adjustment Share-for-Combined: Modified Calculation Agent Adjustment Composition of Combined Consideration: Not Applicable [INITIALS] 3 Nationalization, Insolvency or Delisting: Cancellation and Payment (Calculation Agent Determination) Additional Disruption Events: Change in Law: Applicable Insolvency Filing: Not Applicable Hedging Disruption: Not Applicable Increased Cost of Hedging: Not Applicable Loss of Stock Borrow: Not Applicable Increased Cost of Stock Borrow: Not Applicable Optional Early Termination: Applicable, provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing. From the Effective Date to the Termination Date, Counterparty will have the option, with a five Business Days prior written notice to Santander, to early terminate this Transaction in whole and not in part, designating a new Valuation Date, which in no case may be a date after December 29, 2006. The designation by Counterparty of the new Valuation Date shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. Optional Extension: Provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing, Counterparty will have the option to extend the Termination Date by designating a new Valuation Date. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to December 29, 2006, replacing December 29, 2006 with January 31, 2007 as the Valuation Date. If Counterparty has exercised the Optional Extension above, Counterparty shall be entitled to an additional Optional Extension. For this purpose, Counterparty shall give a written notice to Santander no later than five Business Days prior to January 31, 2007, replacing January 31, 2007 with February 28, 2007 as the Valuation Date. The replacement by Counterparty of the Valuation Date by exercising the Optional Extensions above, shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. 2. CALCULATION AGENT: SANTANDER 3. ACCOUNT DETAILS: Account for payments to Santander: To be determined Account for payments to Counterparty: To be determined [INITIALS] 4 4. OFFICES: The Office of Santander for the Transaction is: Ciudad Grupo Santander, Avenida de Cantabria s/n, Edificio Amazonia planta 1, 28660 Boadilla del Monte (Madrid) Attn. D. Ignacio Cepeda The Office of Counterparty for the Transaction is: Avenida de Europa 18, Parque Empresarial La Moraleja, 28108 Alcobendas, Madrid, Attn: D. Juan Gallardo. Fax no. +34 91663 7884 5. OTHER PROVISIONS: a) Non Reliance: Applicable b) Agreements and Acknowledgements Regarding Hedging Agreements: Applicable c) Additional Acknowledgements: Applicable Please confirm that the foregoing correctly sets forth the terms of our agreement with respect to the Transaction by executing this Confirmation and returning it D. Ignacio Cepeda, Fax: +34 912571841. Very truly yours, BANCO SANTANDER CENTRAL HISPANO, S.A. By: /s/ Francisco Benitez Aranda ----------------------------- Name: Title:/s/ Noemi Doce Deibe ------------------------------ Finanzas Dos, S.A. ACCEPTED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN: By: /s/ Juan Gallardo Cruces /s/ Jorge Vega-Penichet Lopez ------------------------- Name: ------------------------- Title: ------------------------- 5 EX-99.1 6 exhib99.txt EXHIBIT 99.1 Exhibit 99.1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - ----------------------------------------- E.ON AG and E.ON ZWOLFTE VERWALTUNGS GmbH, Plaintiffs, JUDGE COTE 06 CV 8720 v. Civil Action No. ACCIONA, S.A. and FINANZAS DOS, S.A., Defendants. - ----------------------------------------- COMPLAINT Plaintiffs E.ON AG and E.ON Zwolfte Verwaltungs GmbH (collectively, "E.ON") by their undersigned counsel allege upon knowledge to themselves and their own acts, and upon information and belief as to all other matters, as follows: NATURE OF THE ACTION 1. Defendants Acciona, S.A. ("Acciona, S.A.") and Finanzas Dos, S.A. ("Finanzas") (collectively, "Acciona") have made false and misleading statements relating to the equity securities of a Spanish utility called Endesa, S.A. ("Endesa"). Endesa's ordinary shares and American Depositary Shares ("ADSs") are registered under the United States Securities Exchange Act of 1934, as amended (the "'34 Act"), and the ADSs are traded on the New York Stock Exchange. Acciona's false and misleading disclosures violate the United States securities laws. 2. In February 2006, plaintiff E.ON announced its intent to launch a tender offer for Endesa. Although Endesa has not yet issued a formal recommendation on the E.ON bid, it has commented favorably on the bid's structure and its impact on Endesa's current industrial plans. Indeed, Endesa favors the E.ON bid over a lower bid announced by another Spanish company called Gas Natural SDG, S.A. ("Gas Natural"), which Endesa has formally recommended that its shareholders reject. Despite the favorable economics of E.ON's bid, various Spanish interests have opposed E.ON's offer because E.ON is a German company, and they want Endesa to remain in Spanish hands. Indeed, the Spanish Government has taken a series of steps to prevent E.ON from succeeding in its bid for Endesa. Initially, those efforts were either suspended or invalidated. The Gas Natural bid was suspended by the Spanish courts, and the European Commission ruled that conditions imposed by Spanish regulators pursuant to emergency legislation Spain had enacted specifically to stop E.ON's bid were illegal under European law. Then on September 25, 2006, with the stated purpose of helping ensure that Endesa stays Spanish-owned, defendant Acciona (which is a Spanish construction company) suddenly acquired a 10% stake in Endesa. Acciona has publicly announced its intent to acquire up to a total of just under 25% of Endesa. 3. In fact, Acciona has already entered into complicated derivative contracts with Banco Santander Central Hispano, S.A. ("Santander"), which is Spain's largest bank, giving Acciona effective control over at least an additional 5% of Endesa's equity securities. As discussed below, in filings with the Spanish securities regulator on September 26 and 27, 2006, Acciona disclosed that "[i]n preparation for a decision to increase the investment [in Endesa] beyond the 10% initially acquired, Acciona has contracted for financial coverage to neutralize the risk of fluctuation of the purchase price" of an additional 5.01% of Endesa's shares. Then on September 29, 2006, Santander made a filing with the Spanish securities regulator disclosing its purchases of over 5% of Endesa stock and declaring that "positions acquired on September 26 2 and 27 correspond to coverage of various derivative transactions executed on those same dates with Acciona, S.A". 4. Those filings in Spain strongly indicate that Acciona and Santander entered into contracts pursuant to which Santander is required to sell shares representing at least 5% of Endesa's currently outstanding stock to Acciona in the future at a set price. To hedge itself against any fluctuation in the price of Endesa stock, Santander purchased that stock on or around the day that the contracts were executed and, as is customary in such transactions, would hold the stock until it is transferred to Acciona in exchange for the fixed cash payment pursuant to the contracts. Since making its filing with the Spanish securities regulator, Santander has acquired additional Endesa securities for Acciona. Bear Stearns is also reportedly seeking to acquire Endesa shares on Acciona's behalf. 5. Notwithstanding Acciona and Santander's Spanish disclosures, Acciona filed a false Schedule 13D with the SEC on October 5, 2006. Under Section 13(d) of the '34 Act, and SEC rules promulgated thereunder, a person acquiring more than 5% of a registered security is required to make a variety of disclosures for the benefit of investors. In particular, within ten days of acquiring its large block of Endesa securities, Acciona was required to file a Schedule 13D disclosing, among other things: (1) the number of equity securities that Acciona has acquired or has a right to acquire "directly or indirectly"; (2) the "details" of "any contracts, arrangements, or understandings with any person with respect to any securities of" Endesa; (3) the "purpose of the purchases", including whether Acciona has any "plans or proposals" concerning "[a]n extraordinary corporate transaction" or "change in the present board of directors or management"; and (4) the financing arrangements Acciona made for the purchases, 3 including a "description of the transaction". 15 U.S.C. ss. 78m(d)(1); 17 C.F.R. ss.ss. 240.13d-1, 240.13d-101. 6. Acciona's filing, which was made on October 5, 2006, violates each of these disclosure requirements. 7. FIRST, Acciona's Schedule 13D falsely states that Acciona is the beneficial owner of securities "constitut[ing] 10% of the outstanding ordinary shares" of Endesa. In fact, as a result of its derivative arrangements with Santander, Acciona is the beneficial owner of up to at least another 5% of additional Endesa shares or ADSs, for a total of at least 15% of Endesa's equity. 8. SECOND, Acciona's Schedule 13D falsely states that Acciona does not have any "contracts, arrangements, understandings or relationships (legal or otherwise) with any person with respect to any securities" of Endesa. In fact, Acciona's derivative contracts with Santander relate to Endesa securities and constitute precisely such "contracts, arrangements, understandings or relationships". Moreover, Acciona's Schedule 13D misleadingly omits any mention of its "contracts, arrangements, or understandings" with other persons (such as Gas Natural, Gas Natural's shareholders or Bear Stearns) to purchase Endesa securities in order to block E.ON's offer. 9. THIRD, Acciona's Schedule 13D falsely states that Acciona's purchase of Endesa stock was only for "investment purposes" and expressly disclaims any "plans or proposals" relating to an "extraordinary corporate transaction" involving Endesa. In fact, Acciona bought Endesa stock for the express strategic purpose of blocking E.ON's acquisition. 10. FOURTH, Acciona's Schedule 13D falsely disclaims any "plans or proposals" relating to "changes in the present board of directors or management" of Endesa. In 4 fact, Acciona intends to use its substantial minority interest in Endesa to attempt to install directors and officers of its choosing and is already in discussions with Endesa's management. 11. FIFTH, Acciona's Schedule 13D falsely states that Acciona's purchase of Endesa securities was "financed by Banco Santander" and that it has "secured financing to acquire . . . up to 20% of the issued and outstanding" Endesa shares. In fact, Acciona has failed to disclose a sufficient "description of the transaction", as Section 13(d) requires. Santander has provided extremely generous financing terms, the details of which would indicate to investors the extent to which Acciona's purchases are backed by third parties in Spain in an effort to keep Endesa under Spanish ownership. 12. The declaratory and injunctive relief sought herein is necessary to provide Endesa shareholders (including ADS-holders) with all of the information to which they are entitled under the United States securities laws. Absent such relief, there is a substantial likelihood that Endesa shareholders will take actions (such as selling to Acciona or its agents) that they would not otherwise take with the benefit of accurate information. 13. Moreover, because E.ON's bid is conditioned upon a specified percentage of shares being tendered and certain shareholder votes being taken, there is a substantial likelihood that if Acciona is permitted to acquire more shares or ADSs (or to vote the shares it owns or acquires) without correcting its Schedule 13D, Acciona (and those acting in concert with it) could unfairly prevent some of the conditions to E.ON's bid from being satisfied. As a result, Endesa shareholders who would otherwise choose to tender their shares to E.ON in exchange for the fair price that E.ON is offering would be prevented from doing so. 14. Proper disclosure will "level the playing field" to allow Endesa shareholders (including ADS-holders) to evaluate what they want to do with their securities. In 5 order for Endesa shareholders to evaluate fairly whether to tender their shares to E.ON or to sell to Acciona in its effort to acquire up to 25% of Endesa's stock (or to take some other action), they need to be informed of Acciona's true holdings in Endesa securities, Acciona's true motives for acquiring those securities, and the true extent of Acciona's relationships with other parties regarding its stake in Endesa. 15. Pending such disclosure, Acciona should be barred from acquiring more Endesa securities and from voting the securities it already owns. Moreover, Acciona should be required to rescind the purchase of or to sell any Endesa securities it acquired after the filing of its false and misleading Schedule 13D. JURISDICTION AND VENUE 16. This action arises under Section 13(d) of the '34 Act, 15 U.S.C. ss. 78m(d), and the rules and regulations promulgated thereunder by the SEC. 17. Jurisdiction over the subject matter of this action is based upon 28 U.S.C. ss. 1331 and Section 27 of the '34 Act, 15 U.S.C. ss. 78aa. 18. Venue in this district is proper pursuant to Section 27 of the '34 Act, 15 U.S.C. ss. 78aa, and 28 U.S.C. ss. 1391(d). 19. Declaratory relief is appropriate pursuant to 28 U.S.C. ss. 2201 because an actual controversy exists regarding the propriety of Acciona's statements and disclosures under Section 13(d) of the '34 Act. THE PARTIES 20. E.ON AG is a German company headquartered in Dusseldorf, Germany and is the world's largest private power and gas company with over 30 million customers in more than 20 European countries and the United States. 6 21. E.ON Zwolfte Verwaltungs GmbH is a wholly owned German subsidiary of E.ON AG formed for the sole purpose of carrying out the tender offer for Endesa. 22. Acciona, S.A. is a Spanish construction company with its principal place of business in Madrid, Spain. Acciona's principal activities include construction and engineering, logistics and airport services. It has historically thrived on public works contracts and other government-supported projects. 23. Finanzas Dos, S.A. ("Finanzas") is a wholly owned subsidiary of Acciona, S.A. through which Acciona acquired its stake in Endesa. ENDESA 24. Endesa is Spain's leading electrical utility and has operations worldwide. Endesa's shares are publicly held and traded on the Madrid, Barcelona, Bilbao and Valencia stock exchanges in Spain, and on the Santiago Off Shore Stock Exchange in Chile. In addition, Endesa's ordinary shares are registered with the SEC pursuant to Section 12 of the '34 Act, 15 U.S.C. ss. 78l, and Endesa ADSs are traded on the New York Stock Exchange. 25. Endesa's articles of incorporation provide that no matter how many shares of the company a shareholder owns, it may not vote more than 10% of Endesa's shares. This provision--the Spanish equivalent of a "poison pill"--forces a shareholder owning even a majority of Endesa's stock to work with minority shareholders in order to exercise control over the company, thereby making a takeover much less likely. As a practical matter, any person seeking to acquire Endesa would need to have that provision removed, which requires a favorable vote of more than 50% of Endesa's voting shares. 7 THE GAS NATURAL BID FOR ENDESA 26. Gas Natural, the largest supplier of natural gas in Spain, announced an intention to commence a tender offer for Endesa on September 5, 2005. The bid was for (euro)22/share (in a combination of cash and stock), worth a total of (euro)23.2 billion. The price offered by Gas Natural was below the price at which Endesa's stock and ADSs were trading at the time. 27. Gas Natural's announcement came on the heels of an agreement between Gas Natural and Iberdrola, S.A. ("Iberdrola"), Endesa's main Spanish competitor, pursuant to which Gas Natural had promised to sell to Iberdrola a substantial part of Endesa's business if Gas Natural's bid was successful. Thus, together, Gas Natural and Iberdrola agreed on a plan to take over Endesa and break up the company. 28. Concurrent with the announcement of Gas Natural's bid came expressions of support from Caja de Ahorros y Pensiones de Barcelona (known as "La Caixa") and Repsol YPF, S.A. ("Repsol"). La Caixa is a Spanish savings bank, which owns approximately 33.1% of Gas Natural's ordinary shares. Repsol, in which La Caixa also owns a substantial stake, exercises control over an additional 30.8% of Gas Natural's ordinary shares. Repsol and La Caixa have entered into a shareholders' agreement in respect of Gas Natural. In addition, the Chairman of Gas Natural is the vice chairman of La Caixa. 29. On January 5, 2006, Spanish antitrust regulators recommended to the Spanish Government that the proposed acquisition of Endesa by Gas Natural be prohibited. However, the Spanish Cabinet, which consists of Ministers appointed by and is chaired by President Rodriguez Zapatero, declined to follow that recommendation and approved Gas Natural's (euro)23.2 billion bid, which would have combined Spain's biggest gas importer and 8 supplier with its biggest electricity producer and distributor. Leslie Crawford, SPAIN VOWS TO PREVENT FOREIGN TAKEOVER, Fin. Times, Feb. 22, 2006, at 27. 30. Notwithstanding the Spanish Government's strong support for Gas Natural's bid, Endesa strongly opposed it. Rafael Miranda, Endesa's CEO, called the Gas Natural bid "complete nonsense". ENDESA TODAY WILL DEPOSIT THE ONE BILLION EURO BOND TO STOP THE TAKEOVER, Expansion, Mar. 31, 2006, at 3. Endesa told its shareholders at its February 25, 2006 annual meeting that the Gas Natural bid was at an "insufficient price" (that was actually below Endesa's share price when it was made and was then well below after E.ON's bid was announced), involved an "inadequate method of payment", "destroys value", "weakens Endesa's industrial standing" and involved "no commitment to shareholders". Slides for Endesa Ordinary Shareholders' Meeting, Feb. 25, 2006; MIRANDA SAYS THAT ENDESA WILL DEPOSIT BOND TO STOP TAKEOVER, El Pais, Mar. 31, 2006, at 89. 31. Endesa also resisted Gas Natural's bid in the Spanish courts. By resolution dated March 21, 2006, a Commercial Court in Madrid enjoined the Gas Natural bid pending the outcome of a lawsuit Endesa brought alleging violations of European antitrust law. The Court based its decision on the existence of the Gas Natural-Iberdrola agreement pursuant to which Gas Natural had promised to sell to Iberdrola a substantial part of Endesa's business if Gas Natural's bid was successful. In addition, Endesa appealed to the Spanish Supreme Court the Spanish Government's approval of the Gas Natural bid. By resolution dated April 28, 2006, the Spanish Supreme Court temporarily suspended that approval (which directly entails the suspension of Gas Natural's bid) until it could rule on the merits of Endesa's claim. 9 THE E.ON BID FOR ENDESA 32. In the midst of the legal wrangling between Endesa and Gas Natural, E.ON announced its intent to launch a competing, and far more lucrative, offer for Endesa shares. Specifically, on February 21, 2006, E.ON announced a (euro)27.5 per share offer, which was worth a total of (euro)29.1 billion, nearly (euro)6 billion more than the Gas Natural bid. Moreover, unlike the Gas Natural bid, E.ON's bid was all cash. 33. To ensure that E.ON not be required to purchase the tendered shares unless it would obtain effective control of Endesa, E.ON's offer is contingent on two principal conditions: (1) that E.ON be tendered a minimum of 50.01% of Endesa stock; and (2) that a majority of Endesa shareholders vote to amend the anti-takeover provision in Endesa's articles prohibiting a shareholder from voting any more than 10% of Endesa stock. The other conditions require modification to Endesa's articles in order to eliminate requirements related to the composition of the board of directors of Endesa and the types of directors as well as the special qualifications required to be appointed a director or a managing director. All of these conditions are intended to ensure that E.ON not be required to purchase the tendered shares unless it would obtain effective control of Endesa. 34. Endesa favored E.ON's objectively superior offer to Gas Natural's bid. At the same February 25, 2006 shareholders' meeting at which Endesa recommended rejection of Gas Natural's bid, it praised the E.ON offer not only because of the better price, but also "[b]ecause it is formulated in cash, the bid makes the shareholders' decision easy". Slides for Endesa Ordinary Shareholders' Meeting, Feb. 25, 2006. As Endesa CEO Rafael Miranda further explained: o Gas Natural's bid is "bad". ENDESA WILL DISTRIBUTE 4.2 BILLION TO ITS SHAREHOLDERS IN TWO YEARS, El Pais, May 17, 2006, at 83. 10 o E.ON's bid is "undoubtedly better in economic terms". ENDESA WILL PAY THE BOND AND PLACE ITS SHARES ABOVE 30 EUROS, La Gaceta, Mar. 31, 2006, at 21. o "E.ON's offer is much better as it does not break up the company and is paid in cash." ENDESA'S BOARD TODAY WILL AUTHORIZE THE BOND THAT WILL STOP GAS NATURAL'S TAKEOVER BID, Cinco Dias, Mar. 31, 2006 at 4. Indeed, Miranda explicitly acknowledged the tension between a nationalistic desire to maintain Spanish control of Endesa and the superiority of E.ON's bid, and he came out squarely on the side of what was best for Endesa shareholders, saying, "We feel we are Catalanonians, but the offer by E.ON is better." E. Villarejo, "WE FEEL WE ARE CATALONIANS, BUT THE OFFER BY E.ON IS BETTER," SAYS RAFAEL MIRANDA, ABC, Mar. 11 2006, at 81. 35. On March 8, 2006, Endesa filed with the SEC a Schedule 14D-9/A in which it formally recommended that its shareholders reject Gas Natural's offer. One of the many reasons given for the rejection was the fact that Gas Natural's offer price "is substantially lower than a competing all-cash offer announced by E.ON", which is at a price "28% greater than" Gas Natural's offer price. Plus, "E.ON's offer is all cash, which makes it easier for Endesa's shareholders to make a decision with respect to the offer". 36. The Spanish Government, by contrast, quickly made its opposition to E.ON's bid known. On February 22, 2006, Fernando Moraleda, a Spanish Government spokesman, was quoted as saying: "WE WILL DO EVERYTHING IN OUR POWER TO ENSURE THAT SPAIN'S ENERGY COMPANIES REMAIN SPANISH. . . . The government believes Spain should have strong national companies with independent decision making power in sectors such as energy." Leslie Crawford, SPAIN VOWS TO PREVENT TAKEOVER, Fin. Times, Feb. 22, 2006, at 27 (emphasis added ). 11 37. Thus, three days after the E.ON bid was announced, the Spanish Government passed legislation requiring companies to gain the authorization of the Spanish National Energy Commission (known by its Spanish initials as the "CNE") for the acquisition of over 10%, or any other percentage resulting in significant influence, of a Spanish energy company's share capital. As Industry Minister Jose Montilla explained: "THE GOVERNMENT BACKS AN ALL-SPANISH TAKEOVER FOR ENDESA and passed a decree that will expand the scope of its energy regulator's veto power to include deals in which a foreign buyer targets a Spanish energy concern." SPAIN TAKES MEASURES TO FEND OFF E.ON BID, Associated Press Newswires, Feb. 24, 2006 (emphasis added). 38. In addition, because Spanish law restricted Gas Natural itself from acquiring Endesa shares outside its announced tender offer, Minister Montilla reportedly sought a "white knight" to step in to acquire Endesa shares and approached, among others, Acciona and Santander: "Montilla has set his agenda to organize a consortium of financial companies that would come to the aid of Gas Natural and would become its partners as owners of part of the resulting company. . . . Called upon to participate in this venture are, at this time, Caja Madrid, BANCO SANTANDER and ACCIONA. . . . As for ACCIONA, at this time it is the Spanish construction company with the greatest financial resources available to dedicate to investments." GAS NATURAL SEEKS FINANCIAL PARTNERS IN ORDER TO "HISPANIFY" AND INCREASE ITS BID, La Razon, Feb. 23, 2006, at 54-55 (emphasis added). 39. Pursuant to the new legislation enacted in response to E.ON's bid, E.ON had to submit its offer for approval by the Spanish energy regulators at the CNE. Although the relevant European Commission authorities had approved E.ON's bid, the CNE imposed substantial roadblocks. On July 27, 2006, the CNE "approved" E.ON's bid but subjected it to nineteen very onerous conditions. Compliance with those conditions would greatly inhibit 12 E.ON's ability to manage its interest in Endesa and also result in the divestiture of approximately one-third of Endesa's domestic energy-producing assets, effectively breaking up the company. In particular, the CNE required, among other things, that: o E.ON not reorganize Endesa for a period of ten years; o E.ON divest several specified power stations and other key assets; o stringent limits be placed on E.ON's ability to receive dividends from its Endesa holdings; o E.ON inform the CNE each year regarding future investment plans in gas and electricity regulated activities and strategic assets; and o during the ten years from E.ON's effective acquisition of control over Endesa, E.ON inform the CNE of potential changes in control of E.ON, at which point the CNE could revise its conditions on the E.ON-Endesa relationship. Breach of any of the CNE's conditions and obligations could give rise to revocation of the CNE's authorization for E.ON to proceed with its offer, the suspension of E.ON's right to vote its Endesa shares, or the forced divestiture of Endesa shares acquired by E.ON. 40. Both E.ON and Endesa appealed the CNE's ruling to the Spanish Ministry of Industry, arguing that the conditions violated Spanish law. Such an appeal is a prerequisite to challenging the conditions in the Spanish courts. 41. In addition, the European Commission separately investigated the CNE's action to determine whether it violated European law. The European Commission was reportedly "infuriated by the Spanish maneuvers", which were clearly intended "to scuttle an offer for Endesa by E.ON of Germany, and to merge Endesa instead with Gas Natural, a Spanish rival, to create an Iberian energy champion". James Kanter, SPAIN TO ALLOW E.ON TO TAKE OVER ENDESA, Int'l Herald Trib., Sept. 26, 2006. 13 42. In August 2006, the European Commission delivered to Spain a pre-warning letter in which the European Commission indicated that many or all of the conditions may conflict with European law. The conventional wisdom across Europe and within Spain was that the European Commission would declare the CNE conditions illegal. 43. Then, on September 26, 2006, the European Commission struck down the CNE conditions. The European Commission held that the CNE's conditions violated the European Commission Treaty's rules on free movement of capital (Article 56) and freedom of establishment (Article 43) and were not justified by a legitimate interest, such as the security ofSpain's supply of energy. In addition, the European Commission held that the CNE conditions were unlawful because they were adopted and entered into force without prior communication to and approval by the European Commission, in violation of Article 21 of the European Merger Regulation. 44. If given full force and effect, the European Commission's ruling would eliminate a major impediment to the E.ON bid and deal a serious blow to the Spanish efforts to stop Endesa's shareholders from accepting E.ON's superior offer. However, the Spanish Government has yet to give the European Commission's clear ruling full force and effect, stating that it is still determining how the ruling should be implemented. As a result, Spain is now being threatened with legal action by the European Union if the Spanish authorities do not comply with the ruling. ACCIONA STEPS IN AS A "WHITE KNIGHT" 45. While E.ON's bid was being delayed, Acciona stepped in. On September 25, 2006, the day before the European Commission's decision was scheduled to be issued, Acciona announced that it had acquired securities representing 10% of Endesa's shares. Acciona 14 also announced that it planned to acquire more Endesa securities, just up to the limit at which it would be required to launch a tender offer. (Under current Spanish law, that limit is 25%.) 46. In addition to the 10% stake in Endesa that Acciona acquired directly, Acciona entered into agreements with Santander, under which Santander would "warehouse" for Acciona at least an additional 5% of Endesa stock. In September 26 and 27, 2006 filings with the Spanish securities regulator (known by its Spanish initials as the "CNMV"), Acciona admitted that "[i]n preparation for a decision to increase the investment [in Endesa] beyond the 10% initially acquired, Acciona has contracted for financial coverage to neutralize the risk of fluctuation of the purchase price" of up to 5.01% of additional Endesa stock. A CNMV filing made by Santander on September 29, 2006 confirms that Santander acquired over 5% of Endesa's stock and that "the positions acquired on September 26 and 27 correspond to the coverage of various derivative transactions executed on those same dates with Acciona, S.A.". 47. Under those derivative agreements, Santander is required to sell securities representing at least 5% of Endesa's currently outstanding stock to Acciona in the future at a set price. To hedge itself against any fluctuation in the price of Endesa stock, Santander purchased those Endesa securities on or around the day that the contracts were executed and, as is customary in such contracts, will hold them until such time as it is required to transfer the securities to Acciona in exchange for the fixed cash payment pursuant to the contracts. Thus, in effect, in addition to the 10% of Endesa that Acciona directly owns, Acciona is assured control of Santander's stake in Endesa (which was at 5% and has grown since then). 48. This "warehousing" arrangement was designed in part to evade the very same restrictions on acquiring more than 10% of Endesa's equity that the Spanish Government 15 enacted in February 2006 in response to the E.ON bid. Acciona has applied to the CNE for approval to exceed the 10% threshold. 49. In addition, because Endesa shareholders are currently prohibited from voting more than 10% of Endesa stock, the Endesa-Santander "warehousing" arrangement has the added benefit of permitting Acciona and Santander to attempt to vote a block of at least 15% of Endesa's shares against, for example, amending the anti-takeover provision in Endesa's articles (which is a condition of E.ON's offer). 50. Santander has also been actively soliciting holders of Endesa securities to sell their shares and ADSs to Santander on Acciona's behalf. In discussions with investors, Santander has represented that Acciona seeks control or influence over Endesa's board andmanagement and that Acciona contemplates merging Endesa into Acciona within two years' time. 51. Bear Stearns is also reportedly in the market to purchase Endesa securities on behalf of Acciona. For example, Reuters reported that "[m]arket sources said Santander and Bear Stearns ran Acciona's share buy and had looked to acquire up to 20% of Endesa". ACCIONA GRABS 10 PCT OF ENDESA IN TAKEOVER BATTLE, Reuters News, Sept. 25, 2006. 52. In addition to the "warehousing" agreements, Santander also provided extraordinarily favorable financing for Acciona's direct stock purchases. Acciona has an equity market capitalization of approximately (euro)7.6 billion. The 10% equity stake in Endesa that Acciona initially acquired (at (euro)32/share) was valued at approximately (euro)3.4 billion. For Acciona to complete its acquisition of just under 25% of Endesa stock will require a total of over (euro)8.5 billion, which is more than Acciona's entire equity market capitalization. Nevertheless, Santander agreed to provide Acciona a bridge facility that would be refinanced with 20% equity 16 and 80% of NON-RECOURSE DEBT. In other words, Santander agreed to finance Acciona's very large acquisition without having any recourse to Acciona's assets in the event of default, notwithstanding the fact that Acciona would be borrowing to make an investment that exceeded its equity market capitalization. 53. Acciona's acquisition of Endesa securities was done with the intent to block E.ON's bid and help keep Endesa under Spanish ownership. Indeed, shortly after Acciona announced its purchases, an Acciona spokesperson was quoted as saying, "WE'LL ONLY LEAVE IF THE E.ON BID PROSPERS, AND WE'LL DO EVERYTHING WE CAN TO MAKE SURE THAT DOESN'T HAPPEN." Keith Johnson and Jason Singer, A SPANISH SCION PLAYS THE SPOILER --- ENDESA MOVES SHOW NEW, BOLDER TACTICS BY ULTRAWEALTHY, The Wall Street Journal, Oct. 2, 2006, at 4. 54. According to Acciona spokesperson Javier de Mendizabal, Acciona seeks "to lead, put together, an alternative group to what was there", meaning E.ON, and has been "talking with all the shareholders involved". ACCIONA WANTS "TO PUT TOGETHER" A GROUP OF PARTNERS AS AN ALTERNATIVE TO THE GERMAN COMPANY, Cinco Dias, Oct. 4, 2006, at 4. One of the shareholders likely to side with Endesa is SOCIEDAD ESTATAL DE PARTICIPACIONES INDUSTRIALES ("SEPI"), a Spanish Government agency that serves as a holding company for the Spanish Government's interest in certain companies. SEPI currently holds a 2.95% interest in Endesa. 55. Acciona's move was obviously timed to coincide with the expected decision from the European Commission to strike down the conditions imposed by the CNE on E.ON's bid: "The latest development came as the European Commission was expected Tuesday to rap Spain on the knuckles for raising illegal barriers against the E.ON bid. Spain favors an alternate bid for Endesa launched by Spain's Gas Natural." 17 SPAIN'S ACCIONA SEEKS TO RAISE ITS ENDESA STAKE TO JUST UNDER 25%, Associated Press Financial Wire, Sept. 26, 2006. "When it seemed as if the launching of the German E.ON's offer on Endesa was only hanging by a thread, the rapid investment of Acciona in the Spanish electricity company has added a new twist to the matter." Juan Maria Hernandez, THE SEARCH FOR A WHITE KNIGHT, ACCIONA'S STEP TO THE FORE EXPLAINS THE PREVIOUS PASSIVENESS OF THE GOVERNMENT, La Vanguardia, Oct. 1, 2006. The article further noted that Acciona, "a player from the infrastructures sector", had to be sought because of prohibitions or other practical impediments stopping "great bank[s]" (such as Santander) from playing the "white knight" role. (Moreover, Gas Natural itself could not buy Endesa shares because Spanish law restricts its ability to do so while its tender offer remains outstanding.) 56. Spanish commentators have also noted that it is unlikely that Acciona is acting alone. For example, on October 1, 2006, El Mundo asked: "But the question in business and political circles is who is behind these transactions? Is there an invisible hand that pulls the strings and has caused Jose Manuel Entrecanales [of Acciona] and Florentino to go into the electricity sector? Is Emilio Botin [of Santander] behind this? Has the Government brought it about?" Julian Gonzalez, WAR OF THE PRINCES IN THE UTILITY EMPIRE, El Mundo, Oct. 1, 2006. E.ON INCREASES ITS BID 57. E.ON responded to Acciona's maneuver by substantially increasing its intended offer from (euro)25.405 per share (the original (euro)27.5 per share reduced to adjust for a (euro)2.095 dividend paid by Endesa in the meantime) to (euro)35 per share, further enhancing the bid's value in the face of the powerful Spanish interests aligned to prevent Endesa's shareholders from being given an opportunity to accept E.ON's offer. The financial press has acclaimed the increased E.ON offer as "pretty generous". SEE, E.G., Paul Betts, COMMENT: SPANISH FOG, Fin. Times, Oct. 6, 2006. 18 ACCIONA FILES A FALSE AND MISLEADING SCHEDULE 13D 58. Section 13(d)(1) of the '34 Act mandates that "any person" who becomes "directly or indirectly the beneficial owner of more than 5 per centum" of a class of securities of an issuing corporation, within 10 days after such acquisition, file a statement setting forth certain information with the SEC and send the statement to the issuer. Among the information that must be provided is: "(B) the source and amount of the funds or other consideration used or to be used in making the purchases, and if any part of the purchase price is represented or is to be represented by funds or other consideration borrowed or otherwise obtained for the purpose of acquiring, holding, or trading such security, a description of the transaction and the names of the parties thereto . . . ; "(C) if the purpose of the purchases or prospective purchases is to acquire control of the business of the issuer of the securities, any plans or proposals which such persons may have to liquidate such issuer, to sell its assets to or merge it with any other persons, or to make any other major change in its business or corporate structure; "(D) the number of shares of such security which are beneficially owned, and the number of shares concerning which there is a right to acquire, directly or indirectly, by (i) such person, and (ii) by each associate of such person, giving the background, identity, residence, and citizenship of each such associate; and "(E) information as to any contracts, arrangements, or understandings with any person with respect to any securities of the issuer, including but not limited to transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or guaranties of profits, division of losses or profits, or the giving or withholding of proxies, naming the persons with whom such contracts, arrangements, or understandings have been entered into, and giving the details thereof." The SEC has prescribed Schedule 13D as the official form for compliance with the statute, which also specifically requires, among other things, that the filer "[s]tate the purpose or purposes of the acquisition of securities of the issuer". 17 C.F.R. ss.ss. 240.13d-1, 240.13d-101. 19 59. On October 5, 2006, Acciona, S.A. and Finanzas filed with the SEC a Schedule 13D, in which they disclosed that "Acciona, through Finanzas, acquired in a market transaction ADSs representing 105,875,211 [Endesa] Shares for (euro)3,388 billion, which investment was financed by Banco Santander". (Schedule 13D, Item 3.) Acciona then went on to make at least five categories of false or misleading statements or omissions. 60. FIRST, Acciona's Schedule 13D falsely states that Acciona is the beneficial owner of securities "constitut[ing] 10% of the outstanding ordinary shares" of Endesa. (Schedule 13D, Item 5.) In fact, as a result of its derivative arrangements with Santander, Acciona is the beneficial owner of at least an additional 5% of Endesa stock, for a total of at least 15%. 61. SECOND, Acciona's Schedule 13D falsely states that Acciona does not have any "contracts, arrangements, understandings or relationships (legal or otherwise) with any person with respect to any securities" of Endesa. (Schedule 13D, Item 6.) In fact, the derivative contracts between Acciona and Santander relate to Endesa securities, and Acciona should have disclosed them in the Schedule 13D. Acciona should also have disclosed its arrangements with Bear Stearns regarding the purchase of Endesa securities. 62. Moreover, Acciona improperly failed to disclose its "contracts, arrangements, understandings or relationships" with other third parties in Spain, such as Gas Natural and Gas Natural's shareholders, to purchase Endesa securities and block E.ON's offer. As set forth above, ever since E.ON announced its bid, various Spanish interests have been acting in concert with Gas Natural (and its controlling shareholders, La Caixa and Repsol) to defeat E.ON's offer and find a "white knight" that will save Endesa from falling into foreign hands. They found that "white knight" in Acciona. The timing of Acciona's acquisition of 20 Endesa securities--on the eve of the European Commission's decision striking down the CNE conditions and clearing the way for E.ON's tender offer to proceed--is further evidence that Acciona has acted pursuant to "contracts, arrangements, understandings or relationships" with these third parties in Spain intent on preventing Endesa from being acquired by a non-Spanish company. 63. THIRD, Acciona's Schedule 13D misleadingly states that the "purpose of [the] transaction" was only for "investment purposes". (Schedule 13D, Item 4.) In addition, Acciona falsely stated that it "does not have any plans or proposals" that relate to, among other things, "an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving [Endesa] or any of its subsidiaries". (ID.) In fact, another "purpose of [the] transaction"--indeed, a primary "purpose of [the] transaction" according to Acciona's own statements to the press--is to move strategically to prevent any "extraordinary corporate transaction" with E.ON. "THE COMPANY WILL ONLY LEAVE IF THE E.ON BID PROSPERS, AND WE'LL DO EVERYTHING WE CAN DO TO MAKE SURE THAT DOESN'T HAPPEN." Keith Johnson and Jason Singer, A SPANISH SCION PLAYS SPOILER --- ENDESA MOVES SHOW NEW, BOLDER TACTICS BY ULTRAWEALTHY, The Wall Street Journal, Oct. 2, 2006, at 4. Ultimately, Acciona seeks to influence a change in control of Endesa, either to Acciona itself or to a group of Spanish entities including Acciona and Gas Natural. 64. FOURTH, Acciona's Schedule 13D expressly disclaims any "plans or proposals" relating to "changes in the present board of directors or management" of Endesa. (Schedule 13D, Item 4.) In fact, Acciona intends to use its substantial minority interest in Endesa to forge a consortium of shareholders who would install directors and officers of Acciona's choosing. For example, an Acciona spokesman announced, "WE WANT TO PARTICIPATE 21 IN MANAGEMENT. WE WANT TO LEAD ENDESA." ACCIONA TO REQUEST REGULATORY OK TO INCREASE ENDESA STAKE, Dow Jones Int'l News, Sept. 26, 2006. Acciona's director of institutional relations also made it clear, with a veiled threat, that Acciona intended to exercise any rights it had to affect the management structure--he said that "the share packet gives us the right to name the managing team, and we would like to count on [the current Chairman], IF HE IS COOPERATIVE". ACCIONA GETS GUARANTEES FOR ABOUT 18% OF ENDESA, Dow Jones, Sept. 26, 2006. Indeed, an Acciona official is reported to have said that "Acciona's goal as [Endesa's] single-largest shareholder is to 'MANAGE' Endesa". ID. Acciona is also reportedly already in discussions with Endesa concerning issues relating to management and board membership. ACCIONA WILL HAVE A FOOTHOLD IN ENDESA IF E.ON IS SUCCESSFUL, La Gaceta, Oct. 4, 2006. 65. FIFTH, Acciona's Schedule 13D states that Acciona's purchase of Endesa stock was "financed by Banco Santander". (Schedule 13D, Item 3.) That terse disclosure is misleading and does not comply with Section 13(d)'s requirement that Acciona provide a "description of the transaction". In fact, Santander provided an extraordinarily generous financing package, which enabled Acciona to make an investment costing nearly half its own equity market capitalization and to seek to more than double that investment. Disclosure of the details of that financing arrangement is essential for shareholders to understand the nature of Acciona's interest in Endesa and the full extent of its relationships with third parties in Spain who seek to block the E.ON bid. 66. The day after Acciona filed its false and misleading Schedule 13D, the financial press articulated its frustration with the lack of transparency. A commentary in the Financial Times stated that "[t]he takeover battle for Endesa is becoming more confusing by the 22 day" and that "no one seems to know who has what and who is holding what for whom". Paul Betts, COMMENT: SPANISH FOG, Fin. Times, Oct. 6, 2006. ENDESA SHAREHOLDERS AND E.ON WILL BE IRREPARABLY HARMED IF INJUNCTIVE RELIEF IS NOT GRANTED 67. Because Acciona has filed a materially false and misleading Schedule 13D, Endesa shareholders do not currently have the complete and accurate information to which Section 13(d) entitles them. Unless and until that filing is corrected, Acciona (and those acting in concert with it) will have an impermissible "leg up" in the effort to prevent E.ON's offer from being fairly put to Endesa shareholders. The only way to address the problems created by Acciona's improper disclosures is to require that the disclosures be corrected. There is no adequate remedy at law. 68. Ordering Acciona to file an amended Schedule 13D--while necessary--would not be a complete remedy. If Acciona were permitted to continue acquiring Endesa securities while its materially false and misleading disclosures existed in the market (or to retain any securities acquired during that time frame), then Acciona would improperly benefit from its violation of Section 13(d), to the irreparable detriment of E.ON and Endesa's shareholders. Endesa shareholders who sold their shares to Acciona before the correction of Acciona's false and misleading disclosures would be deprived of their right to make a decision about what to do with their shares on the basis of complete and accurate information (E.G., whether to sell to Acciona now or to wait and tender to E.ON for a higher price). An order barring Acciona, and those acting in concert with it, from acquiring additional Endesa shares or ADSs until it corrects its Schedule 13D (and requiring it to rescind the purchase of or sell any such securities acquired during that time frame) is the only way to make those security holders whole. There is no adequate remedy at law. 23 69. In addition, allowing Acciona to acquire additional Endesa shares (or retain shares acquired) before the correction of its false and misleading statements would unfairly and irreparably harm E.ON's bid. That is because as Acciona and its allies acquire a larger and larger stake in Endesa, it will have an increased ability to work with other large shareholders to ensure that the conditions on E.ON's offer are not satisfied. In particular, if E.ON is not tendered at least 50% of Endesa's shares and a majority of shareholders do not vote to eliminate the anti-takeover provision in Endesa's articles, then the E.ON bid cannot go forward. Endesa's shareholders would thus be deprived of the opportunity to take advantage of E.ON's offer, and both E.ON and those Endesa shareholders who already favor E.ON's offer would be irreparably harmed. An order barring Acciona, and those acting in concert with it, from acquiring additional Endesa shares or ADSs until it corrects its Schedule 13D (and requiring it to rescind the purchase of or sell any such securities acquired during that time frame) is necessary to prevent Acciona from using its false and misleading disclosures to thwart the E.ON bid. There is no adequate remedy at law. 70. The other relief necessary to prevent Acciona from benefiting from its violation of Section 13(d) is an order barring Acciona from voting its Endesa shares until the Schedule 13D is amended. Absent such relief, Acciona could join with other shareholders to prevent a majority vote approving the elimination of the anti-takeover provision in Endesa's articles. (Indeed, Acciona's "warehousing" agreement with Santander appears to be an attempt by Acciona to circumvent the 10% voting cap imposed by Endesa's articles.) Section 13(d) entitles the Endesa shareholders to complete and accurate information before casting such a vote. Acciona should not be permitted to add its votes to the tally until it corrects its materially false and misleading disclosures. There is no adequate remedy at law. 24 COUNT I (VIOLATION OF SECTION 13(d) OF THE '34 ACT AND SEC RULES PROMULGATED THEREUNDER) 71. E.ON repeats the allegations of preceding paragraphs 1-76 as if fully set forth herein. 72. The Schedule 13D filed by Acciona on October 5, 2006 is materially false and misleading in that, as described in more detail above, it misstates and/or omits material information that must be disclosed. 73. Acciona is obligated to correct the foregoing material misstatements and omissions so that Endesa shareholders have a full and accurate understanding of Acciona's actions and intentions as soon as possible. Absent such a correction and appropriate interim relief, E.ON and Endesa's shareholders will be irreparably harmed. WHEREFORE, E.ON prays for a judgment against Acciona S.A. and Finanzas as follows: a) declaring that the Schedule 13D filed by Acciona S.A. and Finanzas violates Section 13(d) of the '34 Act; b) ordering that Acciona S.A. and Finanzas, their officers, agents, servants, employees, and attorneys, and those persons in active concert or participation with them: i) correct by public means their material misstatements and omissions, including by filing with the SEC and sending to Endesa, complete and accurate disclosures required by Section 13(d) of the '34 Act; ii) are enjoined from purchasing or making any arrangement to purchase, such as through a forward contract, any Endesa securities until such time as they have 25 filed with the SEC and sent to Endesa accurate disclosures required by Section 13(d) of the '34 Act and the market has had adequate time to digest that new information; iii) rescind the purchase (or arrangement to purchase) of or sell any Endesa securities they acquired (or arranged to acquire) after the October 5, 2006 filing of the false and misleading Schedule 13D and up until such time as they have filed with the SEC and sent to Endesa accurate disclosures required by Section 13(d) of the '34 Act and the market has had adequate time to digest that new information; iv) are enjoined from voting any Endesa securities they currently own until such time as they have filed with the SEC and sent to Endesa accurate disclosures required by Section 13(d) of the '34 Act and the market has had adequate time to digest that new information; and v) are enjoined from making any additional material misstatements or omissions in connection with Endesa securities; and c) granting such other and further relief as the Court may deem just and proper. October 12, 2006 CRAVATH, SWAINE & MOORE LLP, By: /s/ Rory O. Millson --------------------------------- Rory O. Millson (RM-6160) Gary A. Bornstein (GB-9028) Members of the Firm Attorneys for Plaintiffs 825 Eighth Avenue New York, NY 10019 (212) 474-1000 26 -----END PRIVACY-ENHANCED MESSAGE-----