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EXHIBIT 1.2

**“ARTICLES  OF ASSOCIATION OF REPSOL YPF, S.A.”**

**PART I**

**DENOMINATION, PURPOSE,  REGISTERED OFFICE AND****DURATION  OF THE COMPANY**

**Article 1. DENOMINATION**

The Company is denominated  REPSOL YPF, S.A. and is governed by the present Articles of Association, by  the rules contained in the laws governing corporations and any general regulations  in force that may apply.

**Article 2. BUSINESS  PURPOSE**

| 2.1    | The company’s      business purpose is: |
|--------|----------------------------------------------|
|   |                                         |   |
|   | I.                                           | The research, exploration, exploitation, importing, storage, refining, petrochemistry      and other industrial operations, transport, distribution, sale, exporting      and marketing of hydrocarbons of any kind, their by-products and residues. |
|   |                                         |   |
|   | II.                                          | The      research and development of sources of energy other than those deriving      from hydrocarbons      and the exploitation, manufacture, importation, storage, distribution, transport,      sale, exportation and marketing thereof. |
|   |                                         |   |
|   | III.                                         | The exploitation of real-estate property and of the industria lproperty      and technology      owned by the Company. |
|   |                                         |   |
|   | IV.                                          | The      marketing of all kinds of products in installations attached to service      stations and petrol pumps and through the marketing networks established      for the products manufactured by the Company, as well as the provision of      services linked to the consumption or use of the latter. |

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|   | V.     | The provision to subsidiaries of such services as planning, commercial      management, factoring and technical or financial assistance, except for      those activities that are legally reserved for financial or credit institutions.                                                        |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
| 2.2    |   | The      activities that comprise the business purpose may be carried out by the      Companywholly      or partially indirectly, in any of the forms permitted by law and, in particular,      through the holding of shares or interests in companies with the same or      a similar purpose. |

**Article  3. REGISTERED OFFICE**

The  registered office is established in Madrid, at n° 278, Paseo de la Castellana.  The Board of Directors has the power to transfer it anywhere within the same  municipality and to establish offices, branch offices, agencies, representations  or sections of any kind and in any locality, whenever this is considered to  be in the interests of the company’s progress.

**Article 4. DURATION**

The  duration of the Company will be indefinite. It commenced its business activities  on the date of its incorporation.

**PART II**

**CAPITAL STOCK AND  SHARES**

**Article 5. CAPITAL**

The  capital stock amounts to ONE THOUSAND TWO HUNDRED TWENTY MILLION EIGHT HUNDRED  SIXTY THREE THOUSAND FOUR HUNDRED SIXTY THREE EUROS (1,220,863,463 euros) and  is fully subscribed and paid-up.

**Article 6. SHARES**

The  capital stock is made up of ONE THOUSAND TWO HUNDRED TWENTY MILLION EIGHT HUNDRED  SIXTY THREE THOUSAND FOUR HUNDRED SIXTY THREE SHARES (1,220,863,463 shares)  with a nominal value of ONE EURO (1 euro) each, all of the same class, which  will be represented by accounting entries. The shares representing the capital  stock are considered as securities and are subject to Stock Market regulations.

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The shares represented  by means of accounting entries are established as such by virtue of their entry  in the corresponding accounting records, which will show the details given in  the issue deed and whether or not they are fully paid-up, as the case may be.

The  competency to exercise the rights of shareholder, including that of transfer,  as the case may be, is obtained through the entry in the accounting records,  which presumes lawful ownership and authorizes the registrar holder to demand  the Company to regard said person as a shareholder. Such competency may be evidenced  by exhibiting the appropriate certificates issued by the entity responsible  for keeping the accounting records.

Should  the Company make any payment in favour of the supposed legitimate holder, it  shall be released from its obligation, although said holder may not be the real  holder of the share, provided that the Company has acted in good faith and without  any gross negligence.

**Article 7. SHAREHOLDERS’  RIGHTS**

The share confers the condition  of shareholder on its legitimate holder and gives him the rights recognized  in the Joint-Stock Companies Act and in the present Articles of Association:

In the terms established  in the Joint-Stock Companies Act and save in those cases contemplated therein,  the shareholder has at least the following rights:

| a)     | The right      to share in the distribution of the business profits and in the assets resulting |
|--------|-------------------------------------------------------------------------------------------------|
|   | from liquidation.                                                                               |
|   |                                                                                            |
| b)     | The right to preferential      subscription in the issue of new shares or convertible bonds.    |
|   |                                                                                            |
| c)     | The right to attend      and vote at the General Meetings of Shareholders and to impugn         |
|   | company resolutions.                                                                            |
|   |                                                                                            |
| d)     | The right to information.                                                                       |

**Article 8. NON-VOTING  SHARES**

The Company may issue non-voting  shares with a nominal value not exceeding one half of the paid-up capital stock.

The holders of non-voting  shares shall be entitled to receive a minimum annual dividend of five per cent  of the paid-up capital for each non-voting share, as well as the other rights  established in the Joint-Stock Companies Act. After the minimum dividend has  been resolved, the holders of non-voting shares shall be entitled to the same  dividend as that corresponding to ordinary shares.

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**Article 9.  CALLS ON SHARE CAPITAL AND DEFAULT BY THE SHAREHOLDER**

The  shareholder is obliged to pay the part of the capital not paid up in the manner  and terms decided upon by the Board of Directors.

Any  shareholder who has not paid such calls within the period established for said  payment of unpaid capital shall be in default.

Shareholders  in arrears with the payment of calls on share capital may not exercise their  voting right. The amount of their shares shall be deducted from the capital  stock for the calculation of the quorum.

Neither  shall defaulting shareholders be entitled to receive dividends or to preferential  subscription in new shares or convertible bonds. Once the amount of the capital  call has been paid, the shareholder may claim the payment of the dividends not  received, but may not claim the right to preferential subscription if the period  for exercising it has already expired.

When  the shareholder is in default, the Company may, as appropriate and in view of  the nature of the unpaid contribution, claim the fulfillment of the payment  obligation, with payment of the legal interest and any damages caused by the  delayed payment, or transfer the shares for account and risk of the defaulting  shareholder or file summary proceedings for collection against the assets of  the shareholder in order to collect in cash the unpaid part of the capital together  with the interest.

Should  the Company have opted to transfer and this has not been possible, the share  shall be redeemed, with the consequent reduction of capital, any sums already  received on account of the share being retained by the Company.

 The buyer of the unpaid  share shall be jointly and severally liable with all preceding transferors,  and at the election of the Company’s Directors, for payment of the unpaid  part.

The  liability of the transferors shall last for three years as from the date of  the respective transference.

**Article 10. DOCUMENTATION  OF SHARES**

The  shares issued must be recorded in the corresponding issue deeds which will indicate:  the name, number of shares, nominal value and other terms and conditions of  the shares included in the issue. In respect of such shares, the Company must  comply with Stock Market regulations.

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**Article 11. JOINT  OWNERSHIP AND REAL PROPERTY RIGHTS ON SHARES**

The  rules regulating joint ownership, usufruct, pledging and attachment of the Company’s  shares shall be as determined in Sections 66 to 73 of the Revised Text of the  Joint-Stock Companies Act and other complementary provisions.

**Article 12. MODIFICATION  OF THE CAPITAL**

The capital stock may  be increased or reduced once or several times, subject to compliance with applicable  legal requirements.

In any capital increase  involving the issue of new shares, the existing shareholders and holders of  convertible bonds may exercise the right to subscription in the new issue to  a number of shares in proportion to the nominal value of the shares already  held or to those that would correspond to holders of convertible bonds should  conversion be carried out at that time, within the time limit established for  the purpose by the General Meeting of Shareholders or by the Board of Directors,  which may not be less than the time period established by applicable law in  force at the time.

The right to preferential  subscription shall not be applicable when the capital increase is due to the  conversion of bonds into shares, or to the absorption of another company or  part of the assets separated from another company, or when the General Meeting  of Shareholders, when deciding on the capital increase, resolves the total or  partial suppression of such right, pursuant to the requirements of section 159  of the Revised Text of the Joint-Stock Companies Act.

In the issue of convertible  bonds into shares, existing shareholders of the Company shall have the right  to preferential subscription to the convertible bonds. The same right shall  correspond to the holders of convertible bonds from previous issues in the proportion  corresponding to them according to the bases of conversion.

**PART III**

**CAPITAL DEBENTURES**

**Article 13.**  The Company may issue numbered series of debentures or other securities which  acknowledge or create a debt, as long as the total amount of the issues does  not exceed the paid-up capital stock plus the reserves as given in the last  approved Balance Sheet and any accounts of updating and regularisation of balance  sheets accepted by the Ministry of Economy and Finance. All such bonds will  be subject to the regulations established with regard to debentures by prevailing  legal provisions and may be represented by entries on account or nominative  or bearer certificates, and may be simple or mortgage debentures.

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**PART IV**

**CORPORATE BODIES**

**Article 14.**  The governing bodies of the Company are the General Meeting of Shareholders  and the Board of Directors.

**SECTION I**

**CONCERNING THE GENERAL  MEETING OF SHAREHOLDERS**

**Article 15. THE  GENERAL MEETING OF SHAREHOLDERS**

The  shareholders constituted as a General Meeting of Shareholders, duly convened,  shall decide by majority vote on all matters within the competence of the General  Meeting.

All  shareholders, including those who are dissident or who have not taken part in  the meeting, are bound by the resolutions of the General Meeting of Shareholders.

**Article 16. TYPES  OF GENERAL MEETING**

General Meetings of Shareholders  may be ordinary or extraordinary.

**Article 17. ORDINARY  GENERAL MEETING**

The  Ordinary General Meeting of Shareholders, previously convened for the purpose,  must meet within the first six months of each financial year to consider the  management of the company approve the accounts for the previous year, as the  case may be and decide on the application of the results.

The  General Meeting may also adopt resolutions on any other matters submitted for  its consideration.

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**Article 18. EXTRAORDINARY  GENERAL MEETING**

Any  General Meeting other than that contemplated in the previous article will be  considered as an Extraordinary General Meeting.

**Article 19. CONVOCATION  OF THE GENERAL MEETING**

The  Ordinary and Extraordinary General Meetings of Shareholders must be convened  by the Board of Directors by means of a notice published in the Official Bulletin  of the Registry of Commercial Concerns and in one of the daily newspapers with  the widest circulation in the province in which the Company has its registered  office, at least fifteen days prior to the date fixed for the meeting, except  in those cases in which the law establishes a longer period of notice.

The  announcement will give the date of the meeting at the first call and all the  matters that are to be discussed. It may also mention the date at which the  Meeting will be held at a second call, if this is necessary.

A period of at least twenty-four  hours must elapse between the first and second sessions.

If  a duly convened General Meeting should not be held at the first call and the  notice has given no indication of the date for a second call, this must be announced  with the same publicity requirements as the first, within the fifteen days following  the date of the General Meeting not held and eight days prior to the date of  the meeting.

**Article 20. POWER  AND OBLIGATION TO CALL**

The  Board of Directors may convene the extraordinary General Meeting of Shareholders  whenever it is considered to be in the Company’s interests.

It  must also be convene the General Meeting whenever requested by shareholders  who hold at least five per cent of the capital stock, indicating in the request  the matters to be discussed at the Meeting. In this case, the General Meeting  must be convened to be held within the thirty days following the date on which  the Board of Directors has been notarially requested to call the Meeting.

The  Board of Directors shall draw up the agenda, necessarily including the matters  that have given rise to the request.

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**Article 21. CONSTITUTION  OF THE GENERAL MEETING**

The General Meeting of  Shareholders will be validly constituted at the first call when the shareholders  present or represented hold at least twenty-five per cent of the subscribed  voting capital.

At the second call, the  constitution of the Meeting will be valid irrespective of the capital attending  the same.

**Article 22. SPECIAL  RESOLUTIONS, CONSTITUTION AND MAJORITIES**

In  order that the General Meeting, whether ordinary or extraordinary, may validly  resolve on the issue of debentures, the increase or reduction of capital, the  transformation, merger, demerger or dissolution of the Company and, in general,  any modification of the Articles of Association, it must be attended, at the  first convocation, by shareholders, present or represented, who hold at least  fifty per cent (50%) of the subscribed voting capital. At the second call, it  will be sufficient for twenty-five per cent (25%) of the said capital to be  present.

When  the General Meeting is attended by shareholders representing less than fifty  per cent (50%) of the subscribed voting capital, the resolutions referred to  in the first paragraph of this article may only be legally adopted by the vote  in favour of two thirds of the capital present or represented at the Meeting.

Special  resolutions for modifying the last paragraph of article 27 of the Articles of  Association relating to the maximum number of votes that may be voted at the  General Shareholders Meeting by a single shareholder or by companies belonging  to the same group, as well as resolutions to modify this special provision,  shall require in both the first and second convocation the affirmative vote  of 75% of the Company’s capital stock present or represented at the General  Meeting.

**Article 23. RIGHT  TO ATTEND**

The  General Meeting may be attended by shareholders who hold at least 150 shares,  provided that these are recorded in the corresponding accounting record five  days prior to the meeting, and that they obtain in the manner stipulated in  the convocation, the relevant attendance card proving the fulfillment of said  requirements, which will be issued with a nominative character by the legally  authorized entities.

Those  shareholders who do not hold said number of shares may group together in order  to attend, appointing a representative who need not be a shareholder.

The  members of the Board of Directors should attend the General Meetings of Shareholders.

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The  Company’s directors, managers and technical staff may attend the General  Meetings when invited to do so by the Board of Directors.

The  Chairman may authorize the attendance of any other person as he shall deem fit,  although the General Meeting may revoke such authorization.

**Article 24. REPRESENTATION**

Any shareholder entitled  to attend may be represented at the General Meeting by another person, who need  not be a shareholder.

The representation must  be conferred in writing and specifically for each General Meeting, save as stipulated  in section 108 of the Joint-Stock Companies Act.

The  Company must be notified of the representation by the shareholder or his representative  at least three days prior to the date set for the first session of the meeting,  presenting the document accrediting the representation and the attendance card  of the represented shareholder in proof of said representation and confirmation  of its adequacy.

**Article 25. CHAIRMANSHIP  OF THE GENERAL MEETING**

The  General Meeting of Shareholders shall be presided over by the Chairman of the  Board of Directors or, in his absence, by the Vice-Chairman and, in the absence  of both, by the shareholder elected in each case by the shareholders present  at the Meeting.

The  Chairman shall be assisted by a Secretary, who shall be the Secretary of the  Board of Directors or, in his absence, by the Assistant Secretary of the Board,  and in the absence of the latter, whoever is elected by the General Meeting  itself.

The  General Committee presiding the Meeting shall be composed of the Board of Directors.

**Article 26. ATTENDANCE  LIST**

Before  commencing discussion of the Agenda, an attendance list will be drawn up, indicating  the nature or representation of each person present and the number of shares,  owned or represented, with which they attend.

The attendance list may    also be drawn up by means of files or on computer software. In such cases,    the means used shall be indicated in the minutes of the meeting and the appropriate    identification shall be affixed to the sealed cover of the file or software,    signed by the Secretary and endorsed by the Chairman. 

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At  the end of the list, the number of shareholders present and represented will  be calculated, as well as the amount of capital held by them, specifying that  which corresponds to the shareholders with voting rights.

The  Chairman is responsible for appointing, should he so deem fit, two or more shareholder-scrutineers,  who shall assist the General Committee in drawing up the attendance list and,  if necessary, in counting the votes.

**Article 27. DELIBERATION  AND ADOPTION OF RESOLUTIONS**

After the meeting has  been declared open, the Secretary shall read out the points on the agenda.

Following the speech of  the Chairman of the Board of Directors and of those persons authorized by him,  the Chairman shall give the floor to any shareholders who request it, directing  and maintaining the debate within the limits of the agenda, except as provided  in sections 131 and 134 of the Revised Text of the Joint-Stock Companies Act.  The Chairman will close the debate when he considers that the matter has been  sufficiently discussed, and will then proceed to put the various proposals for  resolutions to the vote.

Resolutions  shall be adopted with the favorable vote of the majority of the voting capital  present and represented at the General Meeting, with the exceptions contemplated  in the Joint-Stock Companies Act and in these Articles of Association.

 The maximum number of  votes to be cast at a General Meeting by a sole shareholder or by the companies  appertaining to the same Group of companies will be 10 per cent of the total  share-capital with voting rights. To this extent it is understood that companies  controlled by another company, as defined by article 4 of the Ley de Mercado  de Valores of July 28th, 1988, appertain to the same Group of companies.  The limitation on the voting rights established by this article will not prevent  the total number of shares attending the meeting from being counted to determine  whether a quorum is present at a Meeting.

**Article 28. RIGHT  TO INFORMATION**

The  shareholders may request in writing prior to any General Meeting or verbally  during the same, such reports or clarifications as they may consider necessary  with regard to the matters included on the agenda. The Board of Directors shall  be obliged to provide such reports or information, save in those cases in which,  in the Chairman’s opinion, publicizing the details requested would go against  the Company’s interests.

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This  exception shall not be applicable when the request is supported by shareholders  who represent at least one quarter of the capital.

**Article 29. MINUTES  OF THE GENERAL MEETING OF SHAREHOLDERS**

The  minutes of the General Meeting may be approved by the Meeting itself at the  end of the session, or otherwise within a period of fifteen days, by the Chairman  of the General Meeting and two scrutineers, one representing the majority and  the other representing the minority.

The  minutes, approved by either method, shall be enforceable as from the date of  their approval.

Should  a General Meeting be held with the presence of a notary public required by the  Board of Directors to issue a certificate, pursuant to section 114 of the Joint-Stock  Companies Act, the notarial certificate shall be considered as the minutes of  the General Meeting, and shall not, therefore, require its approval.

**SECTION II**

**THE BOARD OF DIRECTORS**

**Article 30. COMPOSITION**

The Company shall be administered  and governed by the Board of Directors. The Board shall be composed of a maximum  of sixteen members and a minimum of nine. The General Meeting shall determine  the number, appointment and the removal of the Board members.

The  election of the Board members shall be made by vote. For this purpose, any shares  voluntarily grouped together in order to constitute a sum of capital equal to  or greater than that resulting from dividing the latter by the number of Board  members, shall be entitled to appoint those who, exceeding whole fractions,  are deducted from the corresponding proportion. If this right is used, the shares  so grouped shall not participate in the appointment of the remaining members  of the Board.

No  persons incurring in the prohibitions contemplated in section 124 of the Joint-Stock  Companies Act, nor those deemed incompatible according to prevailing legislation,  especially those so declared in the Government members incompatibilities Act  number 12, of may 11 1995, of 26th, to the extent and under the conditions established  therein, and in Act number 14 of April 21, 1995, of concerning incompatibilities  of senior executives of the Administration of the Autonomous Community of Madrid,  may be elected as members of the Board nor may they hold any posts in the Company.

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The  Board shall elect from among its members a Chairman and one or more Vice-Chairmans,  that may substitute the Chairman in the order established in their appointment  In the absence of all them, shall act in his stead the eldest Board member.  The Board of Directors is also responsible for electing the Secretary and Assistant  Secretary, who may or may not be members of the Board. In the absence of the  Secretary, the Assistant Secretary shall replace him and may exercise any of  his powers, including those of signing the minutes and issuing certificates.  In the absence of both, the youngest Board member present at the meeting shall  act as Secretary.

The  post of Board member may be waived, revoked or subject to re-election, on one  or several occasions, for periods of equal duration.

 In each financial year,  the company will allocate, in order to remunerate the members of the Board,  an amount equal to the 1,5 per cent of the net profits of the company, which  amount may only be deducted after the legal reserve or any others applications  legally binding are covered and a dividend of, at least, 4 per cent, it is declared  in favour of the shareholders of the company. That amount shall be allocated  among the members of the Board in accordance with a resolution taken by such  Board, taking into consideration the office performed by each Director, their  effective dedication and their attendance to the meeting of the company’s  corporate bodies. The Board may not allocate the full amount of its participation  in the profits of the company in those years in which the Board may deemed it  convenient, in which case no rights would be accrued by the directors with regard  to the sum not allocated.

Board members may be further  remunerated with shares of the Company’s stock, option on shares or other  securities which give the holder the right to obtain shares, or through compensation  schemes based on the quoted price of the stock. The use of such compensation  schemes must be approved by the General Meeting, which will determine the value  of the shares to be used in determining the compensation, the number of shares  to be distributed to each Director, the exercise price of any option rights,  the time period for the compensation scheme, and such conditions as it may deem  appropriate.

The Board of Directors  may use incentive plans consisting of the granting of shares of the Company’s  stock, options to purchase such shares, other securities that give the holder  the right to obtain shares or based on the quoted price of such shares in order  to compensate Company personnel or certain personnel of the Company, provided  such compensation complies with the Law of Corporations, the Law of Capital  Markets, and any other laws applicable in these circumstances, in particular,  the previous approval by the General Meeting when required.

**Article 31. DURATION  AND CO-OPTATION**

The duration of the post  of Board member shall be four years, one quarter of the Board being renewed  every year. The first renewals shall be made by drawing lots, and the following  by order of seniority. In the event of an uneven number of Board members, said  form of renewal shall be rounded upwards.

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The appointment of the  Directors shall expire when, after a period of four years, a General Meeting  has been held or the legal period for holding the Ordinary General Meeting has  elapsed.

If  any vacancies should arise during the period for which directors have been appointed,  the Board may appoint persons from among the shareholders to fill such posts  until the next General Meeting of Shareholders is held.

**Article 32. BOARD  MEETINGS**

The  Board shall meet at least once every two months and whenever convened by the  Chairman or whoever acts in his stead, and also when requested of the latter  by the majority of Board members. Meetings will normally be held at the registered  office, but may also take place elsewhere as determined by the Chairman and  indicated in the convocation.

The  Board of Directors shall be validly constituted when the meeting is attended  by half plus one of its members, present or represented. Each Board member may  confer his representation upon another. Resolutions shall be adopted by an absolute  majority of votes of members present or represented, and in the event of a tie,  the Chairman or whoever acts in his stead shall have the casting vote. The minutes  of Board meetings shall be set down in the special book provided for the purpose  and shall be signed by the Chairman and the Secretary.

**Article 33. LIABILITY**

The  members of the Board shall perform their duties with the diligence of a competent  entrepreneur and loyal representative, and shall be liable to the Company, the  shareholders and the Company’s creditors for any damages caused by acts  contrary to the law or these Articles of Association, or those carried out without  the care with which they should discharge their responsibilities.

All  the members of the Board of Directors who committed the act or adopted the harmful  resolution, shall be jointly and severally liable, except for those who prove  that, not having participated in said adoption or execution, they were unaware  of same or, being aware of it did whatever was necessary to avoid the damage  or at least expressly opposed said act or resolution.

**Article 34. REPRESENTATION  OF THE COMPANY**

The  Board of Directors shall represent the Company in court and extrajudicially.  Such representation shall extend, without any limitation whatsoever, to all  the acts included in the business purpose.

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The Board has the following  powers:

| 1.     | Those especially attributed      to it in certain articles of these Articles of Association.                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 2.     | To      represent the Company with full responsibility in all kinds of acts and      contracts.                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 3.     | To      appoint and remove the Board members of subsidiary companies and directors,      managers or administrators for each and every one of the enterprises and      plants exploited by the Company, establishing their powers, duties and remunerations.                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 4.     | The      appointment of personnel, staff training and determination of duties, attributions,      bonds, salaries and bonuses.                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 5.     | To      organize, direct and control the Company’s progress and approve the      Internal Regulations.                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 6.     | To      carry out the acts and enter into the contracts that may be necessary or      advisable for the realization of the business purpose, including those relating      to the acquisition or transference of real-estate property, the constitution      of real property      rights, including those of mortgage or other personal or real guarantees      and leases and to decide on all kinds of business and operations permitted      to the Company under the terms of its Articles of Association. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 7.     | To      agree on the credit or loan operations that may serve the Company’s      interests and that are not reserved for the General Meeting of Shareholders.                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 8.     | To      decide on the investment of available funds, as well as those in reserve;      to draw up the budget estimates, authorize expenses and appoint agents and      representatives of the Company, with the faculties that it is considered      fit to confer on them in each case.                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 9.     | To      submit to the Ordinary General Meeting each year the Accounts and explanatory      report on the management of corporate affairs by the Board of Directors      during the financial year.                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.    | To      convene the Ordinary and Extraordinary General Meetings of Shareholders      and execute their resolutions.                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 11.    | To      decide, if considered appropriate, on the payment of dividends on account      of the year’s profits, and propose to the General Meeting the mobilization      of the reserves.                                                                                                                                                                                                                                                                                                                    |

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| 12.    | To      decide whatever is considered appropriate with regard to the exercise of      rights and actions that may correspond to the Company before the ordinary      or special courts and tribunals and before the offices, authorities or corporations      of the state, autonomous communities, province or municipality, and with      regard to the filing of ordinary or extraordinary appeals, appointing representatives,      attorneys or lawyers to bear the representation and defense of the Company      to these ends, conferring the relevant powers on them in the manner considered      to be most appropriate including those for coming to agreement or desisting      inconciliations, proceedings, lawsuits, claims, appeals or actions of any      kind and at any stage of the proceedings, to request the suspension of the      same and for all that may be necessary, including the power to compromise      judicially to the fullest extent. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 13.    | To      dispose of the corporate funds and assets and to claim, receive and collect      them, both from private persons and from public offices, setting up or withdrawing      deposits from the “Caja General de Depósitos” (General      Deposit Bank) and wherever it may suit the Company’s interests; to      open current bank accounts, whether in cash, credit or securities and withdraw      cash or securities therefrom and, in general, to carry out all kinds of      banking operations with national or foreign entities; to dispose of the      Company’s funds held by correspondents; issue, endorse, guarantee,      accept, pay and negotiate bills of exchange.                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 14.    | To confer powers of      attorney on certain persons for specific acts or to direct certain branches      of the Company’s business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 15.    | To      resolve any doubts that may arise with regard to the interpretation of the      Articles of Association and make good any omissions therein, duly informing      the first General Meeting to be held thereafter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

The  present indication of powers of the Board of Directors is merely illustrative  and in no way limits the wide powers pertaining to it to govern, direct and  administer the Company’s business and interests in all matters not specially  reserved by the Joint-Stock Companies Act for the competence of the General  Meeting of Shareholders.

**Article 35. DELEGATION  OF POWERS**

The  Board may appoint an Executive Committee that shall be composed of the Chairman  of the Board, that shall also be the Chairman of the Committee and a maximum  of seven Directors. The Secretary of the Board of Directors shall act as Secretary  of the Executive Committee. The Board may also appoint one or more Managing  Directors.

The  permanent delegation of any power of the Board of Directors in the Executive  Committee or in the Managing Directors and the appointment of the Board members  who are to hold such posts will require the favorable vote of two thirds of  the members of the Board.

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The  Board may delegate all its powers, permanently, in the Executive Committee,  except for those that may not be legally delegated. In the same way, without  prejudice to the powers of attorney that both the Board and the Executive Committee  may confer on any person, it may delegate powers in the Managing Directors.

 The Board may establish  any other Committees as it may deem convenient to deliberate in any business  of the competence of the Board, appointing the members that may compose such  Committees

**Article 36. FUNCTIONING  OF THE EXECUTIVE COMMITTEE**

The  Executive Committee shall meet at least once a month and as often as it is convened  by the Chairman or at the request of the majority of its members. It may adopt  final resolutions on all those matters delegated to it by the Board of Directors,  informing the latter at the first meeting to be held thereafter, and it may  also, in the event of emergency, adopt decisions on other delegable matters,  which it will submit for the Board’s approval and ratification.

**Article 36 bis.  AUDIT COMMITTEE**

Under  the name that the Board of Directors considers appropriate, the Company shall  have an Audit Committee comprising at least three Directors appointed by the  Board of Directors, who must have the ability, experience and dedication necessary  to perform their duties. The majority of the Committee members must be non-executive  Directors, with those who do not have executive authorities and Upper Management  duties in the Company being understood as such. The Chairman shall be elected  from among said non-executive Directors and must be replaced every four years,  while he may be reelected as of one year after his termination.

The  Committee shall serve as support to the Board of Directors in its oversight  duties, through periodic review of the economic and financial information preparation  process, the Company's internal controls and the independence of the External  Auditor.

The Committee shall have  the following duties, among others:

|   | 1.     | Report      to the General Shareholders Meetings on the matters raised there by the      shareholders on subjects within the Committee's competence.                                                                                                                                        |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                        |
|   | 2.     | Propose      to the Board of Directors, for submission to the General Shareholders Meeting,      the appointment of the External Auditor referred to under Article 204 of      the Restated Joint Stock Companies Law, approved by Royal Legislative Decree      1564/1989, of December 22. |
|   |   |                                                                                                                                                                                                                                                                                        |
|   | 3.     | Oversee      the internal Auditing Department.                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                        |

 

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|   | 4.     | Oversee      the financial reporting process and the internal oversight systems; and                                                                                                                                                                                                                                                                                                                         |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | 5.     | Maintain      the relationship with the external auditors to receive information on such      matters as may jeopardize the latter's independence, and any other matters      related to the process of conducting financial audits, as well as the other      communications      provided for in the legislation on the Auditing of financial statements      and in the technical standards for Auditing. |
|   |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | 6.     | Any      other reporting and proposition duty of a general or special nature that      may beentrusted      to it by the Board of Directors.                                                                                                                                                                                                                                                                 |

The  Committee shall meet with the frequency it decides and each time that it is  called by its Chairman or when two of its members so request. Any member of  the Company's management team or personnel shall be obligated to attend the  Committee meetings and provide it with assistance and access to the information  he has available when so requested. In order to perform its duties, the Committee  shall have the necessary means at its disposal for autonomous operation. The  Committee shall adopt its decision or recommendations by a majority of votes.

The  Board of Directors may develop the duties and rules of operation for the Audit  Committee.

**Article 37. DUTIES  OF THE CHAIRMAN**

The  Chairman of the Board of Directors who, to all intents and purposes, shall be  considered as Chairman of the Company, shall have the following powers:

| a)     | To represent      the Company, judicially and extrajudicially.                                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                   |
| b)     | To convene and preside      over meetings of the Board of Directors and of the Executive Committee and      execute their resolutions. |
|   |                                                                                                                                   |
| c)     | To direct the discussions      of the Company’s governing bodies over which he presides.                                          |
|   |                                                                                                                                   |
| d)     | To ensure that the      resolutions adopted by said bodies are duly fulfilled and to endorse                                           |
|   | minutes and certificates.                                                                                                              |
|   |                                                                                                                                   |
| e)     | To exercise the senior      management of all the Company’s services.                                                             |
|   |                                                                                                                                   |
| f)     | To bear the corporate      seal.                                                                                                       |
|   |                                                                                                                                   |
| g)     | Any other powers legally      or statutorily attributed to him.                                                                        |

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**PART V**

**THE FINANCIAL YEAR  AND THE ANNUAL ACCOUNTS**

**Article 38. FINANCIAL  YEAR**

The  Company’s financial year will commence on the lst of January and end on  the 31st of December of each year.

**Article 39. ANNUAL  ACCOUNTS**

Within  a period not exceeding three months as from the close of the financial year,  the Board of Directors must draw up the annual accounts, the management report  and the proposal for the application of the profits and, as the case may be  the consolidated accounts and management report.

 The annual accounts shall  comprise the balance sheet, profit and loss account and the management report.  These documents, which form a single unit, must be drawn up clearly, in such  a way as to give a true reflection of the Company’s net worth, financial  situation and results.

The  annual accounts and the management report must be signed by all the Board members,  and should the signature of any of the latter be omitted, this shall be indicated  on each of the documents on which it is lacking, with an express indication  of the cause.

**Article 40. AUDITING**

The  annual accounts and the management report must be examined by auditors appointed  by the General Meeting of Shareholders before the end of the year to be audited,  for a certain period of time that may not be less than three years nor more  than nine from the initial date of the first financial year to be audited. The  appointed auditors may not be re-elected as such until three years have elapsed  since the end of the previous period for which they were appointed.

The  General Meeting may appoint one or several natural persons or bodies corporate  to act jointly as auditors. When those appointed are natural persons, the General  Meeting must assign a substitute for every auditor appointed.

The  General Meeting may not revoke the appointment of auditors without just cause  before the end of the period for which they were appointed.

Should  the General Meeting fail to comply with the provisions of this article, being  obliged to do so, or the persons appointed should refuse the post or are unable  to fulfill their duties, the Board of Directors,  the commissioner of the syndicate of debenture-holders or any shareholder may  request the Registry of Commercial Concerns pertaining to the Company’s  registered office to appoint a person or persons to carry out the audit, pursuant  to the Regulations of the Registry of Commercial Concerns.

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When there is just cause,  the directors of the Company and those persons authorized to apply for the appointment  of auditor may request the Court of First Instance corresponding to the Company’s  registered office to revoke the appointment made by the General Meeting or by  the Registrar of Commercial Concerns and to designate another.

**Article 41. APPROVAL  OF THE ACCOUNTS**

The annual accounts shall  be approved by the General Meeting of Shareholders.

To  this end, and following the convocation of the General Meeting, any shareholder  may obtain from the Company, immediately and free of charge, the documents that  are to be submitted for the approval of the Meeting and the report of the auditors.  The notice of call shall mention this right.

**Article 42. APPLICATION  OF PROFITS**

The  General Meeting shall decide on the application of the profits for the financial  year in accordance with the approved balance sheet.

The  distribution of dividends to ordinary shareholders will be carried out in proportion  to the capital they have paid up, at the time and in the form of payment determined  by the General Meeting; should no decision be made in this sense, the dividend  shall be paid at the registered office as from the day following that of the  resolution.

Dividends  may only be distributed against the profits of the financial year or unappropriated  reserves when the value of the net worth is not, or will not become as a result  of distribution, less than the capital stock.

Should  there be losses from previous years that would bring the value of the Company’s  net worth to below the sum of the capital stock, the profits shall be applied  to offset such losses.

Neither  may profits be distributed until the preliminary expenses and those of research  and development and goodwill entered under assets on the balance sheet have  been fully written-off, unless the amount of unappropriated reserves is at least  equal to the sum of non-amortized expenses.

A sum equal to 10% of the    year’s profits shall be set aside for the legal reserve until this amounts    to at least 20% of the capital stock. Until such time as it exceeds said limit,    the legal reserve may only be applied for offsetting losses in the event that    no other sufficient reserves are available for the purpose. The above is without    prejudice to the provisions of section 157 of the Revised Text of the Joint-Stock    Companies Act.

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Finally, that part of the  profits for the year resolved by the General Meeting shall be applied to voluntary  reserves and to contribute to funds for constructions, new investments and contingencies.

After  the above precautions have been taken and other applications stipulated in the  Joint-Stock Companies Act and the Articles of Association have been covered,  the distribution of dividends against the profits for the financial year or  unappropriated reserves may be resolved in the amount as decided by the General  Meeting; any remainder shall be carried forward to the following financial year.

**Article 43. INTERIM  DIVIDENDS**

The  distribution of interim dividends to shareholders may only be resolved by the  General Meeting or the Board of Directors under the following conditions: the  Board of Directors shall draw up an accounting statement showing that there  is sufficient liquidity for the distribution, and the amount to be distributed  may not exceed the sun of the profits obtained since the close of the last financial  year, after deducting the losses from previous years and the amounts to be set  aside for legal and statutory reserves, as well as an estimation of the tax  payable on said profits.

**Article 44. DEPOSIT  OF THE ANNUAL ACCOUNTS**

Within  one month following the approval of the annual accounts, a certificate accrediting  the resolutions of the General Meeting approving the accounts and the application  of the profits shall be presented at the Registry of Commercial Concerns corresponding  to the registered office, for deposit, together with a copy of each of said  accounts, the management report and the auditors' report.

**PART VI**

**WINDING-UP AND LIOUIDATION**

**Article 45. WINDING-UP  OF THE COMPANY**

The  Company shall be dissolved by resolution of the General Meeting, adopted according  to article 22 of these Articles of Association and in the other events contemplated  by prevailing legislation.

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**Article 46. LIQUIDATION  OF THE COMPANY**

Once  the Company has been dissolved, the period of liquidation shall commence, save  in cases of total merger or demerger or any other of overall assignment of assets  and liabilities.

From  the moment that the Company is declared in liquidation, the representation of  the Board of Directors shall cease, in the terms contemplated in the Revised  Text of the Joint-Stock Companies Act, and the same General Meeting that has  resolved the dissolution shall appoint an uneven number of persons to proceed  with such liquidation and will draw up the rules for same, pursuant to the legal  provisions in force.

On  conclusion of the liquidation, the liquidators shall draw up the final balance  sheet, which shall be inspected by the scrutineers, if any. They shall also  decide on the proportion of the corporate assets to be distributed per share.

 This balance sheet shall  be submitted for approval to the General Meeting and shall be published in the  Official Bulletin of the Registry of Commercial Concerns and in one of the more  widely circulated daily newspapers in the province where the registered office  is located.

**PART VII**

**RESOLUTION OF DISPUTES**

**Article 47.**  Without prejudice to the right of judicial challenging of corporate resolutions,  recognized in the Revised Text of the Joint-Stock Companies Act, all litigious  and controversial issues and claims that may arise between the Company and the  shareholders, by reason of corporate affairs, shall be resolved by means of  equity arbitration which will take place in the locality where the Company has  established its registered office, through the intervention of one or three  arbiters, in accordance with the procedure stipulated by Act 36/1988, of 5th  December, on the Legal Regulations of Arbitration, and with the obligation to  comply with the arbitral award issued.

For  all other cases, the courts and tribunals of the locality in which the Company  has established its registered office shall be competent to judge.

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