Document:

Exhibit 4.1(b)

 

6.41%
NON-CUMULATIVE GUARANTEED

SERIES
1 PREFERRED SECURITIES,

PAR
VALUE $25.00 PER SECURITY

 

	
  NUMBER: 1

  	
  NO. OF SHARES: 7,600,000

  
	
  CUSIP: 80281R 300

  	
   

  
	
  AMOUNT: $190,000,000 (*)

  	
   

  

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC’), THE BANK OF NEW
YORK, AS TRANSFER AGENT AND REGISTRAR, OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS
CERTIFICATE OR ANY PORTION HEREOF IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

 

SANTANDER FINANCE PREFERRED S.A. UNIPERSONAL

 

INCORPORATED
UNDER THE LAWS OF THE KINGDOM OF SPAIN

 

This certifies that CEDE
& CO., as nominee of The Depository Trust Company is the registered
holder of the number of shares indicated on the records of the Transfer Agent
and Registrar of 6.41% Non-Cumulative Guaranteed Series 1 Preferred Securities,
par value $25.00 per security, of Santander Finance Preferred S.A. Unipersonal,
with corporate address at Plaza Canalejas 1, Madrid, Spain, registered with the
Commercial Registry of Madrid under Volume 19747, Folio 171 Sheet M-347560  and with tax identification number A-
83916395 (hereinafter called the Company), subject to the Memorandum and
Articles of Association of the Company, transferable on the books of the
Company upon surrender of this Certificate properly endorsed by the holder in
person or by duly authorized attorney. 
This Certificate is not valid unless countersigned by the Transfer Agent
and Registrar.

 

The Series 1 Preferred
Securities have been documented in a public deed granted before the Notary
Public of Madrid, Spain, Mr. Miguel Ruiz-Gallardon García de la Rasilla under
1,776 of his official files.

 

Witness the signatures of the duly authorized officers
of the Company.

 

Date: March 11, 2004

 

1

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  José Antonio Álvarez Álvarez

  	
   

  	
  Name:

  	
  Natalia Butragueño Rodríguez Borlado

  
	
  Title:

  	
  Chairman

  	
   

  	
  Title:

  	
  Secretary

  

 

 

COUNTERSIGNED AND REGISTERED

THE BANK OF NEW YORK

TRANSFER AGENT AND REGISTRAR

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Officer

  

 

 

(*) 
Equal to Euros 154,597,233.52 based on the exchange rate of US$1.2290 =
Euros 1 on March 11, 2004.

 

2

 

[GLOBAL
CERTIFICATE - REVERSE]

 

GUARANTEE

 

THE HOLDER OF THIS SECURITY IS ENTITLED TO
THE BENEFITS, AND IS SUBJECT TO THE LIMITATIONS, OF THE PAYMENT AND GUARANTEE
AGREEMENT, DATED AS OF MARCH 8, 2004 (THE “GUARANTEE”), EXECUTED AND DELIVERED
BY BANCO SANTANDER CENTRAL HISPANO, S.A. (THE “BANK”) FOR THE HOLDERS FROM TIME
TO TIME OF THIS SECURITY. COPIES OF THE GUARANTEE ARE AVAILABLE UPON WRITTEN
REQUEST TO THE SECRETARY OF SANTANDER FINANCE PREFERRED S.A. UNIPERSONAL (THE “COMPANY”).

 

DESCRIPTION OF THE SERIES 1 PREFERRED SECURITIES

 

Set forth below is condensed information concerning
the 6.41% Non-Cumulative Guaranteed Series 1 Preferred Securities, par value
$25.00 per security, of the Company (the “Series 1 Preferred Securities”). The
summary below does not purport to be complete and is subject to, and qualified
in its entirety by reference to a public deed of issuance dated March 8, 2004
and the resolutions adopted by the shareholders and the board of directors of
the Company establishing the Series 1 Preferred Securities.

 

Distributions

 

Non-cumulative cash
distributions on the Series 1 Preferred Securities (the “Distributions”) will
accrue from the date of original issuance and are payable quarterly in arrears
on March 11, June 11, September 11 and December 11 of each
year, commencing June 11, 2004. The Distributions payable on the Series 1
Preferred Securities are fixed at 6.41% per anum of their par value.

 

Distributions shall not
be payable to the extent that the aggregate of such Distributions, together
with (a) any other distributions previously paid during the then-current fiscal
year and (b) any distributions proposed to be paid during the then-current
calendar quarter, in each case on or in respect of (i) the Series 1 Preferred
Securities and any other Preferred Securities, and (ii) all other preferred
securities issued by the Bank and ranking equally as to participation in
profits with the Bank’s obligations under the Guarantee, would exceed the
Distributable Profits of the immediately preceding fiscal year or even if
Distributable Profits are sufficient, if under applicable Spanish banking
regulations affecting banks which fail to meet their capital ratios on a parent
company only basis or on a consolidated basis, the Bank would be limited in
making payments on preferred securities that it issued that rank equally as to
participation in profits with the Bank’s obligations under the Guarantee.

 

The
term “Distributable Profits” means, for any fiscal year, the Bank’s
reported net profit, determined after tax and extraordinary items for that
year, as derived from the Bank’s audited, non-consolidated profit and loss
account prepared in accordance with generally accepted accounting principles in
Spain and under the requirements and guidelines of the Bank of Spain 

 

3

 

and other Spanish
law in effect at the time of the preparation even if not yet approved at the
general shareholders meeting.  In the
event that on any distribution payment date, the audit of the non-consolidated
profit and loss account has not been completed, the reference to be used to
calculate the Distributable Profits will be the balance of the unaudited
non-consolidated profit and loss account of the Bank as reported in the
financial statements delivered to the Bank of Spain in respect of December 31st
of the preceding fiscal year.

 

The term “Preferred
Securities” include any preferred securities issued under the second additional
rule of Spanish Law 13/1985 and any other preferred securities and preference
shares issued under different jurisdictions of the Company or other
subsidiaries of the Bank, including preferred securities and preference shares
issued through any subsidiary of the Bank established in other jurisdictions
that are entitled to the benefits of a guarantee ranking equally as to
participation in profits with the Bank’s obligations under the Guarantee.

 

The term, “distribution”
includes any distribution on the preferred securities issued under Spanish Law
13/1985 and any dividends paid or to be paid on the Preferred Securities.

 

If Distributions are not
paid in full on the Series 1 Preferred Securities, all distributions paid upon
the Series 1 Preferred Securities and all other Preferred Securities will be
paid pro rata among the Series 1 Preferred Securities and all such other
Preferred Securities, so that the amount of the distribution payment per
security will have the same relationship to each other that the nominal or par
value per security of the Series 1 Preferred Securities and all other Preferred
Securities bear to each other.

 

Except as hereinabove
provided, holders of the Company’s Series 1 Preferred Securities will have no
other right to participate in the profits of the Company.

 

Distributions on the Series 1 Preferred Securities
will be payable to the record holders thereof as they appear on the register
for the Series 1 Preferred Securities on record dates, which will be on the
15th day of the month immediately preceding the relevant payment dates. In
the event that any date on which Distributions are payable on the Series 1
Preferred Securities is not a day on which banks in Madrid and The City of New
York are open for business and on which foreign exchange dealings may be
conducted in Madrid and The City of New York (a “business day”), then payment
of the Distribution payable on such date will be made on the next day which is
a business day (and without any interest or other payment in respect of any
such delay).

 

Liquidating
Distributions

 

If the Company is
voluntarily or involuntarily liquidated, dissolved or wound up, the holders of
outstanding Series 1 Preferred Securities will be entitled to receive out of
the assets available for distribution to holders and before any distribution is
made to holders of ordinary shares or any other class of shares of the Company
ranking junior to the Series 1 Preferred Securities as to participation in
assets, but together with holders of any other Preferred Securities of the
Company ranking equally with the Series 1 Preferred Securities as to
participation in assets, a liquidation distribution in the amount of $25.00 per
Series 1 Preferred Security, plus an 

 

4

 

amount equal to
the accrued and unpaid Distribution for the current distribution period up to
the date of payment.

 

If at the time that any
liquidation distribution is to be paid, proceedings are also pending or have
been commenced for the voluntary or involuntary liquidation, dissolution or
winding-up of the Bank or for a reduction in the Bank’s shareholders’ equity
pursuant to Article 169 of the Spanish Corporation Act (Ley de Sociedades Anónimas),
then the liquidation distribution to be paid to the holders of all Preferred
Securities of the Company, of all Preferred Securities of other subsidiaries of
the Bank and of preferred securities issued by the Bank, will be limited to and
not exceed the amount per Series 1 Preferred Security that would have been paid
as the liquidation distribution from the assets of the Bank (after payment in
full in accordance with Spanish law of all creditors of the Bank, including
holders of subordinated debt but excluding holders of any guarantee or any
other contractual right expressed to rank equally with or junior to the
Guarantee), had all such Preferred Securities been issued by the Bank and
ranked junior to all liabilities of the Bank, ranked equally to the most senior
preferred securities, if any, of the Bank and ranked senior to the Bank’s
ordinary shares.

 

The above limitation will
apply even if the Company has at the time sufficient assets to pay the
liquidation distribution to the holders of all Preferred Securities, including
the Series 1 Preferred Securities.

 

If the foregoing
liquidation distribution relating to the Series 1 Preferred Securities and
other Preferred Securities and any other liquidation distribution cannot be
made in full due to the limitation described above, then all payments will be
made pro rata in the proportion that the amount available for payment bears to
the full amount that would have been payable, had there been no such
limitation.

 

Upon receipt of payment
of the liquidation distribution, holders of Series 1 Preferred Securities will
have no right or claim on any of the remaining assets of either the Company or
the Bank.

 

If the Bank liquidates,
dissolves, winds up or reduces its shareholders’ equity pursuant to Article 169
of the Corporations Law of Spain, the Bank will exercise its voting rights in
order to liquidate the Company. In that case, the amount per security that the
Company pays as a liquidation distribution to the holders of Series 1 Preferred
Securities and other Preferred Securities will be equal to, but not exceed, the
liquidation distribution per Series 1 Preferred Security that would have been
paid from the assets of the Bank had all such Preferred Securities been issued
by the Bank. Except as provided above, the Bank will not permit, and will not
take any action to cause, the liquidation, dissolution or winding-up of the
Company.

 

Optional
Redemption

 

The Series 1 Preferred
Securities are redeemable, at the option of the Company, subject to the prior
consent of the Bank of Spain, in whole but not in part, on or after March 11,
2009, upon not less than 30 nor more than 60 days’ notice prior to the
relevant redemption date  by mail to each record holder, at the
redemption price of $25.00 per Series 1 Preferred Security plus the 

 

5

 

accrued and unpaid
Distribution for the then-current quarterly distribution payment period to the
date fixed for redemption.

 

If the Company gives
notice of redemption of the Series 1 Preferred Securities, then by 12:00 Noon,
New York time on the relevant redemption date, the Company will irrevocably
deposit with the paying agent, funds sufficient to pay the foregoing redemption
price, including the amount of accrued and unpaid Distribution for the
then-current distribution period to the date fixed for redemption and give the
paying agent irrevocable instructions and authority to pay the redemption price
to the holders of the Series 1 Preferred Securities.

 

If the notice of
redemption has been given, and the funds deposited as required, then on the
date of such deposit, Distributions on the Series 1 Preferred Securities called
for redemption shall cease, such securities will no longer be considered
outstanding and the holders will no longer have any rights as holders except the
right to receive the redemption price.

 

If either the notice of
redemption has been given and the funds are not deposited as required on the
date of such deposit or if the Company or the Bank improperly withholds or
refuses to pay the redemption price of the Series 1 Preferred Securities, the
distributions will continue to accrue at the rate specified from the redemption
date to the date of actual payment of the redemption price.

 

In order to comply with
certain Spanish capital adequacy regulations in force on March 11, 2004,
neither the Company nor the Bank nor any of their respective subsidiaries shall
at any time purchase Series 1 Preferred Securities, without the prior consent
of the Bank of Spain, and in any event not earlier than March 11, 2009. Notwithstanding
the foregoing, if Spanish law were to change and such purchases are permitted
before March 11, 2009, then, subject to applicable law, the Company, the Bank
and any of their respective subsidiaries may at any time and from time to time
purchase outstanding Series 1 Preferred Securities by tender, in the open
market or by private agreement.

 

Voting
Rights

 

The holders of Series 1
Preferred Securities will not have any voting rights unless either the Company
or the Bank, under the Guarantee, fails to pay Distributions in full on the
Series 1 Preferred Securities for four consecutive distribution payment
periods. In such event, the holders of outstanding Series 1 Preferred
Securities, together with the holders of any other series of Preferred Securities
of the Company then also having the right to vote for the election of
directors, acting as a single class without regard to series, will be entitled
to appoint two additional members of the board of directors of the Company,
remove any such board member from office and appoint another person(s) in place
of such member(s).

 

This can be accomplished
by either written notice given to the Company by the holders of a majority in
liquidation preference or an ordinary resolution passed by the holders of a
majority in liquidation preference  of the securities present in person or by
proxy at a separate general meeting of the holders convened for that purpose.

 

6

 

If the written
notice of the holders is not given as provided in the preceding paragraph, the
board of directors of the Company, or a duly authorized committee of the board
of directors, is required to convene a separate general meeting for the above
purpose, not later than 30 days after this entitlement arises.

 

If the board of
directors of the Company, or its duly authorized committee, fails to convene
this meeting within the required 30-day period, the holders of 10% in
liquidation preference of the outstanding Series 1 Preferred Securities and
other Preferred Securities of the Company are entitled to convene the meeting.
The provisions of the Articles of the Company that relate to the convening and
conduct of the general meeting of shareholders will also apply to any separate
general meeting. The Company will determine the place where the separate
general meeting will be held.

 

Immediately following a resolution for the appointment
or the removal of additional members to the board of directors, the general
meeting of holders shall give notice of such to the board of directors of the
Company so that it may, where necessary, call a general meeting of the
shareholders of the Company and the shareholder of the Company, so that they
may hold a general meeting of shareholders.

 

The shareholder of
the Company has undertaken to vote in favor of the appointment or removal of
the directors so named by the general meeting of the holders and to take all
necessary measures in such regard.

 

Once distributions
have been paid in full on both the Series 1 Preferred Securities and any other
Preferred Securities of the Company for four consecutive distribution periods,
any member of the board of directors of the Company that has been appointed in
the manner described in the preceding paragraphs is required to vacate office.
Under the Articles of the Company, its board of directors must have a minimum
of three members and a maximum of eleven directors.

 

Any amendments or
abrogations of the rights, preferences and privileges of the Series 1 Preferred
Securities will not be effective, unless otherwise required by applicable law
and except with the consent in writing of the holders of at least two-thirds of
the outstanding Series 1 Preferred Securities or with the sanction of a special
resolution passed at a separate general meeting by the holders of at least
two-thirds of the outstanding Series 1 Preferred Securities.

 

If the Company, or the
Bank under any guarantee, has paid in full the most recent distribution payable
on each series of the Company’s Preferred Securities, the Company, the holders
of its ordinary shares, or its board of directors may, without the consent or
sanction of the holders of its Preferred Securities take any action required to
issue additional Series 1 Preferred Securities or authorize, create and issue
one or more other series of Preferred Securities of the Company ranking equally
with the Series 1 Preferred Securities, as to the participation in the profits
and assets of the Company, without limit as to the amount or take any action
required to authorize, create and issue one or more other classes or series of
shares of the Company ranking junior to the Preferred Securities, as to the
participation in the profits or assets of the Company.

 

7

 

However, if the Company,
or the Bank under any guarantee, has not paid in full the most recent
distribution payable on each series of Preferred Securities, then the prior
consent of the holders of at least two thirds in liquidation preference of the
outstanding Preferred Securities of the Company will be required to carry out
such actions. Such consent may be granted in writing by the holders, or with
the sanction of a special resolution passed at a separate general meeting of
holders.

 

The holders of the Series
1 Preferred Securities, by their subscription of such securities, waive all
rights of priority, that may arise for being formalized as a Spanish public
deed, which would be entitled under Spanish law, with respect to holders of
other Preferred Securities of the Company issued after March 11, 2004.

 

The vote of the holders
of Series 1 Preferred Securities is not required to redeem and cancel the
Series 1 Preferred Securities. Spanish law does not impose any restrictions on
the ability of holders of Preferred Securities, who are not residents or
citizens of Spain to hold or vote such Preferred Securities.

 

If the shareholders of
the Company propose a resolution providing for the liquidation, dissolution or
winding-up of the Company, the holders of all the outstanding Preferred
Securities of the Company will be entitled to receive notice of and to attend
the general meeting of shareholders called to adopt this resolution and will be
entitled to hold a separate and previous general meeting of holders and vote
together as a single class without regard to series on such resolution, but not
on any other resolution. This resolution will not be effective unless approved
by the holders of a majority in liquidation preference of all outstanding
Preferred Securities of the Company.

 

The result of the above
mentioned vote shall be disclosed at the general shareholders meeting as well
as the fact that the shareholder of the Company has undertaken to vote in the
correspondent general shareholders meeting in conformity with the vote of the
separate general meeting of holders.

 

Notice, attendance, or
approval is not required if the liquidation, dissolution and winding-up of the
Company is initiated due to the liquidation, dissolution or, winding up of the
Bank or a reduction in shareholders equity of the Bank under Article 169 of the
Corporations Law of Spain.

 

The Company shall cause a
notice of any meeting at which the holders of Series 1 Preferred Securities are
entitled to vote, to be mailed to each record holder of Series 1 Preferred Securities.
This notice will include a statement regarding the date, time and place of the
meeting, a description of any resolution to be proposed for adoption at the
meeting at which the holders are entitled to vote and instructions for the
delivery of proxies.

 

Transfer

 

The transfer of a Series
1 Preferred Security, and the benefit of the Guarantee, may be registered by
surrendering the certificate evidencing the Series 1 Preferred Security to be
transferred together with the form of transfer endorsed on it duly completed
and executed, at the office of the registrar.

 

8

 

The Company will register
transfers of Series 1 Preferred Securities without charge but with payment (or
the giving of such indemnity for the benefit of the Company as the registrar
may require) for any tax or other governmental charges, which may be imposed in
relation to the transfer.

 

The Company will not
register the transfer of any Series 1 Preferred Securities after such
securities have been called for redemption.

 

Replacement of Lost Certificates

 

If any certificate for Series 1 Preferred Securities
is mutilated or alleged to have been lost, stolen or destroyed, a new
certificate representing the same security may be issued to the record holder
upon request but subject to either delivery of the old certificate or (if
alleged to have been lost, stolen or destroyed) compliance with such
pre-conditions of indemnity and payment of the Company’s out-of-pocket expenses
related to such request as the board of directors of the Company may then
determine.

 

Registrar, Transfer Agent and Paying
Agent

 

The Bank of New York, presently located at 101 Barclay
Street, New York, New York 10286, will act as registrar, transfer agent and
paying agent for the Series 1 Preferred Securities, which together with its
successors and assigns, we will refer to as “the Paying Agent.”

 

Miscellaneous

 

Series 1 Preferred Securities are not subject to any
mandatory redemption or sinking fund provisions. Holders of Series 1 Preferred
Securities have no preemptive rights.

 

9Exhibit
4.2

 

PAYMENT
AND GUARANTEE AGREEMENT

 

THIS PAYMENT AND GUARANTEE AGREEMENT (the “Guarantee”), dated as of
March 8, 2004, is executed and delivered by Banco Santander Central
Hispano, S.A., a sociedad anónima incorporated under the laws of the Kingdom of
Spain (the “Guarantor”), and will be executed and accepted by the Issuer (as
defined below), as issuer of the Series 1 Preferred Securities (as defined
below) and each Registrar and Paying Agent (as defined below) for the benefit
of the Holders (as defined below).

 

WHEREAS, the Guarantor desires to cause the Issuer to issue the Series
1 Preferred Securities and the Guarantor desires to issue this Guarantee for
the benefit of the Holders, as provided herein; and

 

WHEREAS, the Guarantor desires hereby irrevocably and unconditionally
to agree to pay to the Holders the Guarantee Payments (as defined below) and to
make certain other payments on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the purchase of Series 1 Preferred
Securities and the Guarantee by each Holder, which the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee
for the benefit of the Holders.

 

ARTICLE I

 

As used in this Guarantee, the following terms shall, unless the
context otherwise requires, have the following meanings:

 

“Bank Shares” means the ordinary shares of the Guarantor.

 

“Distributable Profits” means for any fiscal year, the Guarantor’s
reported net profit , determined after tax and extraordinary items for such
year, as derived from the Guarantor’s audited, non-consolidated profit and loss
account prepared in accordance with generally accepted accounting principles in
Spain and under the requirements and guidelines of the Bank of Spain and other Spanish
law in effect at the time of such preparation even if not yet approved at a
general meeting of shareholders. In the event that on any distribution payment
date, the audit of the non-consolidated profit and loss account has not been
completed, the reference to be used to calculate the Distributable Profits will
be the balance of the unaudited non-consolidated profit and loss account of the
Guarantor as reported in the financial statements delivered to the Bank of
Spain in respect of December 31st of the preceding fiscal year.

 

“Distributions” means the amount of accrued non-cumulative cash
distributions payable per Series 1 Preferred Security in accordance with the
terms thereof.

 

“Group” means the Guarantor together with its consolidated subsidiaries.

 

“Guarantee Payments” means (without duplication) (i) any accrued but
unpaid Distributions on the Series 1 Preferred Securities for the most recent
distribution period; (ii) the Redemption Price payable with respect to the
Series 1 Preferred Securities redeemed by the 

 

1

 

Issuer thereof;
and (iii) the Liquidation Distributions due on the Liquidation Date, in each
case subject to the limitations contained in Section 2.01 hereof.

 

“Holder” shall mean any holder from time to time of any Series 1
Preferred Securities of the Issuer; provided, however, that in determining
whether the Holders of the requisite percentage of the Series 1 Preferred
Securities have given any request, notice, consent or waiver hereunder, Holder
shall not include the Guarantor or any Subsidiary (as defined below) of the
Guarantor (including the Issuer).

 

“Issuer” shall mean Santander Finance Preferred S.A. Unipersonal, a
sociedad anónima incorporated under the laws of the Kingdom of Spain.

 

“Liquidation Date” shall mean the date of final distribution of the
assets of the Issuer in the case of a winding-up of the Issuer (whether
voluntary or involuntary).

 

“Liquidation Distributions” means, with respect to each of the Series 1
Preferred Securities, the liquidation preference per share as provided by the
terms thereof, plus accrued and unpaid Distributions to the Liquidation Date.

 

“Preferred Securities” means any preferred securities issued under the
second additional provision of Spanish Law 13/1985 and any other preferred
securities and preference shares issued under different jurisdictions of the
Issuer or other Subsidiaries of the Guarantor including preferred securities
and preference shares issued through any Subsidiary of the Guarantor
established in other jurisdictions that are entitled to the benefits of a
guarantee ranking equally to participation in profits with the Bank’s
obligations under this Guarantee.

 

“Redemption Price” shall mean with respect to each Series 1 Preferred
Security the amount required under the terms thereof to be paid to a Holder
upon the redemption of such Series 1 Preferred Security, including any accrued
and unpaid distributions to the redemption date.

 

“Registrar and Paying Agent” means The Bank of New York together with
its successors and assigns.

 

“Series 1 Preferred Securities” means the 7,600,000 6.41%
Non-Cumulative Guaranteed Series 1 Preferred Securities (par value $25.00 per
security) of the Issuer, the Holders of which are entitled to the benefits of
this Guarantee as evidenced by the execution of an acceptance in the form
attached hereto.

 

“Subsidiary” of the Guarantor means any entity in which the majority of
the voting stock is owned directly or indirectly (through a Subsidiary) by the
Guarantor.

 

ARTICLE II

 

Section 2.01                                (a)  Subject to the limitations contained in the
following paragraphs of this Section 2.01, the Guarantor irrevocably and
unconditionally agrees to pay in full to the Holders, the Guarantee Payments
(except to the extent paid by the Issuer), as and when due, regardless of 

 

2

 

any defense, right of
set-off or counterclaim which the Issuer may have or assert. This Guarantee is
continuing, irrevocable, unconditional and absolute.

 

(b)                                 Notwithstanding
Section 2.01(a), the Guarantor shall not be obligated to make any
Guarantee Payments on related Distributions (including accrued and unpaid
Distributions relating to the Redemption Price or Liquidation Distributions) on
any Series 1 Preferred Securities if the related payment, together with (a) any
other distributions or dividends previously paid during the then-current fiscal
year and (b) any distributions or dividends proposed to be paid during the
then-current calendar quarter, in each case on or in respect of (i) the Series
1 Preferred Securities and any other Preferred Securities, and (ii) all other
preferred securities issued by the Guarantor ranking equally as to
participation in profits with the Guarantor’s obligations under the Guarantee,
would exceed the Distributable Profits for the preceding fiscal year. Moreover,
even if Distributable Profits are sufficient, the Guarantor shall not be
obligated to make any payments hereunder to the extent that, in accordance with
applicable Spanish banking regulations affecting banks which fail to meet their
capital ratios on a parent company only or consolidated basis, the Guarantor
would be limited in making payments on preferred securities that it issued that
rank equally as to participation in profits with the Guarantor’s obligations
under this Guarantee.

 

(c)                                  Notwithstanding
Section 2.01(a), if, at the time that any Liquidation Distributions are to
be paid in respect of each of the Series 1 Preferred Securities by the
Guarantor, proceedings are pending or have been commenced for the voluntary or
involuntary liquidation, dissolution or winding-up of the Guarantor or for a
reduction in the Guarantor’s shareholders’ equity pursuant to Article 169
of the Spanish Corporations Law (Ley de
Sociedades Anonimas), then payments for such Liquidation
Distributions and any liquidation distributions payable with respect to (a) the
most senior preferred securities (if any) of the Guarantor and (b) all other
Preferred Securities, shall not exceed the liquidation distributions that would
have been payable from the assets of the Guarantor (after payment in full in
accordance with Spanish law of all creditors of the Guarantor, including
holders of its subordinated debt, but excluding holders of any guarantee or other
contractual right expressed to rank equally with or junior to this Guarantee)
had all such Preferred Securities been issued by the Guarantor and ranked (i)
junior to all liabilities of the Guarantor, (ii) equally with the most senior
preferred securities, if any, of the Guarantor and (iii) senior to the Bank
Shares. In the event of any such liquidation or winding up of the Guarantor or
a reduction in its shareholders’ equity pursuant to Article 169 of the
Spanish Corporations Law, the Guarantor will exercise its voting rights in
order to wind up the Issuer, subject to the prior consent of the Bank of Spain.

 

(d)                                 In
the event that the amounts described in Section 2.01 (a) are not payable
in full by reason of the limitation referred to in Section 2.01(b) or (c),
such amounts shall be made pro rata among the holders of Preferred Securities
in proportion to the amounts that would have been payable but for such
limitation.

 

Section 2.02                                The
Guarantor hereby waives notice of acceptance of this Guarantee and of any
liability to which it applies or may apply, presentment, demand for payment,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.

 

3

 

Section 2.03                                The
obligations, covenants, agreements and duties of the Guarantor under this
Guarantee shall in no way be affected or impaired by reason of the happening
from time to time of any of the following:

 

(a)                                  the
release or waiver, by operation of law or otherwise, of the performance or
observance by the Issuer of any express or implied agreement, covenant, term or
condition relating to the Series 1 Preferred Securities to be performed or
observed by the Issuer;

 

(b)                                 the
extension of time for the payment by the Issuer of all or any portion of the
Distributions, Redemption Price, Liquidation Distributions or any other sums
payable under the terms of the Series 1 Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or
in connection with, such Series 1 Preferred Securities;

 

(c)                                  any
failure, omission, delay or lack of diligence on the part of Holders to
enforce, assert or exercise any right, privilege, power or remedy conferred on
the Holders pursuant to the terms of the Series 1 Preferred Securities, or any
action on the part of the Issuer granting indulgence or extension of any kind;

 

(d)                                 the
voluntary or involuntary liquidation, dissolution, sale of any collateral,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of debt of, or other
similar proceedings affecting, the Issuer or any of the assets of the Issuer;

 

(e)                                  any
invalidity of, or defect or deficiency in, the Series 1 Preferred Securities;
or

 

(f)                                    the
settlement or compromise of any obligation guaranteed hereby or hereby
incurred.

 

There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the foregoing.

 

Section 2.04                                This
is a guarantee of payment and not of collection. A Holder may enforce this
Guarantee directly against the Guarantor, and the Guarantor waives any right or
remedy to require that any action be brought against the Issuer or any other
person or entity before proceeding against the Guarantor. Subject to
Section 2.05, all waivers herein contained shall be without prejudice to
the Holders’ right at the Holders’ option to proceed against the Issuer,
whether by separate action or by joinder. The Guarantor agrees that this
Guarantee shall not be discharged except by payment of the Guarantee Payments
in full and by complete performance of all obligations of the Guarantor
contained in this Guarantee.

 

Section 2.05                                The
Guarantor shall be subrogated to all rights of the Holders against the Issuer
in respect of any amounts paid to such Holders by the Guarantor under this
Guarantee and shall have the right to waive payment of any amount of
Distributions in respect of which payment has been made to the Holders by the
Guarantor pursuant to Section 2.01; provided, however, that the Guarantor
shall not (except to the extent required by mandatory provisions of law)
exercise any rights which it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of a payment under
this Guarantee, if, 

 

4

 

at the time of any such
payment, any amounts are due and unpaid under this Guarantee. If any amount on
the Series 1 Preferred Securities is paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to pay such amount to the Holders.

 

Section 2.06                                Subject
to applicable law and regulations and the requirements of any stock exchange on
which the Series 1 Preferred Securities may at the time be listed, the
Guarantor, at its sole option, shall be entitled to purchase Series 1 Preferred
Securities from any Holder, as a whole but not in part, to the extent that the
Issuer may purchase any Series 1 Preferred Securities.

 

Section 2.07                                The
Guarantor acknowledges that its obligations hereunder are several and
independent of the obligations of the Issuer with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and sole debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (f), inclusive of Section 2.03 hereof.

 

Section 2.08                                The
Guarantor represents and warrants that, subject to applicable laws, its
obligations hereunder rank and will at all times rank (a) junior to all
liabilities of the Guarantor, including subordinated liabilities (other than
any guarantee or contractual right expressed to rank equally with or junior to
this Guarantee), (b) equally with the most senior preferred securities issued
by the Guarantor, if any, or any obligations of the Guarantor under any
guarantee issued by it relating to any Preferred Securities and (c) senior to
the Bank Shares.

 

Each Holder by its acquisition of Series 1 Preferred Securities will be
deemed to waive all other priorities that Spanish law or regulations may confer
at any time including those arising under articles 92 and 158 of Law 22/2003 of
9 July 2003 (Ley Concursal).

 

ARTICLE III

 

Section 3.01                                The
Guarantor agrees not to issue any preferred securities or preference shares
ranking senior to its obligations hereunder and agrees not to guarantee
payments in respect of any Preferred Securities of Subsidiary of the Guarantor
if such guarantee would rank senior to this Guarantee (including, without
limitation, any guarantee that would provide a priority of payment with respect
to Distributable Profits) unless this Guarantee is amended to give the Holders
of Series 1 Preferred Securities such rights and entitlements as are contained
in or attached to such preferred securities or preference shares or such other
guarantee, so that this Guarantee ranks equally with, and contains
substantially equivalent rights of priority on payment of Distributable Profits
if any, as such preferred securities or preference shares or other guarantee.

 

Section 3.02                                The
Guarantor agrees that if any amount required to be paid pursuant to this
Guarantee in respect of a Distribution payable during the most recent quarterly
distribution period has not been paid, whether by reason of the limitations of
Section 2.01(b) hereof or otherwise; (i) no dividends (other than in the
form of the Bank Shares or other shares of the Guarantor ranking junior to
obligations of the Guarantor under this Guarantee) will be declared or paid or
set apart for payment, or (ii) other distribution made, upon the Bank Shares or
any other shares of the Guarantor ranking junior to the obligations of the
Guarantor under this 

 

5

 

Guarantee, and (iii) nor
will any Bank Shares or any other shares of the Guarantor ranking junior to the
obligations of the Guarantor under this Guarantee be redeemed, repurchased or
otherwise acquired for any consideration (including any amount to be paid or
made available for a sinking fund for the redemption of any Bank Shares) by the
Guarantor (except by conversion into or exchange of shares of the Guarantor
ranking junior to the obligations of the Guarantor under this Guarantee), until
such time as the Issuer or the Guarantor pursuant to this Guarantee shall have
resumed the payment of, or set aside payment with respect to, full
Distributions on the Series 1 Preferred Securities for four consecutive
quarterly distribution periods.

 

Section 3.03                                The
Guarantor agrees to maintain ownership of 100% of the ordinary shares of the
Issuer, directly or indirectly, as long as any Series 1 Preferred Securities
remain outstanding.

 

ARTICLE IV

 

This Guarantee shall terminate and be of no further force and effect
upon payment in full of the Redemption Price of all outstanding Series 1
Preferred Securities or upon payment of the Liquidation Distributions and
liquidation of the Issuer; provided, however, that this Guarantee shall
continue to be effective or shall be reinstated (as the case may be) if at any
time a Holder of a Series 1 Preferred Securities is required to restore payment
of any sums paid on such Series 1 Preferred Securities or under this Guarantee.

 

ARTICLE V

 

Section 5.01                                All
guarantees and agreements contained in this Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor
and shall inure to the benefit of the Holders. 
The Guarantor shall not assign its obligations hereunder without the
prior approval of the Holders of not less than two-thirds in liquidation
preference of the outstanding Series 1 Preferred Securities or by special
resolution adopted at a general meeting of holders (Junta General Especial de Partícipes) and approved by
Holders of at least two-thirds of the liquidation preference of the outstanding
Series 1 Preferred Securities; provided, however, that the foregoing shall not
preclude the Guarantor from merging or consolidating with, or transferring or
otherwise assigning all or substantially all of its assets to, a banking
organization or any other entity permitted by applicable laws without obtaining
any approval of such holders.

 

Section 5.02                                Except
for those changes (a) required by Section 3.01 hereof, (b) which do not
adversely affect the rights of Holders or (c) necessary or desirable to give
effect to any one or more transactions referred to in the proviso to
Section 5.01 (in any of which cases no agreement will be required), this
Guarantee shall be changed only by agreement in writing signed by the Guarantor
with the prior approval of the Holders of not less than two-thirds of the
liquidation preference of the Series 1 Preferred Securities, or by a special
resolution adopted at a general meeting of holders (Junta General Especial de Partícipes) and approved by
Holders of at least two-thirds of the liquidation preference of the outstanding
Series 1 Preferred Securities.

 

Section 5.03                                Any
notice, request or other communication required or permitted to be given
hereunder to the Guarantor shall be given in writing by delivering the same
against receipt therefor or by telex or facsimile transmission (confirmed by
mail) addressed to the Guarantor, as 

 

6

 

follows (and if so given,
shall be deemed given upon receipt of an answer-back, if sent by telex, or upon
mailing of confirmation, if given by facsimile transmission):

 

Banco Santander Central Hispano, S.A.

Paseo de la Castellana, 75

28046 Madrid, Spain

Facsimile: (011) 34-91-418-7008

 

Attention: Financial Division Dept.

 

The address of the Guarantor may be changed at any time and from time
to time and shall be the most recent such address furnished in writing by the
Guarantor to the Registrar and Paying Agent.

 

Any notice, request or other communication required or permitted to be
given hereunder to the Holders shall be given by the Guarantor in the same
manner as notices sent by the Issuer to holders of the Preferred Securities.

 

Section 5.04                                This
Guarantee is solely for the benefit of the Holders and is not separately
transferable from the Series 1 Preferred Securities. The Issuer may include on
the share certificates representing Series 1 Preferred Securities a legend in
substantially the following form:

 

THE HOLDER OF THIS
SECURITY IS ENTITLED TO THE BENEFITS, AND IS SUBJECT TO THE LIMITATIONS, OF THE
PAYMENT AND GUARANTEE AGREEMENT, DATED AS OF MARCH 8, 2004, EXECUTED AND
DELIVERED BY BANCO SANTANDER CENTRAL HISPANO, S.A. FOR THE BENEFIT OF HOLDERS
FROM TIME TO TIME OF THIS SECURITY. COPIES OF THE PAYMENT AND GUARANTEE
AGREEMENT ARE AVAILABLE UPON WRITTEN REQUEST TO THE SECRETARY OF THE ISSUER.

 

Section 5.05                                The
Guarantor will furnish any Holder, upon request of such Holder, with a copy of
its annual report, and any interim reports, made generally available by the
Guarantor to holders of the Bank Shares.

 

Section 5.06                                This
Guarantee shall be governed by, and construed in accordance with, the laws of
the State of New York.

 

Section 5.07                                The
Guarantor agrees that any legal suit, action or proceeding brought by any
Holder arising out of or based upon this Guarantee may be instituted in any
state or federal court in the City and State of New York, and waives any
objection that it may now or hereafter have to the laying of venue of any such
proceeding, and irrevocably submits to the non-exclusive jurisdiction of such
courts in any such suit, action or proceeding. The Guarantor has appointed its
New York Branch, located at 45 East 53rd Street, New York, New York
10022, as its authorized agent (the “Authorized Agent”) upon which process may
be served in any action based on this Guarantee that may be instituted in any
state or federal court in the City and State of New York by any Holder, and
expressly accepts the jurisdiction of any such court, but only in respect of
claims arising out of or based upon this Guarantee. The Guarantor represents
and warrants that its New York Branch has agreed to act as said agent for
service of process and agrees to take any 

 

7

 

and all action, including
the filing of any and all documentation and instruments, that may be necessary
to continue such appointment in full force and effect as aforesaid. If said
agent shall cease to act in such capacity, the Guarantor will appoint without
delay another such agent. Notwithstanding the foregoing, any action based on
this Guarantee may be instituted by any Holder in any competent court in Spain.

 

THIS GUARANTEE is executed as of the day and year first above written.

 

 

	
   

  	
  BANCO SANTANDER
  CENTRAL HISPANO, S.A.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOSÉ ANTONIO
  ÁLVAREZ ÁLVAREZ

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

The undersigned hereby agrees that the Series 1 Preferred Securities
are entitled to the benefits of this Payment and Guarantee Agreement dated as
of March 8, 2004.

 

 

	
  SANTANDER
  FINANCE PREFERRED, S.A. UNIPERSONAL

  (Issuer)

  
	
   

  
	
   

  
	
  By:

  	
  /s/ IÑIGO
  BARRERA

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  Dated as of
  March 11, 2004

  

 

 

The undersigned hereby agrees to act as Transfer Agent, Registrar and
Paying Agent with respect to the Series 1 Preferred Securities and is not
otherwise a party to the Payment and Guarantee Agreement and shall have no
duties other than those of Registrar and Paying Agent with respect to the
Series 1 Preferred Securities.

 

	
  THE BANK OF NEW
  YORK

  Registrar and Paying Agent

  
	
   

  
	
   

  
	
  By:

  	
  /s/ STACY BEECH

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

8

 

*    *    *    *    *

 

This acceptance
may be executed in counterparts

 

The undersigned hereby agrees that the Series 1 Preferred Securities
are entitled to the benefits of this Payment and Guarantee Agreement dated as
of  March 11, 2004.

 

 

	
  SANTANDER
  FINANCE PREFERRED, S.A. UNIPERSONAL

  (Issuer)

  
	
   

  
	
   

  
	
  By:

  	
  /s/ IÑIGO
  BARRERA

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  Dated as of:

  

 

 

The undersigned hereby agrees to act as Transfer Agent, Registrar and
Paying Agent with respect to the Series 1 Preferred Securities and is not
otherwise a party to the Payment and Guarantee Agreement and shall have no
duties other than those of Registrar and Paying Agent with respect to such
Preferred Securities.

 

 

	
  THE BANK OF NEW
  YORK

  [Registrar and Paying Agent]

  
	
   

  
	
   

  
	
  By:

  	
  /s/ STACY BEECH

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

*    *    *    *    *

 

This acceptance
may be executed in counterparts

 

9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}]]