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EXHIBIT 10.3

	Sacyr Vallehermoso, S.A.

Att:     Mr. Javier Pérez Gracia

          Mr. José Puelles

Madrid, October 26, 2006

Subject:     Long-term facility for acquisition of up to 20% of REPSOL YPF, S.A. by SPV wholly-owned by Sacyr Vallehermoso, S.A. (“SYV”)

	Dear sirs:

SYV has informed Banco Santander Central Hispano (“SAN”) of its interest in the acquisition of up to 20% of REPSOL YPF, S.A. As a follow-up to our conversations and in response to your request, SAN is pleased to present you with a Firm Offer to underwrite 100% of the above-captioned facility.

The Bank’s commitment is established in the Terms and Conditions included in the Appendix to this letter. In this regard, we attach hereto a Schedule relating to a facility with limited recourse to SYV, as well as a Schedule relating to a bridge facility for a term of up to three months.

Please note that the amounts appearing in the Appendix are based on a transaction value (including all transaction costs) of €6.375 billion. If said value should increase, the financing, equity and contingent guarantee percentages established in this Facility Offer would have to be reconsidered.

By signature of this letter in witness of acceptance, SAN is appointed by you on an exclusive basis as Facility Underwriter and Bookrunner. Therefore, you agree not to appoint other banks as Underwriter and Bookrunner for the same purpose, without out prior consent given in writing. In addition, both parties agree to take into consideration the opinions of the other in the selection process in respect of the Mandate Lead Arrangers.

The Bank may syndicate the transaction with other credit entities before or after the closing thereof, subject to consultation with you.

	Underwriting by the Bank is subject:

		(i)      	to satisfactory contractual documentation, the parties agreeing to negotiate in good faith the contractual documents pertaining to the Facility; 
		 
		(ii)      	to receiving such information as is reasonably requested in order to structure the Facility. 
		 

This Facility Offer is also conditioned upon there not being generated through the signature date of the Facility Agreement any alteration in the credit market or in the financial position of SYV and/or the partners of the Borrower, and/or the shareholder group of the latter, which could alter the present frame of action.

The terms and conditions of the appendix are strictly confidential and must not be disclosed or reported to third parties, legal counsel excepted, without the prior express consent of the parties.

Page 1 of 10

This Facility Offer is valid through December 31, 2006.

Please sign this letter, in witness of your acceptance of the contents thereof and of the Schedule of Terms and Conditions.

Very truly yours,

Banco Santander Central Hispano, S.A. 

Authorized Signatory,

	Accepted and Agreed

	Sacyr Vallehermoso, S.A.

Authorized Signatory,

 

 

Page 2 of 10

FACILITY TO SPV (wholly-owned by SYV)

TERMS AND CONDITIONS OF FACILITY UNDERWRITING

	1.  	  	Total Amount:  	  	Up to a maximum of €5,175,000,000, representing 81.17% of the  
	  	  	  	  	transaction value.  
	  
	2.  	  	Borrower:  	  	A Spanish SPV, wholly-owned (directly or indirectly) by SYV, with no  
	  	  	  	  	activity other than the acquisition of up to 20% of the shares of REPSOL  
	  	  	  	  	YPF, S.A.  	  	  
	  
	  	  	  	  	This SPV will have equity of some €1.2 billion in the form of Capital and/or  
	  	  	  	  	Subordinated Loan.  
	  
	3.  	  	Purpose:  	  	Refinancing of outstanding balance of bridge credit facilities totaling €2.6  
	  	  	  	  	billion granted for the acquisition of 10% of REPSOL YPF, S.A., as well as  
	  	  	  	  	for the acquisition, by the method to be established, of an additional 10% of  
	  	  	  	  	REPSOL YPF, S.A. until totaling 20%.  
	  
	4.  	  	Guarantees:  	  	·  	  	Pledge of 100% of the shares of SPV.  
	  
	  	  	  	  	·  	  	Pledge of the shares of REPSOL YPF, S.A. acquired by SPV (in any  
	  	  	  	  	  	  	case, political rights for SYV). The acquired securities of REPSOL  
	  	  	  	  	  	  	YPF, S.A. shall be deposited at SAN (subject to agreement on  
	  	  	  	  	  	  	conditions of custody).  
	  
	  	  	  	  	·  	  	Irrevocable order of payment of dividends of REPSOL YPF, S.A. into  
	  	  	  	  	  	  	SAN account.  
	  
	  	  	  	  	·  	  	Pledge of SPV’s bank accounts.  
	  
	  	  	  	  	·  	  	SYV will guarantee the payment of interest on the facility.  
	  
	  	  	  	  	·  	  	SYV is required to submit additional liquid listed securities, to the  
	  	  	  	  	  	  	Bank’s satisfaction, or cash, as security for the facility when the loan-  
	  	  	  	  	  	  	to-value ratio falls below 105% during the first 24 months and below  
	  	  	  	  	  	  	115% as from month 24. This contingent guarantee is limited to total  
	  	  	  	  	  	  	contribution having an equivalent value of €1.275 billion. The parties  
	  	  	  	  	  	  	agree that, among those listed securities, the following shall be  
	  	  	  	  	  	  	acceptable:  
	  
	  	  	  	  	  	  	o  	  	Shares of Testa, provided that the said company is in  
	  	  	  	  	  	  	  	  	possession of an asset appraisal report on the basis of  
	  	  	  	  	  	  	  	  	which the value of the shares will be determined. In the  
	  	  	  	  	  	  	  	  	event that SyV chooses to submit shares of Testa, the  
	  	  	  	  	  	  	  	  	equivalent value of the shares to be contributed shall be at  
	  	  	  	  	  	  	  	  	least 125% of the amount necessary to re-establish the  
	  	  	  	  	  	  	  	  	loan-to-value ratio established in the above paragraph,  
	  	  	  	  	  	  	  	  	unless at that time Testa meets the free-float requisites  
	  	  	  	  	  	  	  	  	established in the following paragraph.  
	  
	  	  	  	  	  	  	o  	  	Shares of Eiffage and/or Itinere (when it goes public)  
	  	  	  	  	  	  	  	  	provided that the minimum free-float of these companies  
	  	  	  	  	  	  	  	  	shall be at least 35% of share capital or €1.0 billion.  

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	  	  	  	  	  	  	           o  	  	In the event that SyV has contributed shares of Testa in  
	  	  	  	  	  	  	  	  	order to meet the loan-to-value ratios established in this  
	  	  	  	  	  	  	  	  	section, the Financial Institutions may request that SyV  
	  	  	  	  	  	  	  	  	substitute said shares of Testa for others of Eiffage and/or  
	  	  	  	  	  	  	  	  	Itinere, provided that the latter meet, at the time of the  
	  	  	  	  	  	  	  	  	request, the free-float requisites established in the above  
	  	  	  	  	  	  	  	  	paragraph but Testa does not meet them.  
	  
	  	  	  	  	·  	  	SYV agrees, upon maturity of the facility, provided that it is not  
	  	  	  	  	  	  	refinanced, to submit additional liquid listed securities, in accordance  
	  	  	  	  	  	  	with the provisions of the above paragraph, or cash, up to the  
	  	  	  	  	  	  	aggregate limit mentioned in the preceding paragraph, in order to  
	  	  	  	  	  	  	maintain the same loan-to-value ratio as established at the onset of  
	  	  	  	  	  	  	this facility (1.23x) .  
	  
	5.  	  	Drawdown  	  	Once the conditions precedent established below have been accredited,  
	  	  	Period:  	  	one month from date of signature.  
	  
	6.  	  	Term:  	  	6 years.  	  	  
	  
	7.  	  	Amortization:  	  	Bullet, sole amortization pay-off at maturity.  
	  
	8.  	  	Underwriter:  	  	Banco Santander Central Hispano, S.A.  
	  
	9.  	  	Agent:  	  	SAN  	  	  
	  
	10.  	  	Lender Banks:  	  	Banking syndicate formed by the Underwriter and other Financial  
	Institutions that, in the end, may enter the transaction. 
	  
	  
	11.  	  	Interest Period:  	  	1, 3 and 6 months, at the choice of the Borrower.  
	  
	12.  	  	Interest Rate:  	  	EURIBOR of the relevant term + applicable Margin.  
	  
	13.  	  	Margin:  	  	The margin shall be:  
	  
	  	  	  	  	  	  	           ·  	  	100 basis points per annum through month 24  
	  	  	  	  	  	  	           ·  	  	110 basis points per annum from month 24 through month  
	  	  	  	  	  	  	  	  	48  
	  	  	  	  	  	  	           ·  	  	120 basis points from month 48  
	  
	14.  	  	Underwriting,  	  	0.95% of the Total Amount, payable upon the first Drawdown or upon  
	  	  	Structuring and  	  	expiration of the Drawdown Period, whichever occurs first.  
	  	  	Origination  	  	  	  	  	  	  
	  	  	Fee:  	  	  	  	  	  	  
	  
	15.  	  	Agency Fee:  	  	€60,000 + VAT, payable annually.  
	  
	16.  	  	Voluntary  	  	The Borrower shall have the option of prepaying the facility amount (in  
	  	  	Prepayment:  	  	whole or in part) without penalty, provided that the prepayment coincides  
	  	  	  	  	with an interest payment date, and it is made subject to minimum pre-notice  
	  	  	  	  	to the Agent Bank of 15 business days.  
	  
	  	  	  	  	The prepayment must be for a minimum of €25 million and multiples of €5  
	  	  	  	  	million, in the event that the principal payment is made with funds other  
	  	  	  	  	than those generated by the Borrower. Should that not be the case, no  
	  	  	  	  	minimum will exist.  

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	17. Obligatory  	  	The facility amount must be prepaid in the following circumstances:  
	       Prepayment:  	  	  	  	  
	  	  	·  	  	In full in case of loss of ownership (whether direct or indirect) of  
	  	  	  	  	100% of SPV on the part of SYV.  
	  
	  	  	·  	  	In full in the event that SPV is merged, absorbs or is absorbed, or  
	  	  	  	  	changes activity.  
	  
	  	  	·  	  	In whole or in part, as appropriate, in the event that SPV proceeds  
	  	  	  	  	with the sale, in whole or in part, of the shares of REPSOL YPF, S.A.  
	acquired within the frame of this facility. 
	  
	  	  	·  	  	In full in case of breach of the loan-to-value ratio.  
	  
	18. Market Value of  	  	Result of multiplying the number of shares acquired and pledged by the  
	       the Shares of  	  	SPV by the closing price of the Spanish electronic stock trading system  
	       REPSOL YPF,  	  	(Sistema de Interconexión Bursátil Español).  
	       S.A.:  	  	  	  	  
	  
	19. Loan-to-Value  	  	Defined as the quotient between the Market Value of the Shares of  
	       Coverage  	  	REPSOL YPF, S.A. acquired and pledged by SPV at the end of each  
	       Ratio:  	  	Measurement Period and the outstanding balance of the facility at that time,  
	  	  	net of cash and equivalents at SPV.  
	  
	20. Maintenance of  	  	In the event that the Market Value of the Shares of REPSOL YPF, S.A., at  
	       Loan-to-Value  	  	the end of each Coverage Level Measurement Period has suffered a  
	       Coverage  	  	decrease which provokes the Loan-to-Value Coverage Ratio to fall below  
	       Ratio:  	  	that established in section 4 of this Offer, depending upon the time in which  
	  	  	it is applicable, during 3 consecutive days, SYV shall submit listed  
	  	  	securities, to the satisfaction of the Banks, or funds up to the limit at which  
	  	  	the Loan-to-Value Coverage Ratio is re-established. The total maximum  
	  	  	value of SYV’s contributions to the Borrower and not recovered, in  
	  	  	accordance with the provisions of the following paragraph, shall amount to  
	  	  	€1.275 billion.  
	  
	  	  	If at the end of the following Measurement Period, the share price of  
	  	  	REPSOL YPF, S.A. has appreciated in such a manner that the Loan-to-  
	  	  	Value Coverage Ratio is greater than the one established in section 4 of  
	  	  	this Offer, depending upon the time in which applicable, during three  
	  	  	consecutive days, SYV may re-draw the cash or the securities previously  
	  	  	submitted as collateral.  
	  
	  	  	Once the above-mentioned contingency limit has been exhausted, and in  
	  	  	order to maintain the Loan-to-Value Coverage Ratio, SYV may continue  
	  	  	contributing funds in order to succeed in maintaining the Loan-to-Value  
	  	  	Coverage Ratio as determined. In any case, at the choice of the Borrower  
	  	  	and/or SYV, the following are proposed:  
	  
	  	  	·  	  	Reduction of debt.  
	  
	  	  	·  	  	Contribution of shares of REPSOL YPF, S.A.  
	  
	  	  	·  	  	Contribution of liquid, listed shares.  
	  
	  	  	·  	  	Contribution of cash or equivalent.  
	  
	  	  	·  	  	Bank guarantee (minimum S&P: A+).  

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	  	  	·  	  	Any other one acceptable by the Financial Institutions.  
	  
	21. Loan-to-Value  	  	Monthly, except if the Loan-to-Value Coverage Ratio falls below 1.15x, in  
	       Coverage Ratio  	  	which case weekly.  
	       Measurement  	  	  	  	  	  	  
	       Period:  	  	If the Loan-to-Value Coverage Ratio falls below 1.10x, the Measurement  
	  	  	Period shall be daily.  
	  
	22. Conditions  	  	·  	  	The Loan-to-Value Coverage Ratio must be greater than or equal to  
	       Precedent prior  	  	  	  	1.20x in order for SYV not to have to contribute additional  
	       to Closing and  	  	  	  	guarantees.  
	       Pay-out  	  	  	  	  	  	  
	  	  	Prior to the drawdown of funds, the Agent must have received, inter alia,  
	  	  	the following documents:  
	  
	  	  	·  	  	Authorizations.  
	  
	  	  	·  	  	Incorporation, registration, corporate resolutions and powers of  
	  	  	  	  	attorney of the SPV.  
	  
	  	  	·  	  	Evidence of paid-in Capital, Subordinated Loan.  
	  
	  	  	·  	  	Establishment of Guarantees.  
	  
	  	  	·  	  	Representations: legal status, non-existence of violation, of breach of  
	  	  	  	  	litigation, of insolvency situations, compliance with tax regulations,  
	  	  	  	  	non-existence of early termination events, non-existence of financial  
	  	  	  	  	indebtedness not this facility.  
	  
	  	  	·  	  	Absence of Material Adverse Change. Any circumstance or fact  
	  	  	  	  	which adversely and significantly may affect or affects the financial  
	  	  	  	  	position, equity or capacity of the SPV to meet the obligations  
	  	  	  	  	deriving from the Facility.  
	  
	  	  	·  	  	Representation concerning having paid all fees owed to the banks.  
	  
	23. Borrower’s  	  	During the life of the facility, SPV must fulfill, inter alia, the following  
	       Obligations:  	  	obligations:  	  	  
	  
	  	  	·  	  	Earmark the amount of the facility to the stated purpose.  
	  
	  	  	·  	  	Compliance with laws, maintenance of authorizations.  
	  
	  	  	·  	  	Prompt reporting of the existence of a cause for early termination.  
	  
	  	  	·  	  	Negative Pledge, Pari Passu.  
	  
	  	  	·  	  	Maintenance of ownership of 100% of the shares of REPSOL YPF,  
	  	  	  	  	S.A. acquired by the SPV, free of liens, encumbrances, in-rem rights,  
	  	  	  	  	options, etc., except for the pledge granted in favor of the Financial  
	  	  	  	  	Institutions.  	  	This obligation shall be excepted in the case  
	  	  	  	  	contemplated in section 17.3 of this Offer.  
	  
	  	  	·  	  	Prohibition against incurring indebtedness other than as  
	  	  	  	  	contemplated in these terms and conditions, unless entailing  
	  	  	  	  	indebtedness subordinated to the bank facility, granted by the  

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	  	  	  	  	Shareholder.  
	  
	  	  	·  	  	Prohibition against granting financing and/or bank guarantees and/or  
	  	  	  	  	other types of guarantees.  
	  
	  	  	·  	  	Prohibition against making investments, with the sole exception of  
	  	  	  	  	acquiring new blocks of REPSOL YPF, S.A. and provided that the  
	  	  	  	  	Loan-to-Value Coverage Ratio has been greater than 1.15x during  
	  	  	  	  	two consecutive measurements.  
	  
	  	  	·  	  	Prohibition against adopting resolutions aimed at dissolution,  
	  	  	  	  	winding-up, transformation, merger or spin-off of the company.  
	  
	  	  	·  	  	Prohibition against entering into contracts with especially related  
	  	  	  	  	persons.  
	  
	  	  	·  	  	Prohibition against distributing dividends and remunerating the  
	  	  	  	  	Subordinated Debt which, as the case may be, SYV’s shareholders  
	  	  	  	  	contribute.  
	  
	  	  	·  	  	Exercise the political rights in relation to the shares of REPSOL YPF,  
	  	  	  	  	S.A. diligently, so as not to impair at any time the obligations  
	  	  	  	  	contracted under this Facility and, in any case, under the premise of  
	  	  	  	  	facilitating a dividend distribution which allows the payment of  
	  	  	  	  	interest on the bank financing.  
	  
	  	  	·  	  	Commitment relating to tax consolidation of SPV into the SYV  
	  	  	  	  	consolidated group and contribution by the shareholder of the  
	  	  	  	  	relevant funds to SPV for the tax credit of any tax loss that may exist.  
	  
	  	  	·  	  	The value of the Loan-to-Value Coverage Ratio, at the end of each  
	  	  	  	  	Measurement Period, must be greater than or equal to that  
	  	  	  	  	established in section 4 of this Offer, depending upon the time in  
	  	  	  	  	which applicable, provided that the contingent contribution limit of  
	  	  	  	  	€1.275 billion, to be contributed by SYV, has been exhausted.  
	  
	  	  	·  	  	Commitment to submit economic-financial and annual information  
	  	  	  	  	(within 180 days following the close) and to audit its Annual Financial  
	  	  	  	  	Statements and Management Report annually by a firm of  
	  	  	  	  	recognized prestige.  
	  
	  	  	·  	  	Establishment of interest rate hedging mechanism (at least for 2/3 of  
	  	  	  	  	the amount and 100% of the facility term), to be determined by  
	  	  	  	  	mutual agreement with the Bank. Contracting will be carried out at  
	  	  	  	  	the said bank and pursuant to market conditions.  
	  
	24. SYV’s  	  	·  	  	Make the contributions of funds or securities described in this facility  
	       Obligations:  	  	  	  	offer.  
	  
	  	  	·  	  	Maintain, at all times, at least €1.0 billion in liquid, listed shares free  
	  	  	  	  	of liens or available cash in order to satisfy the contributions to  
	  	  	  	  	maintain the Loan-to-Value Coverage Ratio at the levels established  
	  	  	  	  	in this offer. This amount shall be reduced in proportion to the limit  
	  	  	  	  	of SYV’s contingent guarantee, when such limit, due to the effective  
	  	  	  	  	contribution of securities or cash, has been reduced to €1.0 billion.  
	  
	25. Other  	  	Costs pertaining to Funding Rupture, Substitute Interest, Market Rupture,  

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	       Customary  	  	Default Interest, Change in circumstances, Unforeseen Legal Breach,  
	       Clauses in this  	  	Qualified Credit Entity (for tax purposes). Loan Accounts.  
	       Type of Facility:  	  	  	  	  
	  
	26. Assignments:  	  	Financial Institutions may assign and transfer, in whole or in part, their  
	  	  	  	  	share in this Agreement and, therefore, the rights and obligations  
	  	  	  	  	emanating therefrom, to other credit entities, financial institutions,  
	  	  	  	  	securitization fund established or to be established in Spain or abroad (in  
	  	  	  	  	any case within the EU) as well as to any other entity and, specifically, to  
	  	  	  	  	companies or entities, whether or not regulated, incorporated for the  
	  	  	  	  	purpose of participating in the credit or securities market through  
	  	  	  	  	securitization processes or other processes analogous thereto, provided  
	  	  	  	  	that no greater costs to the Borrower derive from the assignment. Only  
	  	  	  	  	entities having their domicile or a permanent establishment in the EU may  
	  	  	  	  	be assignees.  
	  
	27. Taxes  	  	and  	  	The Borrower shall be responsible for all present or future taxes and  
	      Expenses:  	  	coefficients (“Increased Costs”) which may accrue in relation to this  
	  	  	  	  	financial transaction, including legal expenses, external advisers, as well as  
	  	  	  	  	the movements of funds in Bank of Spain accounts, if any, or any other  
	  	  	  	  	system used to comply with the payment obligations between the parties to  
	  	  	  	  	the contract. The banks shall loan from a permanent establishment in the  
	  	  	  	  	European Union. Standard gross-up clause.  
	  
	28. Early  	  	  	  	·  	  	Breach by the Borrower of any undertaking, obligation, etc.  
	      Termination  	  	  	  	established in the contract, considering and evaluating in each case  
	      Events:  	  	  	  	  	  	the material/substantial nature of each such breach. A grace period  
	  	  	  	  	  	  	or cure period may be established for each one of the early  
	  	  	  	  	  	  	termination events, to be negotiated by the parties and which, in any  
	  	  	  	  	  	  	case, shall not be greater than 5 business days for breach of  
	  	  	  	  	  	  	payment, and 15 calendar days for others.  
	  
	  	  	  	  	·  	  	Cross Default with the corporate operation of SYV which completes  
	  	  	  	  	  	  	the facility earmarked towards acquisition of REPSOL YPF, S.A.  
	  	  	  	  	  	  	shares.  
	  
	  	  	  	  	·  	  	General non-payment of debts on the part of the Borrower or on the  
	part of any company of the SYV Group. 
	  
	  	  	  	  	·  	  	Declaration of early termination of any indebtedness of the Borrower  
	or of any company of the SYV Group. 
	  
	  	  	  	  	·  	  	Change of direct or indirect 100% ownership on the part of SYV.  
	  
	  	  	  	  	·  	  	Breach or unforeseen ineffectiveness of any representation or  
	  	  	  	  	  	  	warranty.  
	  
	  	  	  	  	·  	  	Illegality, voidance or ineffectiveness of the guarantees.  
	  
	  	  	  	  	·  	  	Material Adverse Change. Any circumstance or fact which adversely  
	  	  	  	  	  	  	and significantly may affect or affects the financial position, equity or  
	  	  	  	  	  	  	capacity of the SPV and/or of SYV to meet the obligations deriving  
	  	  	  	  	  	  	from the Facility.  
	  
	29. Documentation:  	  	The transaction shall be formalized via a loan agreement prepared by a  
	  	  	  	  	lawfirm of recognized prestige, and shall include the representations,  
	  	  	  	  	obligations, conditions precedent, termination events and other clauses  

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	  	  	  	  	customary for this type of transaction.  
	  
	  	  	  	  	The documentation shall be executed before a Notary Public.  
	  
	30.  	  	Governing Law  	  	Spanish law and Courts of the city of Madrid  
	  	  	and  	  	  
	  	  	Jurisdiction:  	  	  
	  
	31.  	  	Assistance in  	  	SYV agrees to support the Underwriters and to employ its best efforts during  
	  	  	Syndication:  	  	the syndication to encourage the banks with which a relationship is  
	  	  	  	  	established to participate in order to guarantee the success of such  
	  	  	  	  	syndication.  

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FACILITY TO SPV (wholly-owned by SYV)

TERMS AND CONDITIONS OF BRIDGE FACILITY UNDERWRITING

	1.  	  	Total  	  	Up to a maximum of € 2,600,000,000.  
	  	  	Amount:  	  	  
	2.  	  	Borrower:  	  	A Spanish SPV, wholly-owned (directly or indirectly) by SYV, with no activity  
	  	  	  	  	other than the acquisition of up to 20% of the shares of REPSOL YPF, S.A.  
	3.  	  	Purpose:  	  	Purchase of up to 20% of the shares of REPSOL YPF, S.A.  
	4.  	  	Guarantees:  	  	Sacyr Vallehermoso, S.A. will jointly and severally guarantee the Borrower’s  
	  	  	  	  	obligations.  
	5.  	  	Term:  	  	3 months from signature date.  
	6.  	  	Amortization:  	  	Bullet, upon maturity.  
	7.  	  	Underwriter:  	  	SAN  
	8.  	  	Interest  	  	1 or 3 months, at choice of Borrower.  
	  	  	Period:  	  	  
	9.  	  	Interest Rate:  	  	EURIBOR plus Applicable Margin.  
	10.  	  	Applicable  	  	80 basis points.  
	  	  	Margin:  	  	  
	11.  	  	Origination  	  	2 basis points.  
	  	  	Fee:  	  	  
	12.  	  	Covenants:  	  	· Obligation to deposit the shares of REPSOL YPF, S.A. acquired into a  
	  	  	  	  	   custodial account at SAN.  
					· Prohibition against disposing of the securities deposited.
	  	  	  	  	· In case of sale of the shares of REPSOL YPF, S.A. acquired, earmark  
	  	  	  	  	100% towards prepayment.  

Page 10 of 10mawithconfirm2.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

	(Multicurrency-Cross Border)  	 		 	EXHIBIT 10.4

	  	  	ISDA®  	  	  
	International Swaps and Derivatives Association, Inc.  
	  	  	MASTER AGREEMENT  	  	  
	  	  	dated as of  	  	  
	BANCO SANTANDER  	  	and  	  	SACYR VALLEHERMOSO  
	CENTRAL HISPANO, S.A.  	  	  	  	PARTICIPACIONES  
	  	  	  	  	MOBILIARIAS, S.L.U.  

have entered and/or anticipate entering into one or more transactions (each a “Transaction”) that are or will be governed by this Master Agreement, which includes the schedule (the “Schedule”), and the documents and other confirming evidence (each a “Confirmation”) exchanged between the parties confirming those Transactions. 

	Accordingly, the parties agree as follows:-

1. Interpretation 

	(a)      	Definitions. The terms defined in Section 14 and in the Schedule will have the meanings therein specified for the purpose of this Master Agreement. 
	 
	(b)      	Inconsistency. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement (including the Schedule), such Confirmation will prevail for the purpose of the relevant Transaction. 
	 
	(c)      	Single Agreement. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this “Agreement”), and the parties would not otherwise enter into any Transactions. 
	 

	2. Obligations

	(a)      	General Conditions 
	 
	 	(i)      	Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement. 
	 
	 	(ii)      	Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery 
	 

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	 	 	(that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement. 
	 
	 	(iii)      	Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred or is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other applicable condition precedent specified in this Agreement. 
	 
	(b)      	Change of Account. Either party may change its account for receiving a payment or delivery by giving notice to the other party at least five Local Business Days prior to the scheduled date for the payment or delivery to which such change applies unless such other party gives timely notice of a reasonable objection to such change. 
	 
	(c)      	Netting. If on any date amounts would otherwise be payable:- 
	 
	 	(i)      	in the same currency; and 
	 
	 	(ii)      	in respect of the same Transaction, 

by each party to the other, then, on such date, each party’s obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by whom the larger aggregate amount would have been payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount. 

The parties may elect in respect of two or more Transactions that a net amount will be determined in respect of all amounts payable on the same date in the same currency in respect of such Transactions, regardless of whether such amounts are payable in respect of the same Transaction. The election may be made in the Schedule or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions identified as being subject to the election, together with the starting date (in which case subparagraph (ii) above will not, or will cease to, apply to such Transactions from such date). This election may be made separately for different groups of Transactions and will apply separately to each pairing of Offices through which the parties make and receive payments or deliveries. 

	(d)      	Deduction or Withholding for Tax 
	 
	 	(i)      	Gross-Up. All payments under this Agreement will be made without any deduction or withholding for or on account of any Tax unless such deduction or withholding is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, then in effect. If a party is so required to deduct or withhold, then that party (“X”) will:- 
	 
	 	 	(1) promptly notify the other party (“Y”) of such requirement; 
	 

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	 	(2)      	pay to the relevant authorities the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from any additional amount paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such deduction or withholding is required or receiving notice that such amount has been assessed against Y; 
	 
	 	(3)      	promptly forward to Y an official receipt (or a certified copy), or other documentation reasonably acceptable to Y, evidencing such payment to such authorities; and 
	 
	 	(4)      	if such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which Y is otherwise entitled under this Agreement, such additional amount as is necessary to ensure that the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount Y would have received had no such deduction or withholding been required. However, X will not be required to pay any additional amount to Y to the extent that it would not be required to be paid but for:- 
	 
	 	 	(A)      	the failure by Y to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d); or 
	 
	 	 	(B)      	the failure of a representation made by Y pursuant to Section 3(f) to be accurate and true unless such failure would not have occurred but for (I) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (II) a Change in Tax Law. 
	 
	(ii)      	Liability. If:- 
	 
	 	(1)      	X is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding in respect of which X would not be required to pay an additional amount to Y under Section 2(d)(i)(4); 
	 
	 	(2)      	X does not so deduct or withhold; and 
	 
	 	(3)      	a liability resulting from such Tax is assessed directly against X, 
	 

then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y will promptly pay to X the amount of such liability (including any related liability for interest, but including any related liability for penalties only if Y has failed to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)). 

	(e)      	Default Interest; Other Amounts. Prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party that defaults in the performance of any payment obligation will, to the extent permitted by law and subject to Section 6(c), be required to pay interest (before as well as after judgment) on the overdue 
	 

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amount to the other party on demand in the same currency as such overdue amount, for the period from (and including) the original due date for payment to (but excluding) the date of actual payment, at the Default Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. If, prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party defaults in the performance of any obligation required to be settled by delivery, it will compensate the other party on demand if and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement. 

	3. Representations

Each party represents to the other party (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into and, in the case of the representations in Section 3(f), at all times until the termination of this Agreement) that:- 

	(a)      	Basic Representations. 
	 
	 	(i)      	Status. It is duly organised and validly existing under the laws of the jurisdiction of its organisation or incorporation and, if relevant under such laws, in good standing; 
	 
	 	(ii)      	Powers. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action to authorize such execution, delivery and performance; 
	 
	 	(iii)      	No Violation or Conflict. Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets; 
	 
	 	(iv)      	Consents. All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support Document to which it is a party have been obtained and are in full force and effect and all conditions of any such consents have been complied with; and 
	 
	 	(v)      	Obligations Binding. Its obligations under this Agreement and any Credit Support Document to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)). 
	 
	(b)      	Absence of Certain Events. No Event of Default or Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing and no 
	 

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	 	such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party. 
	 
	(c)      	Absence of Litigation. There is no pending or, to its knowledge, threatened against it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Document. 
	 
	(d)      	Accuracy of Specified Information. All applicable information that is furnished in writing by or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the date of the information, true, accurate and complete in every material respect. 
	 
	(e)      	Payer Tax Representation. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(e) is accurate and true. 
	 
	(f)      	Payee Tax Representations. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(f) is accurate and true. 
	 

	4. Agreements

Each party agrees with the other that, so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party:- 

	(a)      	Furnish Specified Information. It will deliver to the other party or, in certain cases under subparagraph (iii) below, to such government or taxing authority as the other party reasonably directs:- 
	 
	 	(i)      	any forms, documents or certificates relating to taxation specified in the Schedule or any Confirmation; 
	 
	 	(ii)      	any other documents specified in the Schedule or any Confirmation; and 
	 
	 	(iii)      	upon reasonable demand by such other party, any form or document that may be required or reasonably requested in writing in order to allow such other party or its Credit Support Provider to make a payment under this Agreement or any applicable Credit Support Document without any deduction or withholding for or on account of any Tax or with such deduction or withholding at a reduced rate (so long as the completion, execution or submission of such form or document would not materially prejudice the legal or commercial position of the party in receipt of such demand), with any such form or document to be accurate and completed in a manner reasonably satisfactory to such other party and to be executed and to be delivered with any reasonably required certification, 
	 

in each case by the date specified in the Schedule or such Confirmation or, if none is specified, as soon as reasonably practicable. 

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	(b)      	Maintain Authorisations. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future. 
	 
	(c)      	Comply with Laws. It will comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement or any Credit Support Document to which it is a party. 
	 
	(d)      	Tax Agreement. It will give notice of any failure of a representation made by it under Section 3(f) to be accurate and true promptly upon learning of such failure. 
	 
	(e)      	Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax levied or imposed upon it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is incorporated, organised, managed and controlled, or considered to have its seat, or in which a branch or office through which it is acting for the purpose of this Agreement is located (“Stamp Tax Jurisdiction”) and will indemnify the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other party’s execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the other party. 

5. Events of Default and Termination Events

	(a)      	Events of Default. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes an event of default (an “Event of Default”) with respect to such party:- 
	 
	 	(i)      	Failure to Pay or Deliver. Failure by the party to make, when due, any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) required to be made by it if such failure is not remedied on or before the third Local Business Day after notice of such failure is given to the party; 
	 
	 	(ii)      	Breach of Agreement. Failure by the party to comply with or perform any agreement or obligation (other than an obligation to make any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or obligation under Section 4(a)(i), 4(a)(ii) or 4(d) to be complied with or performed by the party in accordance with this Agreement if such failure is not remedied on or before the thirtieth day after notice of such failure is given to the party; 
	 
	 	(iii)      	Credit Support Default 
	 
	 	 	(1)      	Failure by the party or any Credit Support Provider of such party to comply with or perform any agreement or obligation to be complied with or performed by it 
	 

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	 	          in accordance with any Credit Support Document if such failure is continuing after any applicable grace period has elapsed; 
	 
	 	(2)      	the expiration or termination of such Credit Support Document or the failing or ceasing of such Credit Support Document to be in full force and effect for the purpose of this Agreement (in either case other than in accordance with its terms) prior to the satisfaction of all obligations of such party under each Transaction to which such Credit Support Document relates without the written consent of the other party; or 
	 
	 	(3)      	the party or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, such Credit Support Document; 
	 
	(iv)      	Misrepresentation. A representation (other than a representation under Section 3(e) or (f)) made or repeated or deemed to have been made or repeated by the party or any Credit Support Provider of such party in this Agreement or any Credit Support Document proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated; 
	 
	(v)      	Default under Specified Transaction. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party (1) defaults under a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction, (2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment or delivery due on the last payment, delivery or exchange date of, or any payment on early termination of, a Specified Transaction (or such default continues for at least three Local Business Days if there is no applicable notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in part, a Specified Transaction (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf); 
	 
	(vi)      	Cross Default. If “Cross Default” is specified in the Schedule as applying to the party, the occurrence or existence of (1) a default, event of default or other similar condition or event (however described) in respect to such party, any Credit Support Provider of such party or any applicable Specified Entity of such party under one or more agreements or instruments relating to Specified Indebtedness of any of them (individually or collectively) in an aggregate amount of not less than the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such agreements or instruments, before it would otherwise have been due and payable or (2) a default by such party, such Credit Support Provider or such Specified Entity (individually or collectively) in making one or more payments on the due date thereof in an aggregate amount of not less than the applicable Threshold Amount under such agreements or instruments (after giving effect to any applicable notice requirement or grace period); 
	 

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	 	(vii)      	Bankruptcy. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party:- 
	 
	 	 	(1)      	is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or become subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 
	 	(viii)      	Merger Without Assumption. The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer:- 
	 
	 	 	(1)      	the resulting, surviving or transferee entity fails to assume all the obligations of such party or such Credit Support Provider under this Agreement or any Credit Support Document to which it or its predecessor was a party by operation of law or pursuant to an agreement reasonably satisfactory to the other party to this Agreement; or 
	 
	 	 	(2)      	the benefits of any Credit Support Document fail to extend (without the consent of the other party) to the performance by such resulting, surviving or transferee entity of its obligations under this Agreement. 
	 
	(b)      	Termination Events. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any 
	 

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event specified below constitutes an Illegality if the event is specified in (i) below, a Tax Event if the event is specified in (ii) below or a Tax Event Upon Merger if the event is specified in (iii) below, and, if specified to be applicable, a Credit Event Upon Merger if the event is specified pursuant to (iv) below or an Additional Termination Event if the event is specified pursuant to (v) below:- 

	(i)      	Illegality. Due to the adoption of, or any change in, any applicable law after the date on which a Transaction is entered into, or due to the promulgation of, or any change in, the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law after such date, it becomes unlawful (other than as a result of a breach by the party of Section 4(b)) for such party (which will be the Affected Party);- 
	 
	 	(1)      	to perform any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of such Transactions or to comply with any other material provision of this Agreement relating to such Transaction; or 
	 
	 	(2)      	to perform, or for any Credit Support Provider of such party to perform, any contingent or other obligation which the party (or such Credit Support Provider) has under any Credit Support Document relating to such Transaction; 
	 
	(ii)      	Tax Event. Due to (x) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (y) a Change in Tax Law, the party (which will be the Affected Party) will, or there is a substantial likelihood that it will, on the next succeeding Scheduled Payment Date (1) be required to pay to the other party an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount is required to be deducted or withheld for or on account of a Tax (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount is required to be paid in respect of such Tax under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or (B)); 
	 
	(iii)      	Tax Event Upon Merger. The party (the “Burdened Party”) on the next succeeding Scheduled Payment Date will either (1) be required to pay an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been deducted or withheld for or on account of any Indemnifiable Tax in respect of which the other party is not required to pay an additional amount (other than by reason of Section 2(d)(i)(4)(A) or (B)); in either case as a result of a party consolidating or amalgamating with, or merging with or into, or transferring all or substantially all its assets to, another entity (which will be the Affected Party) where such action does not constitute an event described in Section 5(a)(viii); 
	 

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	 	(iv)      	Credit Event Upon Merger. If “Credit Event Upon Merger” is specified in the Schedule as applying to the party, such party (“X”), any Credit Support Provider of X or any applicable Specified Entity of X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and such action does not constitute an event described in Section 5(a)(viii) but the creditworthiness of the resulting, surviving or transferee entity is materially weaker than that of X, such Credit Support Provider or such Specified Entity, as the case may be, immediately prior to such action (and, in such event, X or its successor or transferee, as appropriate, will be the Affected Party); or 
	 
	 	(v)      	Additional Termination Event. If any “Additional Termination Event” is specified in the Schedule or any Confirmation as applying, the occurrence of such event (and, in such event, the Affected Party or Affected Parties shall be as specified for such Additional Termination Event in the Schedule or such Confirmation). 
	 
	(c)      	Event of Default and Illegality. If an event or circumstance which would otherwise constitute or give rise to an Event of Default also constitutes an Illegality, it will be treated as an Illegality and will not constitute an Event of Default. 
	 

	6. Early Termination

	(a)      	Right to Terminate Following Event of Default. If at any time an Event of Default with respect to a party (the “Defaulting Party”) has occurred and is then continuing, the other party (the “Non-defaulting Party”) may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, “Automatic Early Termination” is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the event analogous thereto, (8), and as of the time immediately proceeding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8). 
	 
	(b)      	Right to Terminate Following Termination Event. 
	 
	 	(i)      	Notice. If a Termination Event occurs, an Affected Party will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Termination Event and each Affected Transaction and will also give such other information about that Termination Event as the other party may reasonably require. 
	 
	 	(ii)      	Transfer to Avoid Termination Event. If either an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the Affected Party, the Affected Party will, as a condition to its right to designate an Early Termination Date under Section 6(b)(iv), use all reasonable efforts (which will not require such party to incur a loss, 
	 

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	 	 	excluding immaterial, incidental expenses) to transfer within 20 days after it gives notice under Section 6(b)(1) all its rights and obligations under this Agreement in respect of the Affected Transactions to another of its Offices or Affiliates so that such Termination Event ceases to exist. 
	 
	 	 	If the Affected Party is not able to make such a transfer it will give notice to the other party to that effect within such 20 day period, whereupon the other party may effect such a transfer within 30 days after the notice is given under Section 6(b)(i). 
	 
	 	 	Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional upon the prior written consent of the other party, which consent will not be withheld if such other party’s policies in effect at such time would permit it to enter into transactions with the transferee on the terms proposed. 
	 
	 	(iii)      	Two Affected Parties. If an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties, each party will use all reasonable efforts to reach agreement within 30 days after notice thereof is given under Section 6(b)(i) on action to avoid that Termination Event. 
	 
	 	(iv)      	Right to Terminate. If:- 
	 
	 	 	(1)      	a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as the case may be, has not been effected with respect to all Affected Transactions within 30 days after an Affected Party gives notice under Section 6(b)(i); or 
	 
	 	 	(2)      	an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or an Additional Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened Party is not the Affected Party. 
	 
	 	 	 	either party in the case of an Illegality, the Burdened Party in the case of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event or an Additional Termination Event if there is more than one Affected Party, or the party which is not the Affected Party in the case of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Party may, by not more than 20 days notice to the other party and provided that the relevant Termination Event is then continuing, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all Affected Transactions. 
	 
	(c)      	Effect of Designation. 
	 
	 	(i)      	If notice designating an Early Termination Date is given under Section 6(a) or (b), the Early Termination Date will occur on the date so designated, whether or not the relevant Event of Default or Termination Event is then continuing. 
	 
	 	(ii)      	Upon the occurrence or effective designation of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or 2(e) in respect of the Terminated Transactions will be required to be made, but without prejudice to the 
	 

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	 	other provisions of this Agreement. The amount, if any, payable in respect of an Early Termination Date shall be determined pursuant to Section 6(e). 
	 
	(d)      	Calculations. 
	 
	 	(i)      	Statement. On or as soon as reasonably practicable following the occurrence of an Early Termination Date, each party will make the calculations on its part, if any, contemplated by Section 6(e) and will provide to the other party a statement (1) showing, in reasonable detail, such calculations (including all relevant quotations and specifying any amount payable under Section 6(e)) and (2) giving details of the relevant account to which any amount payable to it is to be paid. In the absence of written confirmation from the source of a quotation obtained in determining a Market Quotation, the records of the party obtaining such quotation will be conclusive evidence of the existence and accuracy of such quotation. 
	 
	 	(ii)      	Payment Date. An amount calculated as being due in respect of any Early Termination Date under Section 6(e) will be payable on the day that notice of the amount payable is effective (in the case of an Early Termination Date which is designated or occurs as a result of an Event of Default) and on the day which is two Local Business Days after the day on which notice of the amount payable is effective (in the case of an Early Termination Date which is designated as a result of a Termination Event). Such amount will be paid together with (to the extent permitted under applicable law) interest thereon (before as well as after judgment) in the Termination Currency, from (and including) the relevant Early Termination Date to (but excluding) the date such amount is paid, at the Applicable Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. 
	 
	(e)      	Payments on Early Termination. If an Early Termination Date occurs, the following provisions shall apply based on the parties’ election in the Schedule of a payment measure, either “Market Quotation” or “Loss,” and a payment method, either the “First Method,” or the “Second Method.” If the parties fail to designate a payment measure or payment method in the Schedule, it will be deemed that “Market Quotation” or the “Second Method,” as the case may be, shall apply. The amount, if any, payable in respect of an Early Termination Date and determined pursuant to this Section will be subject to any Set-off. 
	 
	 	(i)      	Events of Default. If the Early Termination Date results from an Event of Default:- 
	 
	 	 	(1)      	First Method and Market Quotation. If the First Method and Market Quotation apply, the Defaulting Party will pay to the Non-defaulting Party the excess, if a positive number, of (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non- defaulting Party over (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. 
	 

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	 	(2)      	First Method and Loss. If the First Method and Loss apply, the Defaulting Party will pay to the Non-defaulting Party, if a positive number, the Non-defaulting Party’s Loss in respect of this Agreement. 
	 
	 	(3)      	Second Method and Market Quotation. If the Second Method and Market Quotation apply, an amount will be payable equal to (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party. 
	 
	 	(4)      	Second Method and Loss. If the Second Method and Loss apply, an amount will be payable equal to the Non-defaulting Party’s Loss in respect of this Agreement. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party, if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party. 
	 
	(ii)      	Termination Events. If the Early Termination Date results from a Termination Event:- 
	 
	 	(1)      	One Affected Party. If there is one Affected Party, the amount payable will be determined in accordance with Section 6(c)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if Loss applies, except that, in either case, references to the Defaulting Party and to the Non-defaulting Party will be deemed to be references to the Affected Party and the party which is not the Affected Party, respectively, and, if Loss applies and fewer than all the Transactions are being terminated, Loss shall be calculated in respect of all Terminated Transactions. 
	 
	 	(2)      	Two Affected Parties. If there are two Affected Parties:- 
	 
	 	 	(A)      	if Market Quotation applies, each party will determine a Settlement Amount in respect of the Terminated Transactions, and an amount will be payable equal to (I) the sum of (a) one-half of the difference between the Settlement Amount of the party with the higher Settlement Amount (“X”) and the Settlement Amount of the party with the lower Settlement Amount (“Y”) and (b) the Termination Currency Equivalent of the Unpaid Amounts owing to X less (II) the Termination Currency Equivalent of the Unpaid Amounts owing to Y; and 
	 
	 	 	(B)      	if Loss applies, each party will determine its Loss in respect of this Agreement (or, if fewer than all the Transactions are being terminated, in respect of all Terminated Transactions) and an amount will be payable equal to one-half of the difference between the Loss of the party with the higher Loss (“X”) and the Loss of the party with the lower Loss (“Y”). 
	 

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If the amount payable is a positive number, Y will pay it to X; if it is a negative number, X will pay the absolute value of that amount to Y. 

	(iii)      	Adjustment for Bankruptcy. In circumstances where an Early Termination Date occurs because “Automatic Early Termination” applies in respect of a party, the amount determined under this Section 6(e) will be subject to such adjustments as are appropriate and permitted by law to reflect any payments or deliveries made by one party to the other under this Agreement (and retained by such other party) during the period from the relevant Early Termination Date to the date for payment determined under Section 6(d)(ii). 
	 
	(iv)      	Pre-Estimate. The parties agree that if Market Quotation applies an amount recoverable under this Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount is payable for the loss of bargain and the loss of protection against future risks and except as otherwise provided in this Agreement neither party will be entitled to recover any additional damages as a consequence of such losses. 

	7. Transfer

Subject to Section 6(b)(ii), neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party, except that:- 

	(a)      	a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and 
	 
	(b)      	a party may make such a transfer of all or any part of its interest in any amount payable to it from a Defaulting Party under Section 6(e). 

Any purported transfer that is not in compliance with this Section will be void.

8. Contractual Currency 

	(a)      	Payment in the Contractual Currency. Each payment under this Agreement will be made in the relevant currency specified in this Agreement for that payment (the “Contractual Currency”). To the extent permitted by applicable law, any obligation to make payments under this Agreement in the Contractual Currency will not be discharged or satisfied by any tender in any currency other than the Contractual Currency, except to the extent such tender results in the actual receipt by the party to which payment is owed, acting in a reasonable manner and in good faith in converting the currency so tendered into the Contractual Currency, of the full amount in the Contractual Currency of all amounts payable in respect to this Agreement. If for any reason the amount in the Contractual Currency so received falls short of the amount in the Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for the shortfall. If for any 
	 

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	 	reason the amount in the Contractual Currency so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party receiving the payment will refund promptly the amount of such excess. 
	 
	(b)      	Judgments. To the extent permitted by applicable law, if any judgment or order expressed in a currency other than the Contractual Currency is tendered (i) for the payment of any amount owing in respect of this Agreement, (ii) for the payment of any amount relating to any early termination in respect of this Agreement or (iii) in respect of a judgment or order of another court for the payment of any amount described in (i) or (ii) above, the party seeking recovery, after recovery in full of the aggregate amount to which such party is entitled pursuant to the judgment or order, will be entitled to receive immediately from the other party the amount of any shortfall of the Contractual Currency received by such party as a consequence of sums paid in such other currency and will refund promptly to the other party any excess of the Contractual Currency received by such party as a consequence of sums paid in such other currency if such shortfall or such excess arises or results from any variation between the rate of exchange at which the Contractual Currency is converted into the currency of the judgment or order for the purposes of such judgment or order and the rate of exchange at which such party is able, acting in a reasonable manner and in good faith in converting the currency received into the Contractual Currency, to purchase the Contractual Currency with the amount of the currency of the judgment or order actually received by such party. The term “rate of exchange” includes, without limitation, any premiums and costs of exchange payable in connection with the purchase of or conversion into the Contractual Currency. 
	 
	 
	 
	(c)      	Separate Indemnities. To the extent permitted by applicable law, these indemnities constitute separate and independent obligations from the other obligations in this Agreement, will be enforceable as separate and independent causes of action, will apply notwithstanding any indulgence granted by the party to which any payment is owned and will not be affected by judgment being obtained or claim or proof being made for any other sums payable in respect of this Agreement. 
	 
	(d)      	Evidence of Loss. For the purpose of this Section 8, it will be sufficient for a party to demonstrate that it would have suffered a loss had an actual exchange or purchase been made. 

	9. Miscellaneous

	(a)      	Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings with respect thereto. 
	 
	(b)      	Amendments. No amendment, modification or waiver in respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties or confirmed by an exchange of telexes or electronic messages on an electronic messaging system. 
	 

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	(c)      	Survival of Obligations. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties under this Agreement will survive the termination of any Transaction. 
	 
	(d)      	Remedies Cumulative. Except as provided in this Agreement, the rights, powers, remedies and privileges provided in this Agreement are cumulative and not exclusive of any rights, powers, remedies and privileges provided by law. 
	 
	(e)      	Counterparts and Confirmations. 
	 
	 	(i)      	This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile transmission), each of which will be deemed an original. 
	 
	 	(ii)      	The parties intend that they are legally bound by the terms of each Transaction from the moment they agree to those terms (whether orally or otherwise). A Confirmation shall be entered into as soon as practicable and may be executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes or by an exchange of electronic messages on an electronic messaging system, which in each case will be sufficient for all purposes to evidence a binding supplement to this Agreement. The parties will specify therein or through another effective means that any such counterpart, telex, or electronic message constitutes a Confirmation. 
	 
	(f)      	No Waiver of Rights. A failure or delay in exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege. 
	 
	(g)      	Headings. The headings used in this Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement. 

	10. Offices; Multibranch Parties

	(a)      	If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction through an Office other than its head or home office represents to the other party that, notwithstanding the place of booking office or jurisdiction of incorporation or organisation of such party, the obligations of such party are the same as if it had entered into the Transaction through its head or home office. This representation will be deemed to be repeated by such party on each date on which a Transaction is entered into. 
	 
	(b)      	Neither party may change the Office through which it makes and receives payments or deliveries for the purpose of a Transaction without the prior written consent of the other party. 
	 

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	(c)      	If a party is specified as a Multibranch Party in the Schedule, such Multibranch Party may make and receive payments or deliveries under any Transaction through any Office listed in the Schedule, and the Office through which it makes and receives payments or deliveries with respect to a Transaction will be specified in the relevant Confirmation. 
	 

	11. Expenses

A Defaulting Party will, on demand, indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees and Stamp Tax, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement or any Credit Support Document to which the Defaulting Party is a party or by reason of the early termination of any Transaction, including, but not limited to, costs of collection. 

	12. Notices

	(a)      	Effectiveness. Any notice or other communication in respect of this Agreement may be given in any manner set forth below (except that a notice or other communication under Section 5 or 6 may not be given by facsimile transmission or electronic messaging system) to the address or number or in accordance with the electronic messaging system details provided (see the Schedule) and will be deemed effective as indicated:- 
	 
	 	(i)      	if in writing and delivered in person or by courier, on the date it is delivered; 
	 
	 	(ii)      	if sent by telex, on the date the recipient’s answerback is received; 
	 
	 	(iii)      	if sent by facsimile transmission, on the date that transmission is received by a responsible employee of the receipt in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender’s facsimile machine); 
	 
	 	(iv)      	if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date that mail is delivered or its delivery is attempted; or 
	 
	 	(v)      	if sent by electronic messaging system, on the date that electronic message is received, 

unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Local Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Local Business Day. 

	(b)      	Change of Addresses. Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system details at which notices or other communications are to be given to it. 
	 

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	13. Governing Law and Jurisdiction

	(a)      	Governing Law. This Agreement will be governed by and construed in accordance with the law specified in the Schedule. 
	 
	(b)      	Jurisdiction. With respect to any suit, action or proceedings relating to this Agreement (“Proceedings”), each party irrevocably:- 
	 
	 	(i)      	submits to the jurisdiction of the English courts, if this Agreement is expressed to be governed by English law, or to the non-exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City, if this Agreement is expressed to be governed by the laws of the State of New York; and 
	 
	 	(ii)      	waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does have any jurisdiction over such party. 
	 

Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction (outside, if this Agreement is expressed to be governed by English law, the Contracting Shares, as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or any modification, extension or re-enactment thereof for the time being in force) nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction. 

	(c)      	Service of Process. Each party irrevocably appoints the Process Agent (if any) specified opposite its name in the Schedule to receive, for it and on its behalf, service of process in any Proceedings. If for any reason any party’s Process Agent is unable to act as such, such party will promptly notify the other party and within 30 days appoint a substitute process agent acceptable to the other party. The parties irrevocably consent to service of process given in the manner provided for notices in Section 12. Nothing in this Agreement will affect the right of either party to serve process in any other manner permitted by law. 
	 
	(d)      	Waiver of Immunities. Each party irrevocably waives, to the fullest extent permitted by applicable law, with respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction, order for specific performance or for recovery of property, (iv) attachment of its assets (whether before or after judgment) and (v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any Proceedings. 
	 

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	14. Definitions 

As used in this Agreement:-

“Additional Termination Event” has the meaning specified in Section 5(b). 

“Affected Party” has the meaning specified in Section 5(b). 

“Affected Transactions” means (a) with respect to any Termination Event consisting of an Illegality, Tax Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such Termination Event and (b) with respect to any other Termination Event, all Transactions. 

“Affiliate” means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, “control” of any entity or person means ownership of a majority of the voting power of the entity or person. 

	“Applicable Rate” means:-

	(a)      	in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate; 
	 
	(b)      	in respect of an obligation to pay an amount under Section 6(e) of either party from and after the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable, the Default Rate; 
	 
	(c)      	in respect of all other obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default Rate; and 
	 
	(d)      	in all other cases, the Termination Rate. 
	 

“Burdened Party” has the meaning specified in Section 5(b). 

“Change in Tax Law” means the enactment, promulgation, execution or ratification of, or any change in or amendment to, any law (or in the application or official interpretation of any law) that occurs on or after the date on which the relevant Transaction is entered into. 

“consent” includes a consent, approval, action, authorisation, exemption, notice, filing, registration or exchange control consent. 

“Credit Event Upon Merger” has the meaning specified in Section 5(b). 

“Credit Support Document” means any agreement or instrument that is specified as such in this Agreement. 

“Credit Support Provider” has the meaning specified in the Schedule. 

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“Default Rate” means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus 1% per annum. 

“Defaulting Party” has the meaning specified in Section 6(a). 

“Early Termination Date” means the date determined in accordance with Section 6(a) or 6(b)(iv). 

“Event of Default” has the meaning specified in Section 5(a) and, if applicable, in the Schedule. 

“Illegality” has the meaning specified in Section 5(b). 

“Indemnifiable Tax” means any Tax other than a Tax that would not be imposed in respect of a payment under this Agreement but for a present or former connection between the jurisdiction of the government or taxation authority imposing such Tax and the recipient of such payment or a person related to such recipient (including, without limitation, a connection arising from such recipient or related person being or having been a citizen or resident of such jurisdiction, or being or having been organised, present or engaged in a trade or business in such jurisdiction, or having or having had a permanent establishment or fixed place of business in such jurisdiction, but excluding a connection arising solely from such recipient or related person having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement or a Credit Support Document). 

“law” includes any treaty, law, rule or regulation (as modified, in the case of tax matters, by the practice of any relevant governmental revenue authority) and “lawful” and “unlawful” will be construed accordingly. 

“Local Business Day” means, subject to the Schedule, a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) (a) in relation to any obligation under Section 2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement, (b) in relation to any other payment, in the place where the relevant account is located and, if different, in the principal financial centre, if any, of the currency of such payment, (c) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), in the city specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and (d) in relation to Section 5(a)(v)(2), in the relevant locations for performance with respect to such Specified Transaction. 

“Loss” means, with respect to this Agreement or one or more Terminated Transactions, as the case may be, and a party, the Termination Currency Equivalent of an amount that party reasonably determines in good faith to be its total losses and costs (or gain, in which case expressed as a negative number) in connection with this Agreement or that Terminated Transaction or group of Terminated Transactions, as the case may be, including any loss of bargain, cost of funding or, at the election of such party but without duplication, loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or

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related trading position (or any gain resulting from any of them). Loss includes losses and costs (or gains) in respect of any payment or delivery required to have been made (assuming satisfaction of each applicable condition precedent) on or before the relevant Early Termination Date and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a party’s legal fees and out-of-pocket expenses referred to under Section 11. A party will determine its Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as of the earliest date thereafter as is reasonably practicable. A party may (but need not) determine its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets. 

“Market Quotation” means, with respect to one or more Terminated Transactions and a party making the determination, an amount determined on the basis of quotations from Reference Market-makers. Each quotation will be for an amount, if any, that would be paid to such party (expressed as a negative number) or by such party (expressed as a positive number) in consideration of an agreement between such party (taking into account any existing Credit Support Document with respect to the obligations of such party) and the quoting Reference Market-maker to enter into a transaction (the “Replacement Transaction”) that would have the effect of preserving for such party the economic equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) by the parties under Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have been required after that date. For this purpose, Unpaid Amounts in respect of the Terminated Transaction or group of Terminated Transactions are to be excluded but, without limitation, any payment or delivery that would, but for the relevant Early Termination Date, have been required (assuming satisfaction of each applicable condition precedent) after that Early Termination Date is to be included. The Replacement Transaction would be subject to such documentation as such party and the Reference Market-maker may, in good faith, agree. The party making the determination (or its agent) will request each Reference Market-maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on or as soon as reasonably practicable after the relevant Early Termination Date. The day and time as of which those quotations are to be obtained will be selected in good faith by the party obliged to make a determination under Section 6(e), and, if each party is so obliged, after consultation with the other. If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values. If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations shall be disregarded. If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Terminated Transaction or group of Terminated Transactions cannot be determined. 

“Non-default Rate” means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the Non-defaulting Party (as certified by it) if it were to fund the relevant amount. 

“Non-defaulting Party” has the meaning specified in Section 6(a). 

“Office” means a branch or office of a party, which may be such party’s head or home office. 

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“Potential Event of Default” means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default. 

“Reference Market-makers” means four leading dealers in the relevant market selected by the party determining a Market Quotation in good faith (a) from among dealers of the highest credit standing which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit and (b) to the extent practicable, from among such dealers having an office in the same city. 

“Relevant Jurisdiction” means, with respect to a party, the jurisdictions (a) in which the party is incorporated, organised, managed and controlled or considered to have its seat, (b) where an Office through which the party is acting for purposes of this Agreement is located, (c) in which the party executes this Agreement and (d) in relation to any payment, from or through which such payment is made. 

“Scheduled Payment Date” means a date on which a payment or delivery is to be made under Section 2(a)(i) with respect to a Transaction. 

“Set-off” means set-off, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the payer of an amount under Section 6 is entitled or subject (whether arising under this Agreement, another contract, applicable law or otherwise) that is exercised by, or imposed on, such payer. 

“Settlement Amount” means, with respect to a party and any Early Termination Date, the sum of:- 

	(a)      	the Termination Currency Equivalent of the Market Quotation (whether positive or negative) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation is determined; and 
	 
	(b)      	such party’s Loss (whether positive or negative and without reference to any Unpaid Amounts) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation cannot be determined or would not (in the reasonable belief of the party making the determination) produce a commercially reasonable result. 

“Specified Entity” has the meaning specified in the Schedule. 

“Specified Indebtedness” means, subject to the Schedule, any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money. 

“Specified Transaction” means, subject to the Schedule, (a) any transaction (including an agreement with respect thereto) now existing or hereafter entered into between one party to this Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement (or any Credit Support Provider of such other party or any applicable Specified Entity of such other party) which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange

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transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions), (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation. 

“Stamp Tax” means any stamp, registration, documentation or similar tax. 

“Tax” means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest, penalties and additions thereto) that is imposed by any government or other taxing authority in respect of any payment under this Agreement other than a stamp, registration, documentation or similar tax. 

“Tax Event” has the meaning specified in Section 5(b). 

“Tax Event Upon Merger” has the meaning specified in Section 5(b). 

“Terminated Transactions” means with respect to any Early Termination Date (a) if resulting from a Termination Event, all Affected Transactions and (b) if resulting from an Event of Default, all Transactions (in either case) in effect immediately before the effectiveness of the notice designating that Early Termination Date (or, if “Automatic Early Termination” applies, immediately before that Early Termination Date). 

“Termination Currency” has the meaning specified in the Schedule. 

“Termination Currency Equivalent” means, in respect of any amount denominated in the Termination Currency, such Termination Currency amount and, in respect of any amount denominated in a currency other than the Termination Currency (the “Other Currency”), the amount in the Termination Currency determined by the party making the relevant determination as being required to purchase such amount of such Other Currency as at the relevant Early Termination Date, or, if the relevant Market Quotation or Loss (as the case may be), is determined as of a later date, that later date, with the Termination Currency at the rate equal to the spot exchange rate of the foreign exchange agent (selected as provided below) for the purchase of such Other Currency with the Termination Currency at or about 11:00 a.m. (in the city in which such foreign exchange agent is located) on such date as would be customary for the determination of such a rate for the purchase of such Other Currency for value on the relevant Early Termination Date or that later date. The foreign exchange agent will, if only one party is obliged to make a determination under Section 6(e), be selected in good faith by that party and otherwise will be agreed by the parties. 

“Termination Event” means an Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to be applicable, a Credit Event Upon Merger or an Additional Termination Event. 

“Termination Rate” means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such amounts. 

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“Unpaid Amounts” owing to any party means, with respect to an Early Termination Date, the aggregate of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable but for Section 2(a)(iii) to such party under Section 2(a)(i) on or prior to such Early Termination Date and which remain unpaid as at such Early Termination Date and (b) in respect of each Terminated Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be settled by delivery to such party on or prior to such Early Termination Date and which has not been so settled as at such Early Termination Date, an amount equal to the fair market value of that which was (or would have been) required to be delivered as of the originally scheduled date for delivery, in each case together with (to the extent permitted under applicable law) interest, in the currency of such amounts, from (and including) the date such amounts or obligations were or would have been required to have been paid or performed to (but excluding) such Early Termination Date, at the Applicable Rate. Such amounts of interest will be calculated on the basis of daily compounding and the actual number of days elapsed. The fair market value of any obligation referred to in clause (b) above shall be reasonably determined by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, it shall be the average of the Termination Currency Equivalents of the fair market values reasonably determined by both parties. 

 

 

 

-24-

	IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document.    

	  
	BANCO SANTANDER CENTRAL  	  	SACYR VALLEHERMOSO  	  	  
	HISPANO, S.A.  	  	PARTICIPACIONES  	  	  
	  	  	MOBILIARIAS, S.L.U.  	  	  

	By: /s/_______________________________   	  	By: /s/_______________________________ 
	Name:  	  	Name:  
	Title:  	  	Title:  
	Date:  	  	Date:  
	  
	  
	By: /s/_______________________________   	  	By: __________________________________  
	Name:  	  	Name:  
	Title:  	  	Title:  
	Date:  	  	Date:  

-25-

Annex I 

GARANTIA

GARANTIA de feche de 9 de octubre de 2006 otorgada por Sacyr Vallerhermoso, S.A. (en lo sucesivo, el “Garante”), a favor de Banco Santander Central Hispano, S.A. (en adelante “Santander”), en relación con las Operaciones (tal y como se define a continuación) que éste realizará con Sacyr Vallehermoso Participaciones Mobiliarias, S.L.U. (en lo sucesivo, la “Compañía”). Por “Operaciones” se entenderán las Operaciones de Total Return Equity Swap a contratar entre Santander y la Compañía celebradas al amparo del ISDA Master Agreement, sobre acciones ordinarias de Respsol YPF, S.A. 

1. Garantía. La presente Garantía tiene naturaleza de garantía a primera demanda, incondicioal e irrevocable. Las obligaciones del Garante son solidarias con respecto de la Compañía de tal manera que responde al mismo rivel que la Compañía como obligado principal ante Santander. 

El Garante garantiza con carácter incondicional, irrevocable y a primera demanda a Santander, sus entidades sucesoras y/o cesionarios, el pago al vencimiento de todas y cada una de las obligaciones y responsabilidades de la Compañía con Santander derivadas de las Operaciones (en adelante, “las Obligaciones”), bastando para su reclamación la simple notificación por Santander al Garante, sin necesidad de justificar el motivo del incumplimiento. 

2. Consentimiento, Renuncias y Renovaciones. El Garante acepta que Santander podrá recurrir a ellos para el pago de cualesquiera de las Obligaciones, independientemente de que Santander haya recurrido a cualquier garantia o colateral o haya procedido legalmente contra cualquier otro obligado principal o secundario respecto a cualesquirea de dichas Obligaciones. 

3. Gastos. El Garante se compromete a reembolsar a la vista cualquier gasto relacionado directamente con la ejecución o protección de los derechos de Santander en virtud de la presente Garantía. 

4. Subrogación. El Garante se compromete a no ejercer ningun derecho que pudiera corresponderie frente a la Compañía hasta que la totalidad de las Obligaciones ante Santander se hayan liquidado por completo. Si cualquier importe se hubiera pagado al Garante contraviniendo el compromiso anterior, dicho importe se mantendrá en depósito en beneficio de Santander y será entregado a éste para su plicación a las Obligaciones. 

5. Validez de la Garantía. La presente Garantía tiene carácter de incondicional, irrevocable y a primera demanda, y permanecerá en vigor y será vinculante para el Garante, sus sucesores y cesionarios hasta que la totalidad de las Obligaciones se hayan liquidado por completo. 

6. Ley y Jurisdicción. La presente Garantía está sometida a Derecho español. 

7. Notificaciones. La dirección del garante a efectos de notificaciones es la siguiente. 

8. Modificaciones. No surtirá efecto ninguna modificación de la presente Garantía a menos que se efectúe por escrito, con la firma del Garante, la Compañía y Santander.

 

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		 		 	Sacyr Vallehermoso, S.A.  
		 		 	  
		 		 	  
		 		 	  
		 		 	Fdo:  
		 		 	Nombre:  

-27-

	SCHEDULE    
	  
	To the Master Agreement    

dated as of 9 October, 2006    

	  
	  

between    

	  
	  BANCO SANTANDER  

  CENTRAL HISPANO,  

    S.A.    

  (“Party A”)    	  	        and  	  	SACYR  
	  	  	  	VALLEHERMOSO  
	  	  	  	PARTICIPACIONES  
	  	  	  	MOBILIARIAS, S.L.U.  
	  
	  	  	  	  	  	  	  	  	  	  	(“Party B”)  
	  
	Part 1    

Termination Provisions    

	  
	In this Agreement:-  	  	  	  	  	  	  
	  
	(a)  	  	“Specified Entity” means in relation to Party A for the purpose of:  
	  
	  	  	Section  	  	5(a) (v),  	  	Not applicable.  	  	  
	  	  	Section  	  	5(a) (vi),  	  	Not applicable.  	  	  
	  	  	Section  	  	5(a) (vii),  	  	Not applicable.  	  	  
	  	  	Section  	  	5(b) (iv),  	  	Not applicable.  	  	  
	  
	  	  	In relation to Party B for the purpose of:  	  	  
	  
	  	  	Section  	  	5(a) (v),  	  	Any Affiliate.  	  	  
	  	  	Section  	  	5(a) (vi),  	  	Any Affiliate.  	  	  
	  	  	Section  	  	5(a) (vii),  	  	Any Affiliate.  	  	  
	  	  	Section  	  	5(b) (iv),  	  	Sacyr Vallehermoso, S.A.  	  	  

	(b)      	“Specified Transaction” will have the meaning specified in Section 14 of this Agreement. 
	 
	(c)      	The “Cross Default” provisions of Section 5 (a) (vi) of this Agreement will apply to both parties, but shall exclude any payment default that results solely from wire transfer difficulties or an error or omission of an administrative or operational nature (so long as sufficient funds are available to the relevant party on the relevant date), provided that payment is made within three Business Days after such transfer difficulties have been corrected or the error or omission has been discovered. 
	 
	 	If such provisions apply:- 
	 

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	 	“Specified Indebtedness” means any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money, other than indebtedness in relation to bank deposits received in the normal course of business. 
	 
	 	“Threshold Amount” means in respect of Party A 3% of shareholders’ equity as reported in its most recently audited financial statements and in respect of Party B 3% of shareholders’ equity on a consolidated basis, as reported in its most recently audited financial statements. 
	 
	
(d)    

 
	The “Credit Event Upon Merger” provisions of Sections 5 (b) (vi) will apply to Party A and Party B. 

	 
	(e)      	The “Automatic Early Termination” provisions of Section 6 (a) will not apply to Party A and Party B 
	 
	 
	(f)      	Payment on Early Termination. For the purpose of Section 6 (e) of this Agreement. 
	 
	 	(i) Market Quotation will apply. 
	 
	 	(ii) The Second Method will apply. 
	 
	(g)      	“Termination Currency” means any single currency of any Transaction as may be selected by the party which is not the Defaulting Party or the Affected Party (as the case may be) or, in circumstances where there is more than one Affected Party, such currency of any Transaction as may be mutually agreed between the parties hereto or otherwise, failing such mutual agreement or in the event that such currency is not freely available and convertible, Euro (€). 
	 
	(h)      	Additional Termination Event will not apply. 
	 

	Part 2 
	Tax Representations  

	(a)      	Payer Tax Representations. For the purpose of Section 3 (e) of this Agreement, Party A and Party B will make the following representation:- 
	 
	 
	 	It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any tax from any payment (other than interest under Section 2 (e), 6 (d) (ii) or 6(e) of this Agreement) to be made by it to the other party under this Agreement. In making this representation, it may rely on:- 
	 
	 	(i) the accuracy of any representation made by the other party pursuant to Section 3(f) of this Agreement;
	 
	 	(ii) the satisfaction of the agreement contained in Section 4 (a) (i) or 4 (a) (iii) of this Agreement and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4 (a) (i) or 4 (a) (iii) of this Agreement; and 
	 

-29-

(iii) the satisfaction of the agreement of the other party contained in Section 4 (d) of this Agreement, 

provided that it shall not be a breach of this representation where reliance is placed on clause (ii) and other party does not deliver a form or document under Section 4 (a) (iii) by reason of material prejudice to its legal or commercial position. 

	(b)      	Payee Tax Representations. For the purpose of Section 3(f) of this Agreement, Party A and Party B make no representations. 
	 

	Part 3 
	Documents to be delivered  

	For the purpose of Section 4 (a):-

	(a)  	  	Tax forms, documents or certificates to be delivered are:-  	  	  	  	  	  	  	  	  
	  
	Party  required  to deliver document	  	Form / Document / Certificate  

    	  	Date by which to be delivered  

        
	  	  
	

 		

 		

 
	Each Party    

      	  	Any form,  document or certificate  reasonably  requested by the other party in order for such other party to be able to make payments hereunder without withholding for or on account of Taxes or with such withholding at a reduced rate. 	  	As  soon  as  practicable  

following written demand.  
	  	  
	  
	(b)  	  	Other documents to be delivered are:-    	  	  	  	  	  	  	  	  

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	Party required to  

deliver document  	  	Form / Document/  

Certificate  	  	Date by which  to  be delivered      	  	Covered by Section  

3(d) representation  
	  	  	  
	

		

		

 		

	Each Party  	  	Such proof of the names true signatures  

and authority of persons signing this  

Agreement  on its behalf as the other  

party may reasonably request    	  	On signing  	  	  	Yes  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  
	Party B  	  	A duly signed copy of the Credit Support  

Document referred to in Part 4 of this Schedule. 	  	On Signing  	  	  	Yes  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  
	Party B  	  	A copy of an annual report of such party and its subsidiaries prepared  on a consolidated basis and in conformity with  generally accepted  accounting principles applied on a basis consistent with audited consolidated  

financial statements of such party and its

subsidiaries as at the most  recently completed fiscal year, duly certified by independent certified public accountants of recognized  standing selected  by such party.    	  	Promptly upon request  

  

  

  	  	  	Yes  
	  	  	  	  	  	  
	  	  	  	  	  	  
	  	  	  	  	  	  
	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  
	Party B  	  	A copy of unaudited financial statements of such party and its subsidiaries prepared in the same manner as the audited report referred to above,  	  	Promptly upon request  	  	  	Yes  
	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  

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		 	signed by a duly  	 	
		 	authorized accounting  	 	
		 	officer of such party  	 	
		 	and consisting of at  	 	
		 	least a balance sheet  	 	
		 	as at the close of such  	 	
		 	quarter and statements  	 	
		 	of earnings and source  	 	
		 	and application of  	 	
		 	funds for such quarter  	 	
		 	and for the period  	 	
		 	from the beginning of  	 	
		 	such fiscal year to the  	 	
		 	close of the quarter  	 	

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Part 4 

Miscellaneous

	(a)      	Addresses for Notices. For the purpose of Section 12 (a) of this Agreement: 

Address for notices or communications to Party A:- 
	 

		 	Banco Santander Central Hispano, S.A., Madrid  
		 	Address:  	  	Ciudad Grupo Santander Edificio Marisma, Planta Baja  
		 	  	  	28660 Boadilla del Monte, Madrid  
		 	Attn:  	  	Swaps Administration  
		 	Telex:  	  	42362 / 45928 BADER E  
		 	Swift:  	  	BSCHESMM  
		 	Fax:  	  	(341) 2571228  
		 	Tel:  	  	(341) 2893116  

	 	For all purposes and with respect to Transactions through that Office 
	 
	 	Address for notices or communications to Party B:- 
	 
	 	SACYR VALLEHERMOSO PARTICIPACIONES MOBILIARIAS, S.L.U. 
	 
	 	Address: P° de la Castellana, 83-85 

28046 Madrid 

Attn: José Puelles Gallo 

Tel: +34 91 545 5049 

Fax: +34 91 556 7555 
	
	 	(For all purposes) 
	 
	(b)      	Process Agent. For the purpose of Section 13 (c) of this Agreement:- 
	 
	 	Party A appoints as its Process Agent: 
	 
	 	Banco Santander Central Hispano S.A., London Branch 

Santander House 

100 Ludgate Hill 

London EC4M 7NJ 
	 
	 	Attn: Jim Inches/Brian Watts (OPS CONTROL) 

Tel: 020 7332 7781 / 020 7332 7987 

Fax: 020 7332 7421 
	 
	 	Telex: 8812851 BADER G 

Swift: BSCHGB2L 
	 
	 	Tel. switchboard: 020 7332 7766 

Fax Legal: 020 7332 7440 
	 
	 	Party B appoints as its Process Agent: Not applicable 
	 

 

	 	(c) Offices. The Provisions of Section 10 (a) will apply to this Agreement. 
	 
	 	(d) Multibranch Party. For the purpose of Section 10 (c): 
	 
	 	Party A is not a Multibranch Party and may act through its Madrid Office. 
	 
	 	Party B is not a Multibranch Party. 
	 
	(e)      	Calculation Agent. The Calculation Agent for each Transaction shall be Party A, unless otherwise specified in the relevant Confirmation. 
	 
	(f)      	Credit Support Document. Details of any Credit Support Document: In relation to Party B the “Garantía” in favour of Party A and in the form attached as Annex I hereto. 
	 
	(g)      	
Credit Support Provider. Means: 

In relation to Party A: none 

In relation to Party B: Sacyr Vallehermoso, S.A. 

	 
	(h)      	Governing law. This Agreement will be governed by and construed in accordance with English law. 
	 
	(i)      	Netting of Payments. Subparagraph (ii) of Section 2 (c) of this Agreement will apply to all Transactions. 
	 
	(j)      	“Affiliate” will have the meaning specified in Section 14 of this Agreement. 
	 

Part 5 

Other Provisions

	(a)      	ISDA Definitions. The definitions and provisions contained in the 2000 ISDA Definitions (published by the International Swaps and Derivatives Association, Inc.) (the “Definitions”), are incorporated into any Confirmation which supplements and forms part of the Agreement; and all capitalised terms used in a Confirmation shall have the meaning set forth in the Definitions, unless otherwise defined in a Confirmation. In the event of any conflict between the provision of the Definitions and the provisions of this Agreement, the provisions of this Agreement shall apply, and in the event of any conflict between the provisions of this Agreement and the Confirmation, the provision of the Confirmation will apply. 
	 
	(b)      	Change of account. Section 2 (b) of this Agreement is hereby amended by the addition of the following after the word “delivery” in the first line thereof: 
	 
	 	“to another account in the same legal and tax jurisdiction as the original account”. 
	 
	(c)      	Escrow payments. If, by reason of the time difference between the cities in which payments are to be made, or otherwise, it is not possible for simultaneous payments to be made on any date on which both parties are required to make payments hereunder, either party may at its option and in its sole discretion notify the other party that payments on 
	 

-34-

	 	that date are to be made in escrow. In this case deposit of the payment due earlier on that date shall be made by 2:00 p.m. (local time at the place for the earlier payment) on that day with an escrow agent selected by the party giving the notice, accompanied by irrevocable payment instructions (i) to release the deposited payment to the intended recipient upon receipt by the escrow agent of the required deposit of the corresponding payment from the other party on the same date accompanied by irrevocable payment instructions to the same effect or (ii) if the required deposit of the corresponding payment is not made on the same date, to return the payment deposited to the party that paid it into escrow. The party that elects to have payments made in escrow shall pay the costs of the escrow arrangements and cause those arrangements to provide that the intended recipient of the payment due to be deposited first shall be entitled to interest on that deposited payment for each day in the period of its deposit at the rate offered by the escrow agent for that day for overnight deposits in the relevant currency in the office where it holds that deposited payment (at 11:00 a.m. local time on that day) if that payment is not released by 5:00 p.m. local time on the day it is deposited for any reason other than the intended recipient’s failure to make the escrow deposit it is required to make hereunder in a timely fashion. 
	 
	(d)      	Set-off. Each party agrees that the following provision shall be added as Section 6 (f) of this Agreement: 
	 
	 	“Set-off: Any amount (the “Early Termination Amount”) payable to one party (the “Payee”) by the other party (the “Payer”) under Section 6 (e), in circumstances where there is a Defaulting Party or one Affected Party in the case where a Termination Event under Section 5 (b) (iv) has occurred, will at the option of the Party (“X”) other than the Defaulting Party or the Affected Party (and without prior notice to the Defaulting Party or the Affected Party), be reduced by its set-off against any amount(s) (“the Other Agreement Amount”) payable (whether at such time or in the future or upon the occurrence of a contingency) by the Payee to the Payer (irrespective of the currency, place of payment or booking office of the obligation) under any other agreement(s) between the Payee and the Payer or instrument(s) or undertaking(s) issued or executed by one party to, or in favour of, the other party (and the Other Agreement Amount will be discharged promptly and in all respects to the extent it so set-off). X will give notice to the other party of any set-off so effected. 
	 
	 	For this purpose, either the Early Termination Amount or the Other Agreement Amount (or the relevant portion of such amounts) may be converted by X into the currency in which the other is denominated at the rate of exchange at which such party would be able, acting in a reasonable manner and in good faith, to purchase the relevant amount of such currency. 
	 
	 	If an obligation is unascertained, X may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained. 
	 
	 	Nothing in this paragraph shall be effective to create a charge or other security interest. This paragraph shall be without prejudice and in addition to any right of set-off, 
	 

-35-

	 	combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).” 
	 
	(e)      	Relationship Between the Parties 
	 
	 	Each Party will be deemed to represent to the other party on the date on which it enters into a Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction): 
	 
	 	(a)      	Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into that Transaction and as to whether that Transaction is appropriate or proper for it based upon its own judgement and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into that Transaction, it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into that Transaction. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of that Transaction. 
	 
	 	(b)      	Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of that Transaction. It is also capable of assuming, and assumes, the risks of that Transaction.
	 
	 	(c)      	Status of Parties. The other party is not acting as a fiduciary or an advisor to it in respect of that Transaction. 
	 
	(f)      	Recording of Conversations. Each party (i) consents to the recording of the telephone conversations of its trading and marketing personnel in connection with this Agreement or any potential Transaction; (ii) agrees to obtain any necessary consent of, and give notice of such recording to, such personnel and (iii) agrees that any such recordings may be submitted in evidence in any Proceedings relating to this Agreement. 
	 
	(g)      	Electronic Confirmations. Where a Transaction is confirmed by means of an electronic messaging system that the parties have elected to use to confirm such Transaction (i) such Confirmation will constitute a “Confirmation” as referred to in the this Agreement even where not so specified in the confirmation, (ii) such Confirmation will supplement, form part of, and be subject to this Agreement (unless such Confirmation shall expressly state otherwise) and (iii) the definitions and provisions contained in the 1998 ISDA FX and Currency Option Definitions (as published by the International Swap Dealers Association, Inc.) will be incorporated into the Confirmation if the Transaction is an FX Transaction or Currency Option. In the event of any inconsistency between the Definitions applicable pursuant to clause (iii) of this subsection and this Agreement, the Confirmation will prevail for the purpose of the relevant Transaction.
	 

-36-

IN WITNESS WHEREOF the parties have executed this Schedule on the respective dates specified below with effect from the date specified on the first page of this document.

	Banco Santander Capital  

Hispano, S.A. 	 		 	Sacyr Vallehermoso  

Participaciones Mobiliarias, S.L.U. 
	 		 

	By: /s/_______________________ 	 		 	By: /s/_______________________  
	Name: 	 		 	Name: 
	Title: 	 		 	Title: 
	Date: 	 		 	Date: 
	 
	 
	By: /s/_______________________ 	 		 	By: _________________________ 
	Name: 	 		 	Name: 
	Title: 	 		 	Title: 
	Date: 	 		 	Date: 

-37-

GARANTIA

GARANTIA de feche de 9 de octubre de 2006 otorgada por Sacyr Vallerhermoso, S.A. (en lo sucesívo, el “Garante”), a favor de Banco Santander Central Hispano, S.A. (en adelante “Santander”), en relación con las Operaciones (tal y como se define a continuación) que éste realizará con Sacyr Vallehermoso Participaciones Mobiliarias, S.L.U. (en lo sucesívo, la “Compañía”). Por “Operaciones” se entenderán las Operaciones de Total Return Equity Swap a contratar entre Santander y la Compañía celebradas al amparo del ISDA Master Agreement, sobre acciones ordinarias de Repsol YPF, S.A. 

     1. Garantía. La presente Garantía tiene naturaleza de garantía a primera demanda, incondicional e irrevocable. Las obligaciones del Garante son solidarias con respecto de la Compañía de tal manera que responde al mismo nivel que la Compañía como obligado principal ante Santander. 

El Garante garantiza con carácter incondicional, irrevocable y a primera demanda a Santander, sus entidades sucesoras y/o cesionarios, el pago al vencimiento de todas y cada una de las obligaciones y responsabilidades de la Compañía con Santander derivadas de las Operaciones (en adelante, “las Obligaciones”), bastando para su reclamación la simple notificación por Santander al Garante, sin necesidad de justificar el motivo del incumplimiento. 

     2. Consentimiento, Renuncias y Renovaciones. El Garante acepta que Santander podrá recurrir a ellos para el pago de cualesquiera de las Obligaciones, independientemente de que Santander haya recurrido a cualquier garantía o colateral o haya procedido legalmente contra cualquier otro obligado principal o secundario respecto a cualesquiera de dichas Obligaciones. 

     3. Gastos. El Garante se compromete a reembolsar a la vista cualquier gasto relacionado directamente con la ejecución o protección de los derechos de Santander en virtud de la presente Garantía. 

     4. Subrogación. El Garante se compromete a no ejercer ningún derecho que pudiera corresponderle frente a la Compañía hasta que la totalidad de las Obligaciones ante Santander se hayan liquidado por completo. Si cualquier importe se hubiera pagado al Garante contraviniendo el compromiso anterior, dicho importe se mantendrá en depósito en beneficio de Santander y será entregado a éste para su aplicación a las Obligaciones. 

     5. Validez de la Garantía. La presente Garantía tiene carácter de incondicional, irrevocable y a primera demanda, y permanecerá en vigor y será vinculante para el Garante, sus sucesores y cesionarios hasta que la totalidad de las Obligaciones se hayan liquidado por completo. 

     6. Ley y Jurisdicción. La presente Garantía está sometida a Derecho español. 

     7. Notificaciones. La dirección del garante a efectos de notificaciones es la siguiente: 

-38-

     8. Modificaciones. No surtirá efecto ninguna modificación de la presente Garantía a menos que se efecute por escrito, con la firma del Garante, la Compañía y Santander. 

		 	Sacyr Vallehermoso, S.A.  
		 	  
		 	  
		 	  
		 	Fdo:  
		 	Nombre: /s/  

-39-

	  	  	                                                         CONFIRMATION  
	DATE:  	  	October 13, 2006  
	TO:  	  	SACYR VALLEHERMOSO PARTICIPACIONES MOBILIARIAS, S.L.U.  
	FROM:  	  	BANCO SANTANDER CENTRAL HISPANO, S.A.  
	SUBJECT:  	  	SWAP TRANSACTION  
	  	  	  

Dear Sirs,

The purpose of this letter agreement (this “Confirmation”) is to set forth the terms and conditions of the transaction entered into on the Trade Date referred to below (the “Transaction”), between Banco Santander Central Hispano, S.A. (“SANTANDER”) and SACYR VALLEHERMOSO PARTICIPACIONES MOBILIARIAS, S.L.U. (“Counterparty”). This confirmation constitutes a “Confirmation” as referred to in the Agreement specified below and supersedes any prior written or oral agreements in relation to the Transaction. 

The definitions and provisions contained in the 2000 ISDA Definitions (the “Swap Definitions”) and in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together with the Swap Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ISDA”), are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definitions and the Equity Definitions, the Equity Definitions will prevail. In the event of any inconsistency between either set of Definitions and this Confirmation, this Confirmation will govern. 

This Confirmation supplements, form part of, and is subject to, the agreement dated as of 9 October 2006, as amended and supplemented from time to time (the “Agreement”) between Santander and the Counterparty. All provisions contained in the Agreement govern this Confirmation except as expressly modified below. 

	1.  	  	The terms of the particular Transaction to which this Confirmation relates are as follows:  
	  	  	  
	General Terms:  	  	  
	Trade Date:  	  	13 October, 2006  
	Effective Date:  	  	18 October, 2006  
	Termination Date:  	  	The Cash Settlement Payment Date.  
	Shares:  	  	Shares of REPSOL YPF S.A. shares (REUTERS Code:  
	  	  	  	  	“REP MC”)  
	Exchange:  	  	Madrid, Bilbao, Barcelona, and Valencia Exchanges (Sistema  
	  	  	  	  	de Interconexión Bursátil).  
	Related Exchange:  	  	Meff Renta Variable (MEFF RV).  

-40-

	Equity Amounts Payable by Santander:

	Equity Amount Payer:  	Santander: 46,034,904 
	Number of Shares:  	  
	Equity Notional Amount:  	EUR 1,203,237,303.30 (the Number of Shares times the Initial Price)  
	Equity Notional Reset:  	Not Applicable  
	Type of Return:  	Total Return  
	Initial Price:  	EUR 26.1375  
	Final Price:  	In respect of the Valuation Date, means the weighted average price of the Shares on the Exchange as determined by the Calculation Agent.  
	  
	Valuation Time:  	At the Scheduled Closing Time  
	Valuation Date:  	9 January, 2007  
	Dividend Period:  	Second Period  
	Dividend Amount:  	Paid Amount multiplied by Number of Shares.  
	Dividend Payment Dates:  	The Currency Business Day following the day on which  
	  	payment is made by the Issuer to holders of record of the  
	  	Shares.  
	Re-investment of Dividends:  	Not applicable.  

	Floating Amounts Payable by Counterparty

	Floating Amount Payer:  	 	Counterparty  
	Notional Amount:  	 	The Equity Notional Amount  
	Payments Dates:  	 	The Cash Settlement Payment Date  
	Floating rate Option:  	 	EUR-EURIBOR-TELERATE  
	Designated Maturity:  	 	3 month  
	Spread:  	 	plus 25 bps  
	Floating Rate Day Count  	 	  
	Fraction:  	 	Actual/360  

-41-

	Reset Date:  	  	The first date of each Calculation Period  
	Business Days:  	  	TARGET Settlement Day  
	Compounding:  	  	Inapplicable  	  	  
	Settlement Terms:  	  	  	  	  
	Cash Settlement:  	  	Applicable  	  	  
	Settlement Currency:  	  	EUR  	  	  
	Cash Settlement Payment  	  	  	  	  
	Date:  	  	Three Currency Business Days following the Valuation Date  
	Adjustments:  	  	  	  	  
	Method of Adjustment:  	  	Calculation Agent Adjustment  
	Extraordinary Events:  	  	  	  	  
	Consequences of Merger Events:  	  	  	  	  
	                                               Share-for-Share:  	  	Modified Calculation Agent Adjustment  
	                                               Share-for-Other:  	  	Modified Calculation Agent Adjustment  
	                                               Share-for-Combined:  	  	Modified Calculation Agent Adjustment  
	Tender Offer:  	  	  	  	Applicable including, for the avoidance of  
	  	  	  	  	doubt, the Tender Offers already launched  
	  	  	  	  	over the Shares or any modification thereof.  
	Consequences of Tender Offers:  	  	  	  	  
	                                               Share-for-Share:  	  	Modified Calculation Agent Adjustment  
	                                               Share-for-Other:  	  	Modified Calculation Agent Adjustment  
	                                               Share-for-Combined:  	  	Modified Calculation Agent Adjustment  
	Composition of Combined Consideration:  	  	Not Applicable  
	Nationalization, Insolvency or Delisting:  	  	Cancellation and Payment (Calculation  
	  	  	  	  	Agent Determination)  
	Additional Disruption Events:  	  	  	  	  

-42-

	Change in Law:  	  	Applicable  
	Insolvency Filing:  	  	Not Applicable  
	Hedging Disruption:  	  	Not Applicable  
	Increased Cost of Hedging:  	  	Not Applicable  
	Loss of Stock Borrow:  	  	Not Applicable  
	Increased Cost of Stock Borrow:  	  	Not Applicable  

Optional Early Termination: Applicable, provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing. From the Effective Date to the Termination Date, Counterparty will have the option, with a five Business Days prior written notice to Santander, to early terminate this Transaction in whole and not in part, designating a new Valuation Date, which in no case may be a date after January 9, 2007. The designation by Counterparty of the new Valuation Date shall not, for avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. 

	2.      	Calculation Agent: SANTANDER 
	 
	3.      	Account Details: 
	 

Account for payments to Santander: To be advised

Account for payments to Counterparty: To be advised

	4.      	Offices: 
	 
	 	The Office of Santander for the Transaction is: Ciudad Grupo Santander, Avenida de Cantabria s/n, Edificio Amazonia planta 1, 28660 Boadilla del Monte (Madrid) Attn. D. Ignacio Cepeda 

The Office of Counterparty for the Transaction is: Paseo de la Castellana 83-85, 28046 Madrid, Attn. D. José Puelles
	 
	5.      	Other Provisions: 
	 
	 	a)      	Non Reliance: Applicable 
	 
	 	b)      	Agreement and Acknowledgements Regarding Hedging Agreements: Applicable 
	 
	 	c)      	Additional Acknowledgements: Applicable 
	 

-43-

Please confirm that the foregoing correctly sets forth the terms of our agreement with respect to the Transaction by executing this Confirmation and returning it D. Ignacio Cepeda, Fax: +34 912571841

	 	Very truly yours,

	BANCO SANTANDER CENTRAL HISPANO, S.A. 
	                                                                                     By:__/s/_________________ 
	                                                                                     Name:__________________ 
	                                                                                     Title:___________________ 

	SACYR VALLEHERMOSO PARTICIPACIONES MOBILIARIAS, S.L.U. 
	Accepted and agreed as of the date first above written: 
	By:__/s/___________________ 
	Name:___________________
	Title:_____________________ 

-44-

CONFIRMATION

	DATE:  	  	October 17, 2006  
	TO:  	  	SACYR VALLEHERMOSO PARTICIPACIONES MOBILIARIAS, S.L.U  
	FROM:  	  	BANCO SANTANDER CENTRAL HISPANO, S.A.  
	SUBJECT:  	  	SWAP TRANSACTION  
	  	  	  

Dear Sirs,

The purpose of this letter agreement (this “Confirmation”) is to set forth the terms and conditions of the transaction entered into on the Trade Date referred to below (the “Transaction”), between Banco Santander Central Hispano, S.A. (“SANTANDER”) and SACYR VALLEHERMOSO PARTICIPACIONES MOBILIARIAS, S.L.U. (“Counterparty”). This confirmation constitutes a “Confirmation” as referred to in the Agreement specified below and supersedes any prior written or oral agreements in relation to the Transaction. 

The definitions and provisions contained in the 2000 ISDA Definitions (the “Swap Definitions”) and in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together with the Swap Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ISDA”), are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definition and the Equity Definitions, the Equity Definitions will prevail. In the event of any inconsistency between either set of Definitions and this Confirmation, this Confirmation will govern. 

This Confirmation supplements, forms part of, and is subject to, the agreement dated as of 9 October 2006, as amended and supplemented form time to time (the “Agreement”) between Santander and the Counterparty. All provisions contained in the Agreement govern this Confirmation except as expressly modified below. 

1. The terms of the particular Transaction to which this Confirmation relates are as follows: 

	General Terms:  	  	  	  	  	  	  
	Trade Date:  	  	17 October, 2006  
	Effective Date:  	  	20 October, 2006  
	Termination Date:  	  	The Cash Settlement Payment Date.  

1

 

	Shares:  	  	Shares of REPSOL YPF S.A. shares (REUTERS  
	  	  	Code: “REP.MC”)  
	Exchange:  	  	Madrid, Bilbao, Barcelona, and Valencia Exchanges  
	  	  	(Sistema de Interconexión Bursátil).  
	Related Exchange:  	  	Meff Renta Variable (MEFF RV).  
	Equity Amounts Payable by Santander:  	  	  
	Equity Amount Payer:  	  	Santander.  
	Number of Shares:  	  	9,338,144  
	Equity Notional Amount:  	  	EUR 241,577,785.28 (the Number of Shares times  
	  	  	the Initial Price)  
	Equity Notional Reset:  	  	Not Applicable  
	Type of Return:  	  	Total Return  
	Initial Price:  	  	EUR 25.8700  
	Final Price:  	  	In respect of the Valuation Date, means the  
	  	  	weighted average price of the Shares on the  
	  	  	Exchange as determined by the Calculation Agent.  
	Valuation Time:  	  	At the Scheduled Closing Time  
	Valuation Date:  	  	9 January, 2007  
	Dividend Period:  	  	Second Period  
	Dividend Amount:  	  	Paid Amount multiplied by Number of Shares.  
	Dividend Payment Dates:  	  	The Currency Business Day following the day on  
	  	  	which payment is made by the Issuer to holders of  
	  	  	record of the Shares.  
	Re-investment of Dividends:  	  	Not Applicable.  
	Floating Amounts Payable by  	  	  
	Counterparty  	  	  
	Floating Amount Payer:  	  	Counterparty  
	Notional Amount:  	  	The Equity Notional Amount  

2

	Payments Dates:  	  	The Cash Settlement Payment Date  
	Floating rate Option:  	  	EUR-EURIBOR-TELERATE  
	Designated Maturity:  	  	3 month  
	Spread:  	  	plus 25 bps  
	Floating Rate Day Count Fraction:  	  	Actual/360  
	Reset Date:  	  	The first date of each Calculation Period  
	Business Days:  	  	TARGET Settlement Day  
	Compounding:  	  	Inapplicable  
	Settlement Terms:  	  	  
	Cash Settlement:  	  	Applicable  
	Settlement Currency:  	  	EUR  
	Cash Settlement Payment Date:  	  	Three Currency Business Days following the  
	  	  	Valuation Date  
	Adjustments:  	  	  
	Method of Adjustment:  	  	Calculation Agent Adjustment  
	Extraordinary Events:  	  	  
	Consequences of Merger Events:  	  	  
	                   Share-for-Share:  	  	Modified Calculation Agent Adjustment  
	                   Share-for-Other:  	  	Modified Calculation Agent Adjustment  
	                   Share-for-Combined:  	  	Modified Calculation Agent Adjustment  
	Tender Offer:  	  	Applicable including, for the avoidance of doubt,  
	  	  	the Tender Offers already launched over the Shares  
	  	  	or any modification thereof.  
	Consequences of Tender Offers:  	  	  
	                   Share-for-Share:  	  	Modified Calculation Agent Adjustment  
	                   Share-for-Other:  	  	Modified Calculation Agent Adjustment  

3

	                   Share-for-Combined:  	  	Modified Calculation Agent Adjustment  	  	  
	Composition of Combined Consideration:  	  	Not Applicable  	  	  
	Nationalization, Insolvency or Delisting:  	  	Cancellation and Payment (Calculation Agent Determination)    
	  	  
	Additional Disruption Events:  	  	  	  	  
	                   Change in Law:  	  	Applicable  	  	  
	                   Insolvency Filing:  	  	Not Applicable  	  	  
	                   Hedging Disruption:  	  	Not Applicable  	  	  
	                   Increased Cost of Hedging:  	  	Not Applicable  	  	  
	                   Loss of Stock Borrow:  	  	Not Applicable  	  	  
	                   Increased Cost of Stock Borrow:  	  	Not Applicable  	  	  

Optional Early Termination: Applicable, provided that no Event of Default or Potential Event of Default with respect to the Counterparty shall have occurred and be continuing. From the Effective Date to the Termination Date, Counterparty will have the option, with a five Business Days prior written notice to Santander, to early terminate this Transaction in whole and not in part, designating a new Valuation Date, which in no case may be a date after January 9, 2007. The designation by Counterparty of the new Valuation Date shall not, for the avoidance of doubt, invalidate, alter or cancel the remaining provisions of this Transaction. 

	2.  	  	Calculation Agent: SANTANDER  	  	  
					
	3.  	  	Account Detail:  	  	  
	  	  	Account for payments to Santander:  	  	To be advised  
	  	  	Account for payments to Counterparty:  	  	To be advised  

	4.      	Offices: 
	 
	 	The Office of Santander for the Transaction is: Ciudad Grupo Santander, Avenida de Cantabria s/n, Edificio Amazonia planta 1, 28660 Boadilla del Monte (Madrid) Attn. D Ignacio Cepeda 
	 
	 	The Office of Counterparty for the Transaction is: 
	 	Paseo de la Castellano 83-85, 28046 Madrid, Attn. D. José Puelles 
	 
	5.      	Other Provisions: 
	 
	 	a) Non Reliance: Applicable 
	 

4

	b)      	Agreements and Acknowledgements Regarding Hedging Agreements: Applicable 
	 
	c)      	Additional Acknowledgements: Applicable 
	 

Please confirm that the foregoing correctly sets forth the terms of our agreement with respect to the Transaction by executing this Confirmation and returning it D. Ignacio Cepeda, Fax: +34 912571841. 

Very truly yours, 

	BANCO SANTANDER CENTRAL HISPANO, S.A.  
	By: /s/ Noemi Doce Delbe   
	Name:  
	Title:___________  
	Francisco Benitez Aranda  

	SACYR VALLEHERMOSO PARTICIPACIONES MOBILIARIAS, S.L.U.  
	Accepted and agreed as of the date first above written:  
	By: /s/ ____________________
	Title:_______________________  

5

	  	  	                                                               CONFIRMATION  
	DATE:  	  	OCTOBER 25, 2006  
	TO:  	  	SACYR VALLEHERMOSO PARTICIPACIONES MOBILIARIAS, S.L.U.  
	FROM:  	  	BANCO SANTANDER CENTRAL HISPANO, S.A.  
	SUBJECT:  	  	EARLY TERMINATION OF SWAP TRANSACTION  

	Dear Sirs,

We refer to the Total Return Equity Swap Transaction (the “Transaction”) details of which are set out in Annex A hereto attached between BANCO SANTANDER CENTRAL HISPANO S.A. (“Santander”) and SACYR VALLEHERMOSO PARTICIPACIONES MOBILIARIAS, S.L.U. (“Counterparty”) dated 12 October, 2006 to which the confirmation of such date relates (the “Confirmation”) over 7,626,952 Shares of Repsol YPF, S.A. 

The purpose of this Letter Agreement is to confirm the terms and conditions upon which the Transaction shall be terminated. Santander and the Counterparty hereby agree to early terminate the Transaction effective on 30 October, 2006 (the “Early Termination Date”). 

As consideration of this termination, Santander shall pay to Counterparty an amount in Euro of 347,116.73 (the “Termination Amount”) on the original Termination Date of the Transaction (i.e. 12th January 2007 subject to early termination provisions). The Termination Amount has been calculated in accordance with Annex A. 

Upon payment of the termination Amount the Transaction shall be deemed terminated with effect from the Early Termination Date and the parties shall have no further rights and obligations under the Transaction except of the payment of the Termination Amount. 

This Letter Agreement is hereby incorporated as an Annex to the Confirmation. 

1

Please confirm your agreement to the foregoing by signing in the space provided below and return a copy to us. 

	  	  	  	  	                                                     Very truly yours,  
	  
	  	  	Banco Santander Central Hispano, S.A.  
	  
	/s/ Deborah Marijuán Varona  	  	By:  /s/ Marta Fernández Larrumbe  
	

		

	By: Deborah Marijuán Varona  	  	  Marta Fernández Larrumbe  

  Authorized Signature  

  Firma Autorizada  
	       Authorized signature  	  
	       Firma autorizada  	  

 

	Accepted and agreed:  
	SACYR VALLEHERMOSO PARTICIPACIONES MOBILIARIAS, S.L.U.  

	By:  	 		  	By: /s/  Jose Carlos Otero  
	Name:  	 		  	Name Jose Carlos Otero  

2

Annex A

	1—Details of the Transaction:

	Trade Date:  	  	12 October 2006  
	Effective Date:  	  	17 October 2006  
	Shares:  	  	Shares of Repsol YPF, S.A.  
	Number of Shares:  	  	7,626,952  	  	  

As amended by Agreement dated 16 October 2006

2—Calculation of the Termination Amount: 

Termination Amount = Equity Termination Amount – Interest Termination Amount

	Where

	a)  	  	Equity  	  	  
	  
	  	  	-Share final price for early termination:  	  	Euro 25.5780 per Share (the  
	  	  	  	  	execution price at which Santander  
	  	  	  	  	has executed its delta)  
	  
	  	  	-Share initial price:  	  	Euro 25.4685 per Share  
	  
	  	  	-Number of Shares outstanding in the  	  	  
	  	  	Transaction (NSO):  	  	4,626,952  

- (Share final price – Share initial price)* NSO = Equity Termination Amount 

  (25.5780            –              25.4685 )* 4,626,952 = 506,651.24 

	b)      	Interest 
	 
	 	(Euribor [3.499%] + 0.25%)* 117,841,527 * 13 days = 159,534,51 – Interest Termination Amount. 
	 
	c)      	Termination Amount = 506,651 24 – 159,534,51 = 347,116.73 
	 

3

Amendment Agreement 

	To:  	  	SACYR VALLEHERMOSO PARTICIPACIONES MOBILIARIAS, S.L.U.  
	From:  	  	BANCO SANTANDER CENTRAL HISPANO, S.A.  
	Date:  	  	25 October, 2006  

We refer to the Total Return Equity Swap Transaction (the “Transaction”) entered into between Banco Santander Central Hispano SA (“Santander”) and Sacyr Vallehermoso Participaciones Mobiliarias, S.L.U. (“Counterparty”) dated October 13 (the “Transaction”) to which the confirmation of such date relates (the “Confirmation”) over 46,034,904 Shares of Repsol YPF, S.A. 

The purpose of this letter is to confirm the terms and conditions upon which the Transaction shall be amended so as to decrease the Notional Amount. 

Both parties hereby agree to modify the Transaction by decreasing the Notional Amount (as such term is defined in the Confirmation) in an amount equal to Eur 9,750,542.10 (equivalent to 373,048 shares times 26.1375 euro per share) effective as of 30 October, 2006 (the “Swap Amendment Date”). Consequently the amended Notional Amount shall be Eur 1,193,485,761.2. As consideration of this decrease, Counterpart shall pay Santander an amount equal to Eur 220,915.04 (the “Partial Termination Amount”) on the Termination Date of the Transaction. The Partial Termination Amount has been calculated in accordance with Annex A. 

The remaining terms of the Transaction which have not been amended by virtue of this Amendment Agreement shall remain valid and in full force. 

This Amendment Agreement is hereby incorporated as an Annex to the Confirmation. 

Please confirm your agreement of the foregoing by signing in the space provided below and returning a copy to D. Ignacio Cepeda, Fax 34 91 2571841. 

	 	Very truly yours,

	BANCO SANTANDER CENTRAL HISPANO, S.A.  
	  
	By:  	  	/s/ Marta Fernandez Larrumbe  	  	/s/ Deborah Marijuan Varona  
	  	  	AUTHORIZED SIGNATURE  	  	AUTHORIZED SIGNATURE
	Title:  	  	  

	SACYR VALLEHERMOSO PARTICIPACIONES MOBILIARIAS, S.L.U.  
	Accepted and agreed as of the date first above written:  
	By:  	  	/s/ Jose Carlos Otero  
	Name:  	  	Jose Carlos Otero  
	Title:  	  	  

Annex A:

1—Calculation of the Partial Termination Amount:

Partial Termination Amount = Equity Partial Termination Amount – Interest Partial Termination Amount

	Where

	a) 	 	Equity 	 	 	 	 	 	 
	 	 	–Share final price for partial termination: 	 	Euro 25.5780 per Share (the 
	 	 	 	 	 	 	 	 	execution price at which Santander 
	 	 	 	 	 	 	 	 	has executed its delta) 
	 	 	-Share initial price: 	 	 	 	Euro 26.1375 per Share 
	 	 	-Number of Shares to Decrease (NSD): 	 	373,048 
	 	 	-(Share final price – Share initial price)* NSD = Equity Partial Termination 
	 	 	 	 	 	 	 	 	Amount 
	 	 	 (25.5780 	 	– 	 	26.1375 )* 373,048 = 208,720.36 
	b) 	 	Interest 	 	 	 	 	 	 
	 	 	(Euribor [3.502%] + 0.25%) * 9,750,542 * 12 days = 12,194.68 = Interest Partial 
	 	 	Termination Amount. 	 	 	 	 
	c) 	 	Partial Termination Amount = Equity Partial Termination Amount – Interest 
	 	 	Partial Termination Amount = 220,915.04

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