PAYMENT AND GUARANTEE AGREEMENT
EXHIBIT
10
THIS
PAYMENT AND GUARANTEE AGREEMENT (the “Guarantee”), dated as of
November 21, 2006, is executed and delivered by Banco Santander Central Hispano,
S.A., a sociedad anónima incorporated
under
the laws of the Kingdom of Spain (the “Guarantor”), and will be
executed and accepted by the Issuer (as defined below), as issuer of the Series
4 Preferred Securities (as defined below) and each Registrar and Paying Agent
(as defined below) for the benefit of the Holders (as defined
below).
WHEREAS,
the Guarantor desires to cause the Issuer to issue the Series 4 Preferred
Securities and the Guarantor desires to issue this Guarantee for the benefit
of
the Holders, as provided herein; and
WHEREAS,
the Guarantor desires hereby irrevocably and unconditionally to agree to pay
to
the Holders the Guarantee Payments (as defined below) and to make certain other
payments on the terms and conditions set forth herein.
NOW,
THEREFORE, in consideration of the purchase of Series 4 Preferred Securities
and
the Guarantee by each Holder, which the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee for the
benefit of the Holders.
ARTICLE
1
As
used in
this Guarantee, the following terms shall, unless the context otherwise
requires, have the following meanings:
“Bank
Shares” means the ordinary shares of the Guarantor.
“Distributable
Profits” means, for any fiscal year, the reported net profit
(calculated in compliance with the regulations of the Bank of Spain) of the
Guarantor, determined after tax and extraordinary items for such year, as
derived from the non-consolidated audited profit and loss account of the
Guarantor, irrespective of whether shareholders’ meeting approval is still
pending, prepared in accordance with generally applicable accounting standards
in Spain and Bank of Spain requirements and guidelines, each as in effect at
the
time of such preparation. In the event that on any Distribution payment date,
the audit of the non-consolidated profit and loss account has not been
completed, the reference to be used to calculate the Distributable Profits
will
be the balance of the unaudited non-consolidated profit and loss account of
the
Guarantor as reported in the financial statements delivered to the Bank of
Spain
in respect of December 31st of the preceding fiscal year.
“Distributions”
means the amount of accrued non-cumulative cash distributions payable per Series
4 Preferred Security in accordance with the terms thereof.
“Distribution
Period” means the period from and including one Distribution payment
date (or, in the case of the first Distribution Period, the issuance date)
to
but excluding the next Distribution payment date.
“Group”
means the Guarantor together with its consolidated subsidiaries.
“Guarantee
Payments” means (without duplication) (i) any accrued but unpaid
Distributions for the most recent Distribution Period; (ii) the Redemption
Price
payable with respect to any Series 4 Preferred Securities redeemed by the Issuer
thereof; and (iii) the Liquidation Distributions due on the Liquidation Date,
in
each case subject to the limitations contained in Section 2.01 hereof.
“Holder”
shall mean any holder from time to time of any Series 4 Preferred Securities
of
the Issuer; provided, however, that in determining whether the Holders of the
requisite percentage of the Series 4 Preferred Securities have given any
request, notice, consent or waiver hereunder, Holder shall not include the
Guarantor or any Subsidiary (as defined below) of the Guarantor (including
the
Issuer).
“Issuer”
shall mean Santander Finance Preferred, S.A. Unipersonal, a sociedad anónima
incorporated under the laws of the Kingdom of Spain.
“Liquidation
Date” shall mean the date of final distribution of the assets of the
Issuer in the case of a winding up of the Issuer (whether voluntary or
involuntary).
“Liquidation
Distributions” means, with respect to each of the Series 4 Preferred
Securities, the liquidation preference per share as provided by the terms
thereof, plus accrued and unpaid Distributions to the Liquidation
Date.
“Preferred
Securities” means (as the case may be) any preferred securities
(participaciones preferentes) issued under Spanish Law 13/1985, or
other securities or instruments equivalent to preferred securities issued by
the
Issuer, or by any other subsidiary of the Guarantor, which are entitled to
the
benefit of a guarantee ranking pari passu with the Guarantor’s
obligations under this Guarantee, or any such securities or instruments issued
by the Guarantor and ranking pari passu with the Guarantor’s
obligations under this Guarantee.
“Redemption
Price” shall mean with respect to each Series 4 Preferred Security the
amount required under the terms thereof to be paid to a Holder upon
2
the
redemption of such Series 4 Preferred Security, including any accrued and unpaid
Distributions to the redemption date.
“Registrar
and Paying Agent” means The Bank of New York together with its
successors and assigns.
“Series
4 Preferred Securities” means the 20,000,000 6.80% Non-Cumulative
Guaranteed Series 4 Preferred Securities (par value $25.00 per security) of
the
Issuer, the Holders of which are entitled to the benefits of this Guarantee
as
evidenced by the execution of an acceptance in the form attached
hereto.
“Subsidiary”
of the Guarantor means any entity in which the majority of the voting
stock is owned directly or indirectly (through a Subsidiary) by the
Guarantor.
ARTICLE
2
Section
2.01(a) Subject to the limitations contained in the following
paragraphs of this Section 2.01, the Guarantor
irrevocably and unconditionally agrees to pay in full to the Holders, the
Guarantee Payments (except to the extent paid by the Issuer), as and when due,
regardless of any defense, right of set-off or counterclaim which the Issuer
may
have or assert. This Guarantee is continuing, irrevocable,
unconditional and absolute.
(b) Notwithstanding
Section
2.01(a), the Guarantor shall not be obligated to make any Guarantee
Payment in respect of Distributions (including accrued and unpaid Distributions
relating to the Redemption Price or Liquidation Distributions) on any Series
4
Preferred Securities if the aggregate of such Distribution, together with (a)
any other distributions previously paid during the then-current fiscal year
(defined as the accounting year of the Guarantor) and (b) any distributions
proposed to be paid during the then-current Distribution Period, in each case
on
or in respect of Preferred Securities (including the Series 4 Preferred
Securities) would exceed the Distributable Profits of the immediately preceding
fiscal year. Moreover, even if Distributable Profits are sufficient,
the Guarantor shall not be obligated to make any payments hereunder to the
extent that, in accordance with applicable Spanish banking regulations relating
to capital adequacy requirements affecting financial institutions which fail
to
meet their required capital ratios on a parent company only or on a consolidated
basis, the Guarantor would be prevented at such time from making payments on
its
ordinary shares or on Preferred Securities issued by the Guarantor.
(c) Notwithstanding
Section
2.01(a), if, at the time that any Liquidation Distributions are to be
paid pursuant to this Guarantee in respect of each of the
3
Series
4
Preferred Securities, proceedings are pending or have been commenced for the
voluntary or involuntary liquidation, dissolution or winding up of the Guarantor
or for a reduction in the Guarantor’s shareholders’ equity pursuant to Article
169 of the Spanish Corporations Law (Ley de Sociedades Anonimas), then payments
for such Liquidation Distributions and any liquidation distributions payable
with respect to all other Preferred Securities, shall not exceed the liquidation
distributions that would have been payable from the assets of the Guarantor
(after payment in full in accordance with Spanish law of all creditors of the
Guarantor, including holders of its subordinated debt, but excluding holders
of
any guarantee or other contractual right expressly ranking equally with or
junior to this Guarantee) had all the Preferred Securities been issued by the
Guarantor and ranked (i) junior to all liabilities of the Guarantor, (ii)
pari passu with the most senior Preferred Securities which could have
been issued by the Guarantor (if any) and (iii) senior to the Bank Shares.
In
the event of any such liquidation or winding-up of the Guarantor or a reduction
in its shareholders’ equity pursuant to Article 169 of the Spanish Corporations
Law, the Guarantor will exercise its voting rights in order to wind-up the
Issuer, subject to the prior consent of the Bank of Spain. In any
such case, holders of Series 4 Preferred Securities right to receive liquidation
distributions will be limited as described above.
(d)
If the payments described in Section
2.01(a) are not payable in full due to the limitations referred to in
Section 2.01(b) or (c), such
amounts shall be made pro rata
among the holders of Preferred Securities in the proportion that the amount
available for payment bears to the full amount that would have been payable,
had
there been no such limitation.
Section
2.02. The Guarantor hereby waives notice of acceptance of
this Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
Section
2.03. The obligations, covenants, agreements and duties of
the Guarantor under this Guarantee shall in no way be affected or impaired
by
reason of the occurrence from time to time of any of the following:
(a)
the release or waiver, by operation of law or otherwise, of the performance
or
observance by the Issuer of any express or implied agreement, covenant, term
or
condition relating to the Series 4 Preferred Securities to be performed or
observed by the Issuer;
(b) the
extension of time for the payment by the Issuer of all or any portion of the
Distributions, Redemption Price, Liquidation Distributions or any other sums
payable under the terms of the Series 4 Preferred Securities or the extension
of
time for the performance of any other obligation under, arising out of, or
in
connection with, such Series 4 Preferred Securities;
4
(c) any
failure, omission, delay or lack of diligence on the part of Holders to enforce,
assert or exercise any right, privilege, power or remedy conferred on the
Holders pursuant to the terms of the Series 4 Preferred Securities, or any
action on the part of the Issuer granting indulgence or extension of any
kind;
(d)
the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of
creditors, reorganization, arrangement, composition or readjustment of debt
of,
or other similar proceedings affecting, the Issuer or any of the assets of
the
Issuer;
(e) any
invalidity of, or defect or deficiency in, the Series 4 Preferred Securities;
or
(f) the
settlement or compromise of any obligation guaranteed hereby or hereby
incurred.
There
shall be no obligation of the Holders to give notice to, or obtain consent
of,
the Guarantor with respect to the happening of any of the
foregoing.
Section
2.04. This is a guarantee of payment and not of
collection. A Holder may enforce this Guarantee directly against the
Guarantor, and the Guarantor waives any right or remedy to require that any
action be brought against the Issuer or any other person or entity before
proceeding against the Guarantor. Subject to Section 2.05, all waivers herein contained shall be
without prejudice to the Holders’ right at the Holders’ option to proceed
against the Issuer, whether by separate action or by joinder. The
Guarantor agrees that this Guarantee shall not be discharged except by payment
of the Guarantee Payments in full and by complete performance of all obligations
of the Guarantor under this Guarantee.
Section
2.05. The Guarantor shall be subrogated to all rights of the
Holders against the Issuer in respect of any amounts paid to such Holders by
the
Guarantor under this Guarantee and shall have the right to waive payment of
any
amount of Distributions in respect of which payment has been made to the Holders
by the Guarantor pursuant to Section 2.01;
provided, however that the Guarantor shall not (except to the extent required
by
mandatory provisions of law) exercise any rights which it may acquire by way
of
subrogation or any indemnity, reimbursement or other agreement, in all cases
as
a result of a payment under this Guarantee, if, at the time of any such payment,
any amounts are due and unpaid under this Guarantee. If any amount on
the Series 4 Preferred Securities is paid to the Guarantor in violation of
the
preceding sentence, the Guarantor agrees to pay such amount to the
Holders.
5
Section
2.06. Subject to applicable law and regulations and the
requirements of any stock exchange on which the Series 4 Preferred Securities
may at the time be listed, the Guarantor, at its sole option, shall be entitled
to purchase Series 4 Preferred Securities from any Holder, as a whole but not
in
part, to the extent that the Issuer may purchase any Series 4 Preferred
Securities.
Section
2.07. The Guarantor acknowledges that its obligations
hereunder are several and independent of the obligations of the Issuer with
respect to the Preferred Securities and that the Guarantor shall be liable
as
principal and sole debtor hereunder to make Guarantee Payments pursuant to
the
terms of this Guarantee notwithstanding the occurrence of any event referred
to
in subsections (a) through (f), inclusive of Section
2.03 hereof.
Section
2.08. The Guarantor represents and warrants that, subject to
applicable laws, its obligations hereunder rank and will at all times rank
(a)
junior to all liabilities of the Guarantor, including subordinated liabilities
(other than any guarantee or contractual right expressed to rank equally with
or
junior to this Guarantee), (b) pari passu with the most senior
Preferred Securities which could have been issued by the Guarantor,
if any, and any obligations of the Guarantor under any guarantee issued by
it
relating to any Preferred Securities issued by any subsidiary and (c) senior
to
the Bank Shares.
Each
Holder by its acquisition of Series 4 Preferred Securities will be deemed to
waive all other priorities that Spanish law or regulations may confer at any
time including those arising under articles 92 and 158 of Law 22/2003 of 9
July
0000 (Xxx Xxxxxxxxx), if any.
ARTICLE
3
Section
3.01. The Guarantor agrees not to issue any preferred
securities or other securities equivalent to preferred securities ranking senior
to its obligations hereunder and agrees not to guarantee payments on preferred
securities of any Subsidiary of the Guarantor if that guarantee would rank
senior to this Guarantee (including, without limitation, any guarantee that
would provide a priority of payment with respect to Distributable Profits)
unless this Guarantee is amended to give the Holders of Series 4 Preferred
Securities such rights and entitlements as are contained in or attached to
such
preferred securities or securities equivalent to preferred securities or such
other guarantee, so that this Guarantee ranks equally with, and contains
substantially equivalent rights of priority on payment of Distributable Profits
if any, as such preferred securities or securities equivalent to preferred
securities or other guarantee.
Section
3.02. The Guarantor agrees
that if any amount required to be paid pursuant to this Guarantee in respect
of
a Distribution payable during the most
6
recent
Distribution Period has not been paid, whether by reason of the limitations
of
Section 2.01(b) hereof or otherwise, then (i) no
dividends (other than in the form of the Bank Shares or other shares of the
Guarantor ranking junior to obligations of the Guarantor under this Guarantee)
will be declared or paid or set apart for payment, or (ii) other distribution
made, upon the Bank Shares or any other shares of the Guarantor ranking junior
to the obligations of the Guarantor under this Guarantee, and (iii) the
Guarantor will not redeem, repurchase or otherwise acquire for any consideration
(including any amounts to be paid or made available for a sinking fund for
redemption of any Bank Shares), Bank Shares or any other shares of the Guarantor
ranking junior to the obligations of the Guarantor under this Guarantee (except
by conversion into or exchange for shares of the Guarantor ranking junior to
the
obligations of the Guarantor under this Guarantee), until such time as either
the Issuer or the Guarantor, pursuant to this Guarantee, shall have resumed
the
payment of, or set aside payment with respect to, full Distributions on the
Series 4 Preferred Securities for four consecutive Distribution
Periods.
Section
3.03. The Guarantor further agrees to maintain ownership of
100% of the ordinary shares of the Issuer, directly or indirectly, as long
as
any Series 4 Preferred Securities are outstanding and not to permit or take
any
action to cause the liquidation, dissolution or winding-up of the Issuer except
in the event of the liquidation, dissolution or winding-up of the Bank or of
a
reduction in the Bank’s shareholders’ equity pursuant to Article 169 of the
Spanish Corporations Act (Ley de Sociedades Anónimas).
ARTICLE
4
This
Guarantee shall terminate and be of no further force and effect upon payment
in
full of the Redemption Price of all outstanding Series 4 Preferred Securities,
upon purchase and cancellation of all Series 4 Preferred Securities, or upon
payment of the Liquidation Distributions and liquidation of the issuer;
provided, however, that this Guarantee shall continue to be effective or shall
be reinstated (as the case may be) if at any time a Holder of a Series 4
Preferred Securities is required to restore payment of any sums paid on such
Series 4 Preferred Securities or under this Guarantee.
ARTICLE
5
Section
5.01. All guarantees and agreements contained in this
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the
Holders. The Guarantor shall not assign its obligations hereunder
without the prior approval of the Holders of not
7
less
than
two-thirds in liquidation preference of the outstanding Series 4 Preferred
Securities or by resolution adopted at a special general meeting of holders
(Junta General Especial de Partícipes) and approved by Holders of at least
two-thirds of the liquidation preference of the outstanding Series 4 Preferred
Securities; provided, however, that the foregoing shall not preclude the
Guarantor from merging or consolidating with, or transferring or otherwise
assigning all or substantially all of its assets to, a banking organization
or
any other entity permitted by applicable laws without obtaining any approval
of
such holders.
Section
5.02. Except for those changes (a) required by Section 3.01 hereof, (b) which do not adversely
affect
the rights of Holders or (c) necessary or desirable to give effect to any one
or
more transactions referred to in the proviso to Section
5.01 (in any of which cases no vote will be required), this Guarantee shall
be changed only by agreement in writing signed by the Guarantor with the prior
approval of the Holders of not less than two-thirds in liquidation preference
of
the Series 4 Preferred Securities, or by a resolution adopted at a special
general meeting of holders (Junta General Especial de Partícipes) and approved
by Holders of not less than two-thirds in liquidation preference of the
outstanding Series 4 Preferred Securities.
Section
5.03. Any notice, request or other communication required or
permitted to be given hereunder to the Guarantor shall be given in writing
by
delivering the same against receipt therefor or by telex or facsimile
transmission (confirmed by mail) addressed to the Guarantor, as follows (and
if
so given, shall be deemed given upon receipt of an answer back, if sent by
telex, or upon mailing of confirmation, if given by facsimile
transmission):
Banco
Santander Central Hispano, S.A.
Ciudad
Grupo Santander
Xxxxxxx
xx
Xxxxxxxxx
00000
Xxxxxxxx xxx Xxxxx
Xxxxxx,
Xxxxx
Facsimile:
x00 00-000-00-00
Attention: Emisiones
Corporativas
The
address of the Guarantor may be changed at any time and from time to time and
shall be the most recent such address furnished in writing by the Guarantor
to
the Registrar and Paying Agent.
Any
notice, request or other communication required or permitted to be given
hereunder to the Holders shall be given by the Guarantor in the same manner
as
notices sent by the Issuer to holders of the Preferred Securities.
8
Section
5.04. This Guarantee is solely for the benefit of the
Holders and is not separately transferable from the Series 4 Preferred
Securities. The Issuer may include on the share certificates
representing Series 4 Preferred Securities a legend in substantially the
following form:
THE
HOLDER
OF THIS SECURITY IS ENTITLED TO THE BENEFITS, AND IS SUBJECT TO THE LIMITATIONS,
OF THE PAYMENT AND GUARANTEE AGREEMENT, DATED AS OF NOVEMBER 21, 2006, EXECUTED
AND DELIVERED BY BANCO SANTANDER CENTRAL HISPANO, S.A. FOR THE BENEFIT OF
HOLDERS FROM TIME TO TIME OF THIS SECURITY. COPIES OF THE PAYMENT AND
GUARANTEE AGREEMENT ARE AVAILABLE UPON WRITTEN REQUEST TO THE SECRETARY OF
THE
ISSUER.
Section
5.05. The Guarantor will furnish any Holder, upon request of
such Holder, with a copy of its annual report, and any interim reports, made
generally available by the Guarantor to holders of the Bank Shares.
Section
5.06. This Guarantee shall be governed by, and construed in
accordance with, the laws of the State of New York except for matters related
to
the ranking of this Guarantee, which shall be governed by Spanish
Law.
Section
5.07. The Guarantor agrees that any legal suit, action or
proceeding brought by any Holder arising out of or based upon this Guarantee
may
be instituted in any state or federal court in the City and State of New York,
and waives any objection that it may now or hereafter have to the laying of
venue of any such proceeding, and irrevocably submits to the non exclusive
jurisdiction of such courts in any such suit, action or
proceeding. The Guarantor has appointed its New York Branch, located
at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as its authorized agent (the
“Authorized Agent”) upon which process may be served in any
action based on this Guarantee that may be instituted in any state or federal
court in the City and State of New York by any Holder, and expressly accepts
the
jurisdiction of any such court, but only in respect of claims arising out of
or
based upon this Guarantee. The Guarantor represents and warrants that
its New York Branch has agreed to act as said agent for service of process
and
agrees to take any and all action, including the filing of any and all
documentation and instruments, that may be necessary to continue such
appointment in full force and effect as aforesaid. If said agent
shall cease to act in such capacity, the Guarantor will appoint without delay
another such agent. Notwithstanding the foregoing, any action based
on this Guarantee may be instituted by any Holder in any competent court in
Spain.
9
THIS
GUARANTEE is executed as of the day and year first above written.
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BANCO
SANTANDER CENTRAL
HISPANO,
S.A.
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By:
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/s/
Xxxxxxx Xxxxx Xxxxxx
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Name:
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Xxxxxxx Xxxxx Xxxxxx | ||
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Title:
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Authorized Signatory | ||
The
undersigned hereby agrees that the Series 4 Preferred Securities are entitled
to
the benefits of this Payment and Guarantee Agreement dated as of November 21,
2006.
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SANTANDER
FINANCE PREFERRED,
S.A.
UNIPERSONAL
(Issuer)
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By:
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/s/
Xxxxxxx Xxxxx Xxxxxx
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Name:
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Xxxxxxx Xxxxx Xxxxxx | ||
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Title:
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Director | ||
Dated
as
of: November 21, 2006
The
undersigned hereby agrees to act as Transfer Agent, Registrar and Paying Agent
with respect to the Series 4 Preferred Securities and is not otherwise a party
to the Payment and Guarantee Agreement and shall have no duties other than
those
of Registrar and Paying Agent with respect to the Series 4 Preferred
Securities.
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THE
BANK OF NEW YORK
Registrar
and Paying Agent
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By:
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/s/
Xxxx Xxxxxx
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Name:
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Xxxx Xxxxxx | ||
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Title:
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Vice President | ||
This
acceptance may be executed in counterparts
